'Twisted Sister' is Really QE 3 & QE 4

The following article is the type of article that does contain many hints of what’s afoot and why.  We have numbered the hints numerically.  If you want to know what they portend, ask us at polestarcomm@verizon.net. 

Namely, the FED is very obviously and very desperately committed to continue the financial rehabilitation of their Member Bank’s Balance Sheets and providing limitless ‘life support’ for the Real Estate sector by a strict ZIRP straight across the ‘Yield Curve,’ which action is simply unheard of since the necessities and constraints imposed on the markets during the WW II era.

As we covered in our last Quarterly Update, ‘Operation Twisted Sister’ is  a De facto QE 3 and QE 4 and QE 5 and etc., etc.   And, insane twisting of the 'Yield Curve' will only continue the extreme financial abuses and economic dislocations and missallocated capital of this now extremely fragile economy, and there is now only one possible long-term outcome of this insanity, i.e. massive inflation.

Are you and your company prepared for the inevitable shocks of truly rampant and run-away inflation?

If you have not considered these things, maybe you should, and a good place to assess the future dangers is at www.polestarcomm.com.

Fed May Prefer Another Twist to Adding Assets

Bloomberg; By Joshua Zumbrun - May 18, 2012 10:05 AM ET

“Federal Reserve policy makers may find another round of Operation Twist is preferable to an outright asset-purchase program if the economy shows further signs of weakness or risks increase.

Chairman Ben S. Bernanke on April 25 said he was prepared to take further action to aid the economy if necessary, even as he signaled that he didn’t see an immediate need to add stimulus with inflation near the Fed’s goal and unemployment falling. …The following

“If there were scope to do another twist of some type it would be prudent to consider it, especially in the scenario where things are worse (1) and the Fed feels like it needs to move,” said Nathan Sheets, Global Head of International Economics at Citigroup Inc. in New York. Until August, Sheets was the Fed’s top international economist.

Economists such as Sheets and Credit Suisse Securities’ Dana Saporta say the Fed’s $400 billion program to extend the maturity of bonds has been just as effective as earlier programs to expand its balance sheet, known as quantitative easing. That may make another version of the maturity extension, which is dubbed Operation Twist and is set to expire in June, preferable because it doesn’t risk the same political backlash.(2)

“From a purely economic standpoint it doesn’t matter that much” which option the Fed chooses, Sheets said. “From a public-relations standpoint it might have consequences.”

Government Debt

With Operation Twist, the Fed has sought to lower borrowing costs through purchases of longer-term government debt. Those purchases were offset by sales of shorter-term debt(3), keeping the total size of the Fed’s balance sheet unchanged. The sales didn’t raise short-term yields because the Fed has pledged to keep interest rates near zero at least through late 2014 (4).

… Republicans, including House Speaker John Boehner of Ohio, sent Bernanke a letter saying it risked accelerating inflation, weakening the dollar and fueling asset bubbles.

Consumer Prices

Consumer prices as measured by the personal consumption expenditures index, the gauge preferred by the Fed, rose 2.1 percent in March (5) from a year earlier, close to the central bank’s 2 percent inflation goal.

…American employers added 115,000 jobs in April (6), the fewest in six months, according to a Labor Department report released the week after the Fed meeting. …”