Operation twist

So you’re hearing all this talk about OpTwist and you have no idea what the hell is going on with this economy.  Let me explain.

Operation Twist is named after the popular dance craze when all the FED governors were young, it’s not quantitative easing, its “operation twist” .  It originally happened back in the 60s but it was ineffective because it wasn’t done for a long enough period of time.  So Operation Twist is:  interest rates on short- term Treasuries are lower than on long term.  For example, if you financed a house with a 10 yr loan the interest rate would be cheaper than a 30 yr loan right?  So OpTwist involves selling short term treasuries and buying long term ones.

So what the hell does this mean for you and your wallet?

Nothing really.  If you’re in the market, it can lower long term interest rates enough that people decide to sell their bonds and buy stocks.  You won’t see any drastic changes in the interest rate on your loan or CDs, no jobs, no housing improvement, just a dance.