Operation TWIST Again: Quantitative Tightening

Sept. 7, 2010 - PRLog -- This Article Background:

Having been an attentive Fed Watcher for the last 25 years I have a great experience of the way they communicate or intervene on the markets. Although most of the time they are careful to make themselves predictable every 4 to five years they do engineer some change in market direction or so they wish.

When doing that they communicate or intervene on the market below (when market is falling) or above important technical levels in order to blow the shorts or longs out of the water which amplifies their actions. Their interventions are brutal and they don't let the market breath which make them easily predictable.

Although long term prediction is child play short term prediction (over one day, one week, one month or one year is almost impossible.) When, since May I could make easily short term market predictions and be right 100% of the time it raised my eyebrows and I concluded that there was some kind of government interventions on the market. This is why I came to discover the content of that article.


The name Operation TWIST Again comes from an operation very similar to Quantitative Easing engineered by the Federal Reserve System in the 60's, called Operation TWIST, which ended in a resounding failure and the panic abandon of the gold standard in 1971.

Operation TWIST: To Boldly Go Where We Have Gone Before: Repeating the Interest Rate Mistakes of the Past by Adam M. Zaretsky of the Federal Reserve Bank of St. Louis.
http://www.stlouisfed.org/publications/re/articles/?id=1911


Content:

every economist and financial market participants are now focussed on Quantitative Easing as the only Monetary Tools of the Federal Reserve System. I was fooled at first too. Then I found out that this fuss about the Fed buying less and less security at a time when the offer from the Treasury is thinning made me thing again and if the FEd just reversed course to make us believe it succeeded and change our expectation, what the average opinion expect the average opinion to be:

In one of the greatest investment markets in the world, namely, New York, the influence of speculation (in the above sense) is enormous. Even outside the field of finance, Americans are apt to be unduly interested in discovering what average opinion believes average opinion to be; and this national weakness finds its nemesis in the stock market.But the essential issue here is one of insurance, with a relatively modest premium, against a potentially catastrophic, very low probability event.

The full text of my series of articles about Operation TWIST Again can be found at:
http://www.suckerforum.info/forum/topic/the-yield-curve-t...

The full text of Operation TWIST Again: Quantitative Tightening can be found at
http://seekingalpha.com/instablog/429369-shalom-hamou/918...

http://www.youtube.com/watch?v=dNT-sc1ymEM



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After the Crash:

On Sept. 22nd at 12:00 PM EST, as we will have exhausted all our other options, I will, on "Market Crash: be Prepared" display a series of videos presenting my alternative to the Deep Depression:


An ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to -- to exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact. A flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak. That's precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

History teaches us that men and nations behave wisely
once they have exhausted all other alternatives