Can the Federal Reserve save the economy — and the stock market — by “doing the twist”? Monday’s early rally for the Dow showed hope still is bubbling among some investors, even if it might not quite spring eternal. (The bounce largely faded by the close.)
Today, though, the nation’s central bank will announce the results of its two-day policy meeting in Washington — and the “hopers” are looking for Chairman Ben Bernanke to spin a dusty vinyl platter from the Federal Reserve’s oldies collection.
Back in the early 1960s, in an effort to stimulate a sluggish economy, the Fed — working hand-in-glove with the Kennedy administration’s Treasury Department — instituted Operation Twist. This maneuver called for the central bank to buy long-term Treasury bonds and simultaneously sell government paper with shorter maturities. Read