Market expectations of a new monetary easing in the US are increasing with each passing day. The latest macroeconomic figures are worse than mediocre, and Bernanke's decision to convert the Fed board meeting initially set for September 21 into a two-day affair, September 21-22, has only heightened these expectations.
But despite the conventional wisdom, such action has already taken place in Europe and may indeed accelerate, as I will try to demonstrate later in today's report.
Operation Twist of 1961
First, it is important to review what was in fact Operation Twist, because many who use the expression today do not really understand the major differences between the situation today and that of 1961.
Operation Twist was launched by John F. Kennedy in early February 1961, less than two weeks after he was sworn in as America's 44th president. Initiated in conjunction with the Federal Reserve, the operation consisted of
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