Gyroscopic Investing

QE = Fed buys short term gov bonds to keep short term interest rates low, to encourage short term lending.

Operation Twist = Fed sells these short term bonds and buys longer term bonds...possibly to help with mortgage refinancing (because of the lower 30 year rate).

The theoretical result is that short term interest rates go up, making shorter term loans less accessible, which could in turn cause another liquidity crisis. 

The paradox seems to be that in such a crisis, people run to short term Treasuries, which could again lower short term rates.

It almost seems as if it should work...what am I missing?

I think the Fed figures there is plenty of demand for treasuries on the short end of the yield curve to keep short term rates down, which allows them to go farther out on the curve without it having any effect other than to flatten the entire yield curve.

What is this supposed to accomplish for the average consumer?  I have no idea.  Mortgage rates are mostly tied to the 10 year bond rate, and mortgage rates haven't gone down nearly as much as the 10 year rate has in recent weeks.  Even if mortgage rates did go down a little more, I don't know that it would have a dramatic impact across the entire economy.