Out of the chorus that drones on about how destructive QE might be to markets like a broken record comes this little gem of a new tool to improve influence over interest rates as documented in an article posted on Bloomberg.com.

The basics are that the Fed would exchange cash at a fixed rate for its treasury holdings overnight to banks, money market funds, broker-dealers and GSE’s. It’s just so simple to keep track of, why didn’t we think of it sooner? Really, I have no idea what they plan to accomplish.

It’s just another twist on Operation Twist and will help about as much.

It is well past time to throw the ‘interest rates as a tool’ tradition out with the bathwater and stop haggling over pennies while there’s a multi-trillion dollar gap in NGDP to trend. Even if the interest rate approach worked to any degree, it would not be fast enough to get any kind of robust recovery. A basis point or two just really does not make that much difference. Or maybe they really do want to take a few decades to get there.

This is really very frustrating to watch…

It gets worse.

The facility is the latest innovation from a central bank that has participated on an unprecedented scale in U.S. debt markets since the credit crisis began in 2007. It’s designed to help policy makers — buying $85 billion of bonds a month — siphon off excess cash in the banking system when they begin to tighten policy. Three rounds of so-called quantitative easing have enlarged the Fed’s balance sheet to almost $3.8 trillion.

The new tool — called the fixed-rate, full-allotment overnight reverse repo facility — also is aimed at helping Fed officials address distortions in the market caused by their securities purchases.

“It will serve to put whatever floor they want under rates,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. “You’re providing pretty broad-based access to Fed balances as an investment option.”