Tags: fed | Operation | Twist | Jobs

Liberal Lawmaker: 'Operation Twist' Won't Create Jobs

Thursday, 22 Sep 2011 08:01 AM

Even liberals say the Federal Reserve's newest economic stimulus measure — dubbed "Operation Twist" — won't create jobs.

Under Operation Twist, the Federal Reserve will sell short-term securities and stock up on longer-term debt in its Treasury portfolio in a $400 billion reshuffling of its bond portfolio.

Buying longer-term Treasury notes and bonds will send prices on those instruments rising and long-term interest rates falling, which should keep interest rates on debts like home loans low and encourage lending.

Increased incentive to borrow aims to spur the economy and help fuel jobs creation, which is one of the Federal Reserve's mandate besides keeping inflation rates in check.

Many Republicans say Operation Twist, the latest in a series of Federal Reserve moves to prop up the economy, isn't needed and come with unwelcome side effects, such as skewing prices stability and markets.

Now, some liberals feel likewise or at least question its effectiveness.

"Today’s action by the Federal Reserve is not bold and will not create the millions of jobs that America needs," says Senator Bernard Sanders, an independent from Vermont, the New York Times reports.

Others say it won't work in that interest rates have already been at record lows since 2008, and people still are hesitant to take out loans anyway.

"This is not a situation where people are saying, 'Gee, I really want to buy that house but interest rates are too high'," says Frank Sorrentino, CEO of North Jersey Community Bank, CNNMoney reports.

"Rates are already at historic lows and over the last six to nine months, we have not seen loan demand go up."

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Even liberals say the Federal Reserve's newest economic stimulus measure dubbed Operation Twist won't create jobs. Under Operation Twist, the Federal Reserve will sell short-term securities and stock up on longer-term debt in its Treasury portfolio in a $400 billion...
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2011-01-22
Thursday, 22 Sep 2011 08:01 AM
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