The Federal Reserve's "Operation Twist" represents a $400 billion assault on retirement investment portfolios, pension funds, corporate stock valuations and the financial viability of state and local governments. As explored herein, the full potential effects of Operation Twist and related Federal Reserve policies include: 1) Reducing the standard of living for tens of millions of current and future retirees; 2) Reducing long-term earnings growth rates for stocks, with a potentially major and long-term reduction in fundamental stock values; 3) Setting off feedback loops that will further reduce both retiree lifestyles and stock valuations; and 4) Increasing the chances of insolvency for state and local governments, as well as many major corporations. The Fed's announcement that they will be selling $400 billion of short-term treasuries in order to buy $400 billion in long-term treasuries is not the confusing or ineffective obscurity many observers mistakenly believe it to be, but rather it is a textbook example of the strategy of Financial Repression that the US government has chosen in an attempt to avoid either hyperinflation or default. Succinctly put, the key is to take the massive financial pain that would otherwise be forced on the federal government, and instead move the burden elsewhere. Because the government shortfalls are in the tens of trillions of dollars over the coming decades, only a huge target would be able to bear this burden, and such a target has indeed been found: retirement investors, pension beneficiaries and Social Security recipients. The damage from this deliberate targeting of retiree lifestyles and retirement investors will not be confined to older Americans, however, but in combination with related Federal Reserve actions, will ripple out through the entire US economy, the investment markets, and the world economy as well. The US government may or may not succeed in dodging default or an abrupt collapse in the value of the dollar. But a vigorous attempt is being made right now in real time, and "Operation Twist" is front and center. This attempt and related actions may very well dominate the retirement and long-term investment world for years or decades, albeit beneath the surface. In this article we will pull the mask back from what the government is doing, expose the multiple layers of danger for retirement investors, the directly related and potentially catastrophic risks for stock investors, and how this endangers both corporations and state and local governments. We will also discuss how investors can "Reverse The Twist" for their own protection. See the full article here: http://danielamerman.com/articles/2011/twistC.html
