Twist Paves the Way for QE IIIIn any event, the markets did not want the Twist program, they wanted additional liquidity injections in the form of QE III. In this respect, the market is like a heroin junkie. It needs ever-greater doses of money to continue moving higher. When it gets its fix, it will rally.
But a growing popular mistrust of stimulus is currently pressuring the Fed to forestall the launch of QE III. But a few more whiffs of financial turbulence could cause the Fed to fold. When the market rally ensues the Fed will claim victory. But the celebration will be hollow. The nominal gain in stock prices will likely be eclipsed by dollar declines and a more rapid gain in gold, oil, or other commodity prices. The result for investors will be higher nominal portfolio values but lower real purchasing power and a reduced standard of living.
But many of those who oppose QE3 do so because they believe the economy doesn't need more stimulus not because the stimulus itself is causing the economic weakness. As a result when the economy deteriorates, support for QE III could grow. In the end QE3 will likely be far more popular than another bank bailout (possibly to be called TARP II), which may be on the table if the Fed fails to rescue the banks it may be pushing over the edge with the Twist.
https://www.financialsense.com/contributors/peter-schiff/2011/09/23/twist-paves-the-way-for-qe-3