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Vedun* · 10-04-2011, 11:53 PM

http://www.merkfunds.com/merk-perspe...011-10-04.html ...
Axel Merk, Portfolio Manager, Merk Funds
October 4, 2011
Is Operation Twist a failure? The stock market plunged in disappointment when it was announced. Keynesians are tearing their hair out in frustration, as it appears the Fed failed to ramp up the printing press. Free marketers are disgusted by the blatant manipulation of the yield curve. A number of Federal Reserve (Fed) President Bernanke’s colleagues dissented and/or are voicing public opposition. However, as the dust settles, it appears there is a method to the twist: Bernanke may have a plan…

To understand where we may be heading, let’s look at where we have come from. Below is a graphical depiction of the Federal Reserve’s holdings of Treasury securities on its balance sheet; the different colors represent the evolving composition of the maturity of assets held by the Fed:
White Papers
Merk White Papers provide in-depth information into currency as an asset class.
Portfolio Benefits of The Currency Asset Class
The Currency Asset Class: A New Era of Investment Opportunity
The Archive:
Merk White Papers

One does not need to be an economist to see that the Fed has already been “twisting” its holdings of Treasury securities. It used to be that over 50% of Treasuries held by the Fed had a maturity of less than a year. That portion has already shrunk dramatically. Operation Twist is going to focus on the purple shading, replacing many of these securities with longer-dated ones. Differently said, Operation Twist really is nothing new, but an extension and expansion of policies in place since 2008.

10-04-2011, 11:53 PM	#1
Vedun* Join Date Oct 2005 Posts 461 Senior Member	Operation Twist a Primer for QE3? http://www.merkfunds.com/merk-perspe...011-10-04.html ... Axel Merk, Portfolio Manager, Merk Funds October 4, 2011 Is Operation Twist a failure? The stock market plunged in disappointment when it was announced. Keynesians are tearing their hair out in frustration, as it appears the Fed failed to ramp up the printing press. Free marketers are disgusted by the blatant manipulation of the yield curve. A number of Federal Reserve (Fed) President Bernanke’s colleagues dissented and/or are voicing public opposition. However, as the dust settles, it appears there is a method to the twist: Bernanke may have a plan… To understand where we may be heading, let’s look at where we have come from. Below is a graphical depiction of the Federal Reserve’s holdings of Treasury securities on its balance sheet; the different colors represent the evolving composition of the maturity of assets held by the Fed: White Papers Merk White Papers provide in-depth information into currency as an asset class. Portfolio Benefits of The Currency Asset Class The Currency Asset Class: A New Era of Investment Opportunity The Archive: Merk White Papers One does not need to be an economist to see that the Fed has already been “twisting” its holdings of Treasury securities. It used to be that over 50% of Treasuries held by the Fed had a maturity of less than a year. That portion has already shrunk dramatically. Operation Twist is going to focus on the purple shading, replacing many of these securities with longer-dated ones. Differently said, Operation Twist really is nothing new, but an extension and expansion of policies in place since 2008.
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