Federal Reserve slashes interest rates to zero • Hacker News Board

Re: Federal Reserve slashes interest rates to zero

#61

Post by internet_user » Sun, Mar 15, 2020, 10:29 PM UTC

aazaa wrote: post #15

The Fed can, and will do much, much more. The signal here should be read as "whatever it takes to avoid a depression." Among other steps, this is likely to mean: - Negative-yielding long-term treasuries - Direct purchase of stocks or ETFs, which would require congressional approval. Expect the discussions to start soon. The steps already taken and the ones to be taken will create financial manipulation on a scale nev…

Why can't they just spin up an LLC that would buy stocks/ETFs and just write loans to it?

Why would that need congressional approval? Seems like exactly what they've done with Maiden Lane LLC

Re: Federal Reserve slashes interest rates to zero

#62

Post by [deleted] » Sun, Mar 15, 2020, 10:29 PM UTC

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Re: Federal Reserve slashes interest rates to zero

#63

Post by [deleted] » Sun, Mar 15, 2020, 10:33 PM UTC

dcftoapv wrote: post #57

onlyrealcuzzo wrote: post #51

Earlier quoted context omitted.

A lot of people seem to think the Fed's job evolved to include preventing recessions. I guess the Fed isn't accountable to the US public, so their job can be whatever they want it to be?

The feds mandate is to maximize employment, stabilize prices, and moderate long-term interest rates. A big part of that is trying to avoid the 'bust' part of a boom-bust cycle. As evidenced by your post, the fed should not be accountable to the public because the public cannot be expected to spend anytime trying to understand what they do and their methods of action.

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Re: Federal Reserve slashes interest rates to zero

#64

Post by JoshuaDavid » Sun, Mar 15, 2020, 10:33 PM UTC

SomewhatLikely wrote: post #37

adeelk93 wrote: post #23

Earlier quoted context omitted.

It will, but not just yet. There’s too many people trying to refi right now and supply can’t keep up with demand, so rates are higher than they should be. Give it another 3-6 months and I wouldn’t be surprised if mortgage rates fell by another 1%.

There must be some floor based on default rates right? If 2% of people default you can't go below 2%. And of course default rates go up in recessions.

If 2% of people default per year you can't go below 2%.

Re: Federal Reserve slashes interest rates to zero

#65

Post by [deleted] » Sun, Mar 15, 2020, 10:36 PM UTC

onlyrealcuzzo wrote: post #51

inferiorhuman wrote: post #43

Earlier quoted context omitted.

If the Fed loses this fight, game over. This isn't the Fed's fight. Monetary policy won't fix this.

A lot of people seem to think the Fed's job evolved to include preventing recessions. I guess the Fed isn't accountable to the US public, so their job can be whatever they want it to be?

[deleted]

Re: Federal Reserve slashes interest rates to zero

#66

Post by fourstar » Sun, Mar 15, 2020, 10:36 PM UTC

postingawayonhn wrote: post #56

adventured wrote: post #45

Earlier quoted context omitted.

> You can't print your way out of this is the lesson we KNEW from '08. Printing our way out of 2008-2010 is exactly what we did that worked, and it's what Europe mostly didn't do and their results were terrible by comparison (leading to another bad recession a few years later, after which the ECB finally learned a lesson; and finally after that, Europe began to properly recover, including countries hardest hit like S…

> Printing our way out of 2008-2010 is exactly what we did that worked It was always just a band-aid. The reason the Fed has had to take interest rates so low now is that they were unable to raise them during the lastest 'boom'.

Came here to reply with the same thing. Not sure who is downvoting me but my guess is people who weren't around back in '08 or are significantly out of touch with US economic policy (or general econ policy, that is).

If you've downvoted me then you probably need to watch this: https://www.youtube.com/watch?v=PHe0bXAIuk0.

This is a wet band-aid.

Re: Federal Reserve slashes interest rates to zero

#67

Post by Anon84 » Sun, Mar 15, 2020, 10:38 PM UTC

aazaa wrote: post #15

The Fed can, and will do much, much more. The signal here should be read as "whatever it takes to avoid a depression." Among other steps, this is likely to mean: - Negative-yielding long-term treasuries - Direct purchase of stocks or ETFs, which would require congressional approval. Expect the discussions to start soon. The steps already taken and the ones to be taken will create financial manipulation on a scale nev…

What does game over mean in this context?

Re: Federal Reserve slashes interest rates to zero

#68

Post by csense » Sun, Mar 15, 2020, 10:39 PM UTC

aazaa wrote: post #15

The Fed can, and will do much, much more. The signal here should be read as "whatever it takes to avoid a depression." Among other steps, this is likely to mean: - Negative-yielding long-term treasuries - Direct purchase of stocks or ETFs, which would require congressional approval. Expect the discussions to start soon. The steps already taken and the ones to be taken will create financial manipulation on a scale nev…

Does anyone here understand how negative interest rates would work?

Why would anyone buy a negative-rate treasury bond instead of just hanging on to their cash?

Re: Federal Reserve slashes interest rates to zero

#69

Post by coretx » Sun, Mar 15, 2020, 10:43 PM UTC

The EU is printing more EUR, helping everyone. The USA is lowering the interest, helping the ultra rich.

Re: Federal Reserve slashes interest rates to zero

#70

Post by [deleted] » Sun, Mar 15, 2020, 10:43 PM UTC

superkuh wrote: post #16

Not only that but they've removed the reserve requirements entirely for "thousands" of banks. There are only ~4500 commercial banks in the USA total. So that's at least a good fraction of them. These banks can now create money out of nothing as much as they want.

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