This is rich. Federal Reserve Chairman Ben Bernanke this week announced Operation Twist, a program to pour hundreds of billions of dollars of Fed money into long-term debt to drive down long-term interest rates.
This would be the same Ben Bernanke who joined two other Fed economists to write a paper in 2004 that studied the original Operation Twist in the early 1960s and concluded it was a failure. Here’s the report (PDF).
Bernanke and the other authors concluded the first Operation Twist might not have been big enough. The one Bernanke announced this week is many times larger, both in nominal and inflation-adjusted terms, than the one he concluded had failed.
Should we fear this new and far larger Operation Twist will end up being a far larger failure than the first one? Here’s our news analysis with comments from some economists that make me fear the answer is yes.