Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Federal Reserve slashes interest rates to zero

washingtonpost.com

Post reply on HN
Print view View original

91–100 of 319 posts

Re: Federal Reserve slashes interest rates to zero

#91

Post by deelowe »

taiwanboy wrote: post #79
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.

Game over is an exaggeration. There’s 3.4 trillion sideline cash. China’s economy collapsed 80-90% in the last month and will take months to recover, on top of exploding debts. Japan and Germany was in recession before coronavirus hit. On the other hand, US was growing a steady 2% and had record low unemployment before this. If US can flatten the curve, with only ~3000 cases thus far, US will recover quickly and come…

What are we doing to flatten the curve? I keep seeing the us getting compared to Italy.

Re: Federal Reserve slashes interest rates to zero

#92

Post by yalogin »

Why is this warranted yet? This is a terrible that will only signal that the fed is panicking and nothing else. There are no indications that the supply chain is disrupted or that the economy is sputtering. It will happen at some point in the next few weeks with or without the infusion and rate cuts now. These things are much better done when warranted rather than now. As of now it’s only a humanitarian crisis and only thing that will help is effective communication to contain the pandemic. These infusions now will soon be forgotten by the next bad news and the effect will not persist.

Re: Federal Reserve slashes interest rates to zero

#93

Post by toomuchtodo »

mindcrash wrote: post #82
simonh wrote: post #58

Earlier quoted context omitted.

This is correct, the financial system is actually fine. Banks are well capitalised and stable. The problems are cash flow for businesses, incomes for low income and hourly wage earners, and health care for huge swathes of Americans. The fed has an important role to play of course, but they’re really a sideshow this time around.

>the financial system is actually fine. Banks are well capitalised and stable. No they are not. Most big European banks are technically bankrupt. Most big American banks are technically bankrupt too. The only reason people in general do not know about this is because they used a lot of financial tricks to make it look like they are healthy. In fact, Deutsche Bank very likely had to announce that they are bankrupt thi…

https://www.federalreserve.gov/newsevents/pressreleases/mone...

> In light of the shift to an ample reserves regime, the Board has reduced reserve requirement ratios to zero percent effective on March 26, the beginning of the next reserve maintenance period. This action eliminates reserve requirements for thousands of depository institutions and will help to support lending to households and businesses.

Interesting time to be waiving reserve requirements of banks.

Re: Federal Reserve slashes interest rates to zero

#94

Post by taiwanboy »

AznHisoka wrote: post #89
taiwanboy wrote: post #59

Earlier quoted context omitted.

The government can simply ban shorts, much like 2008, and what other European stock markets have done already. That would kill the shorts dead in its tracks. Then the stock market would stabilize, in time for businesses to stabilize and hopefully by summer everything will be recovery focused.

What if stocks dropping was mostly due to people selling their holdings?

With interest rate at near 0 percent and inflation at 2.3%, people will come back to stocks sooner rather than later

Re: Federal Reserve slashes interest rates to zero

#95

Post by ryl00 »

dcftoapv wrote: post #75
imglorp wrote: post #54

Earlier quoted context omitted.

Most republican administrations have displayed that "get mine and get out" behavior--causing recessions--since Teddy Roosevelt.

Obama's admin let one of the world's foremost financial institutions fail and caused a mass market panic / giant economic setback. Their reasoning was entirely political and caused millions of people to lose their jobs. I'm independent, but claiming that Republicans cause recessions is pretty ironic considering the economic damage the last Democratic admin did.

If you're talking about Lehman Brothers, Wikipedia notes that the bankruptcy occurred on September 15, 2008, two months before Obama was elected.

Re: Federal Reserve slashes interest rates to zero

#96

Post by sg47 »

dcftoapv wrote: post #75
imglorp wrote: post #54

Earlier quoted context omitted.

Most republican administrations have displayed that "get mine and get out" behavior--causing recessions--since Teddy Roosevelt.

Obama's admin let one of the world's foremost financial institutions fail and caused a mass market panic / giant economic setback. Their reasoning was entirely political and caused millions of people to lose their jobs. I'm independent, but claiming that Republicans cause recessions is pretty ironic considering the economic damage the last Democratic admin did.

Yes, Obama was President from 2000 to 2008 when the Fed let the subprime lending happen with stupid monetary policies. The crash happened in 2008 when Bush was still President.

A few days later, Lehman Brothers began to falter. Treasury Secretary Hank Paulson, who in July had publicly expressed concern that continuous bailouts would lead to moral hazard, decided to let Lehman fail. The fallout from Lehman's failure snowballed into market-wide panic. AIG, an insurance company, had sold credit default swaps insuring against Lehman's failure under the assumption that such a failure was extremely unlikely.

https://en.wikipedia.org/wiki/Economic_policy_of_the_George_...

Re: Federal Reserve slashes interest rates to zero

#97

Post by karatestomp »

dcftoapv wrote: post #75
imglorp wrote: post #54

Earlier quoted context omitted.

Most republican administrations have displayed that "get mine and get out" behavior--causing recessions--since Teddy Roosevelt.

Obama's admin let one of the world's foremost financial institutions fail and caused a mass market panic / giant economic setback. Their reasoning was entirely political and caused millions of people to lose their jobs. I'm independent, but claiming that Republicans cause recessions is pretty ironic considering the economic damage the last Democratic admin did.

Which one? The only big one I can think of that wasn’t bailed out was Lehman and that was under W, not Obama.

Re: Federal Reserve slashes interest rates to zero

#98

Post by cryptica »

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…

The more new fiat money is injected into the economy, the more valuable cryptocurrencies become.

It doesn't really matter where that fiat money enters the market. So long as there are millionaires and billionaires at the top of the food chain who keep amassing big money without having to lift a finger, cryptocurrencies will have increasing value.

The Fed's policies have created a large and growing class of people who simply don't know what to do with their money - And these people just keep dumping their money straight into cryptocurrencies and corporate stocks.

It doesn't matter where they dump their money in fact. So long as what they're buying is more scarce than their fiat money, it will go up in price - And to many rich people today, pretty much everything which exists is more scarce than fiat money so the bar for what makes a good investment is very low.

Re: Federal Reserve slashes interest rates to zero

#99

Post by taiwanboy »

deelowe wrote: post #91
taiwanboy wrote: post #79

Earlier quoted context omitted.

Game over is an exaggeration. There’s 3.4 trillion sideline cash. China’s economy collapsed 80-90% in the last month and will take months to recover, on top of exploding debts. Japan and Germany was in recession before coronavirus hit. On the other hand, US was growing a steady 2% and had record low unemployment before this. If US can flatten the curve, with only ~3000 cases thus far, US will recover quickly and come…

What are we doing to flatten the curve? I keep seeing the us getting compared to Italy.

Closing down schools, banning large gatherings, setting up drive thru testing, ramping up test kits next week, letting employees to work from home, closing borders to China and Europe (25k cases), etc

Re: Federal Reserve slashes interest rates to zero

#100

Post by sarah180 »

csense wrote: post #68
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?

If you're a giant financial institution, would you want to count, hold, warehouse, secure and move around $100 million in $100 bills? It weighs roughly the same amount as a car.

It's the same reason I keep my money in a bank with no interest even though I sometimes have to pay ATM fees when I need it: the convenience and security offset the costs.

Post reply on HN