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Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

cnbc.com

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Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#181

Post by chasd00 »

zaroth wrote: post #173
gdubs wrote: post #13

As the joke goes, a trillion here a trillion there and pretty soon you're talking about some real money! But in seriousness, the next week is a critical time in the world. I remember sitting in an airport when news of Lehman Brothers collapse was flashing on the TV screens. I'm reminded of that time. We learned later about how Hank Paulson got down on one knee and begged Nancy Pelosi to go along with is plan to save…

I'm sorry, I simply don't understand the thought process here... Question 1) Is the spread inevitable, or can we achieve containment? Question 2) If it can't be contained, and worldwide spread is inevitable, approximately how many new cases per day do you want to see for the next 6 months? I would say the answer to #1 is that spread is absolutely inevitable. There are way too many vectors, and it is way too virulent.…

yeah at this point it seems reasonable to me that increasing ICU capacity is going to become top priority soon. We missed the boat on testing and containment. We should continue to educate and modify behavior to lesson rate of injection and also increase ICU capacity to handle the inevitable severe cases.

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#182

Post by rabuse »

oarabbus_ wrote: post #89
JustSomeNobody wrote: post #80

Wait for it. Next week stock buybacks will be all over the news. I bet AT&T will be leading the charge.

Next week the coronavirus cases and death tolls will be 2-3x what they are today. Little chance of a V-shaped recovery. We are a long way from the bottom.

Exactly. This is just the beginning, and our efforts are a lot more lax than these other countries combating this issue.

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#184

Post by cryptica »

ipnon wrote: post #162
kylebenzle wrote: post #139

Earlier quoted context omitted.

Why do people keep telling the lie that the FED "does not print money"? As you say, these "loans" are the FED printing $1.5t, no other way to look at it.

The key distinction is that the Fed is trading the new money for high-quality collateral. The original owners of the collateral will return the Fed's money within weeks of months in exchange for the return of the collateral.

No matter how you look at it, somebody who is not the Fed benefits from this. If market participants didn't think that they will benefit financially from this, they would not participate. This kind of "zero-sum temporary money" theory doesn't add up.

The situation is exactly as kylebenzle inferred; the Fed is injecting new fiat money into the economy and it's going straight into the pockets of rich financial institutions which add no value whatsoever to the economy or society.

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#185

Post by beefman »

intopieces wrote: post #144

I thought that the US never really unwound QE and the risk there was that when another financial crisis hit there wouldn't be any more tools in the kit to fix the economy. Is that where we are now?

They never unwound. The two main tools of monetary policy are the federal funds rate (FFR) and the assets side of the Fed's balance sheet.

The FFR started to rise in 2016 but never reached 'normal' levels before declining again in July of last year.[1][2]

The balance sheet started shrinking in 2018 but only managed to reach 2013 levels before expanding again in Q4 last year.[3]

All the while, the FOMC has been talking about "policy normalization", but they've punted on it again and again.[4][5]

It's not clear what kind of event we're seeing now or how much they'll be able to help. It's not even clear how much they helped last time. Counterfactuals are hard.

Edit: There's also the IORR rate, which Bernanke created in the last crisis.[6] As such, there's no historical 'normal' for it (other than zero, perhaps). I've never seen an economist even claim to understand what's going on with IORR -- and not claiming to understand something is a big deal for economists.

[1] https://fred.stlouisfed.org/graph/?g=qkTu

[2] https://fred.stlouisfed.org/series/FEDFUNDS

[3] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

[4] https://www.federalreserve.gov/monetarypolicy/policy-normali...

[5] https://www.federalreserve.gov/monetarypolicy/policy-normali...

[6] https://fred.stlouisfed.org/series/IORR

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#186

Post by thedance »

jacquesm wrote: post #105
mdszy wrote: post #83

Universal healthcare? Too expensive. $1.5T to bail out wall street? Sure!

I don't think you fully understand the subject. This money did not 'bail out wall street', it made sure the bottom did not drop out of the market which would affect pensions and savings plans of very large numbers of people. The thing to worry about is that it did not work .

The number of affected people is pretty large, but it's also worth remembering that about half of American households have no direct exposure to stock markets: no pension, no 401(k) plan, no direct holdings. If you're trying to prop up the stock market you're only directly benefitting, at most, half the people.

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#188

Post by 6gvONxR4sf7o »

ipnon wrote: post #59
asickness231 wrote: post #35

"inject 1.5t" by that do they mean a 1.5t panic bailout for wall street? how can we find 1.5t in the budget but no money for universal healthcare, student loan forgiveness, ubi etc. The markets wouldn't be so important if there were a safety net.

The Fed isn't printing 1.5 trillion greenbacks and handing out fat sacks on Wall St. They are providing short-term loans to increase the amount of money in circulation (liquidity). The intent is to increase the total amount of trading occurring so that the market can return to equilibrium sooner than later. The Fed wants to prevent firms from not making trades solely for lack of liquidity in the market. edit: "from m…

How short term are these loans?

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#189

Post by chrisco255 »

saati wrote: post #111
chrisco255 wrote: post #107

Earlier quoted context omitted.

This disease didn't exist 4 months ago and you're calling it a scandal that they can't process billions of tests in that short time frame? It's also not enough to be tested just once as there have been many false negatives. Scaling that up is an immense challenge. It was also exacerbated by the fact that China wouldn't allow our researchers into the country to study the disease. Meanwhile they've already reached stag…

The US doesn't have billions of people, just checking the ones coming from the countries where it's present would have been enough, other countries managed to do it.

They did that weeks ago. Where have you been? They shut down travel from China a month ago. Which countries managed to contain this thing, by the way? Because I see tens of thousands of cases in Europe and Asia and the Middle East, by the way.

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#190

Post by hogFeast »

I had a conversation with a "very serious" economist the other day about monetary policy was basically solved, and that the Great Moderation proved that we were totally in control...$1.5trn...govt debt monetized, every time we pull back the market collapses, and now we are on fire again...this is connected, if you give a heroin addict more heroin, their health will improve...keep doing it, and they will get sick.

The game is over. The market saw this, and kept falling. It is over...hopefully, things will improve from now and we stop pumping money into markets (and we realise that central bankers had no fucking idea what they were doing...they were just doing whatever was politically expedient, which is...hand out free money).

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