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Federal Reserve slashes interest rates to zero

washingtonpost.com

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Re: Federal Reserve slashes interest rates to zero

#151

Post by miohtama »

jfoutz wrote: post #145
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.

I'm sort of surprised they didn't try to push the issue from the bottom. give every tax filer some amount of money say, $200. A bonus for each dependent, say, $100. pulled numbers absolutely out of thin air. I thought the issue was money sloshing around at the bottom, a couple hundred bucks can be a big deal when you're out of work. Ah well, I'm sure the experts have it well in hand.

It's called helicopter money. Australia and Hong Kong already announced going down this route.

https://en.m.wikipedia.org/wiki/Helicopter_money

It is very last measure as in that point you are basically admitting that capitalism has failed.

Re: Federal Reserve slashes interest rates to zero

#152

Post by toomuchtodo »

spsful wrote: post #149
toomuchtodo wrote: post #137

Earlier quoted context omitted.

If they didn't use them before, why would they use them now? Pushing the string. Can't fix fiscal policy issues with monetary policy. Helicopter money is all that's left, but that requires a functioning legislature, so we’ve already lost.

They didn't use them before because it would have been illegal. The Fed has mandated a 10% liquidity for all major banks. See: https://www.federalreserve.gov/monetarypolicy/reservereq.htm

Allowing banks to draw down their reserves in their entirety isn’t going to change their behavior is my point. You need something like the US Gov’s SBA loan program or similar, to lend directly to businesses that are in jeopardy of default or failure. This is beyond the risk profile of traditional retail bank lending (although you’re probably near junk bond or hedge fund territory; at this scale though, those venues are inadequate). The Fed is attempting to inject liquidity in the wrong spot of the economy.

If you’re shooting for something like “TARP for Main Street”, this is a suboptimal path based on the incentives and historical behaviors of these regulated entities. Get the money velocity back up to speed ASAP.

Edit: We could’ve had the infra in place to plug into banking, credit, and IRS data for companies, to enable rapid analysis, decisioning, and funding of operating accounts in times of crisis as part of the US Treasury Dept. Perhaps next time.

Re: Federal Reserve slashes interest rates to zero

#153

Post by [deleted] »

michaelyoshika wrote: post #106
yalogin wrote: post #92

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 on…

Earlier this weekend Trump said he could have fired Powell but choose not too. Imagine you were Powell, what would you do?

[deleted]

Re: Federal Reserve slashes interest rates to zero

#155

Post by bcrosby95 »

dcftoapv wrote: post #85
dnautics wrote: post #72

Earlier quoted context omitted.

Are you optimistic about the wealth transfer implications of their activity?

Look, I don't want to be alarmist, but the worst outcome here is not '08. It's the 1930s. This has caused material demand and supply side shocks that we haven't seen in my lifetime or my parents' lifetime. I'm likely on the younger side of the hacker news demographic and I still believe that this is the right action to take at this moment. We might be stuck paying it off for awhile, but I would rather deal with an in…

It's foolish because it's literally impossible to avoid a heavy recession or depression when people are told to stay inside and do nothing.

The odds of this action working out well now are slim to none. Then when it's actually needed they will have to do it again. You'll end up with the same non recovery recovery where people are barely getting by but certain asset classes are inflated to the moon.

Re: Federal Reserve slashes interest rates to zero

#156

Post by coretx »

sarah180 wrote: post #112
coretx wrote: post #69

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

This is effectively how you print money in a modern economy. They're giving banks access to a lot more cash and have reduced reserve requirements to 0%, meaning that banks can loan new money without limitation and without fear that they'll be able to borrow to cover those loans. Most money is not actually on paper, so the amount you print is not the point.

You can only benefit / capitalize on the decreased interest if you are in possession of capital already.

Re: Federal Reserve slashes interest rates to zero

#157

Post by cmurf »

kmonsen wrote: post #108
ajross wrote: post #52

Earlier quoted context omitted.

> whatever it takes to avoid a depression Does the Federal Reserve Bank do vaccines, now? This isn't a financial crisis. Money won't fix it. People aren't transacting in big chunks of the economy because they're immobilized by a plague. Now... certainly once the virus is under control, economic recovery is going to depend on finance and liquidity, so it's not like the Fed has no role to play. But... it's not the Fed'…

The thing is, it will be a financial crisis at some point once people start loosing their jobs and can't afford to pay bills in addition to a medical disaster no-one can pay for.

Combination government and market failure, where the market dispassionately says "you should all just lose your jobs, no demand for now", and the government doesn't intervene?

Most ski resorts in North America are shut down for at least a week, but Jackson Hole closed for the season and others are expected to follow. Hospitality and service industry workers who have seasonal jobs, are making a large chunk of their annual earnings during spring break, which is now. Already people are asking about rent reductions. How does that work? Landlord takes a haircut? Will the bank take a mortgage haircut? Who even owns the actual loan, do they take a hair cut? And if no one does, then that means the renter is effectively taking the full hit.

Maybe some of them will qualify for unemployment insurance, but I have no idea how long that lasts or what percent on the dollar it pays.

Re: Federal Reserve slashes interest rates to zero

#158

Post by cinquemb »

fourstar wrote: post #143
kmonsen wrote: post #111

Earlier quoted context omitted.

We really need band-aids now, like in 2008. The problem is not the band-aid now, the problem is that we did not rip it off in the good times but instead spent all the money in irresponsible tax cuts for people that didn't need them.

No. We don't. We need more emphasis on value vs. growth. In what world is WeWork's valuation sustainable. Also who the hell is downvoting me? LOL. If you downvote, please comment here so we can debate. I'm dying to see you defend the bull market case (even sideways to slightly up which would be best case scenario).

Alot of people think that CB's should always be on call to cover their bad bets… like a gunman threatening taking a hostage if they dont get the cash grab they expect…

To bad for them, there's collateral damage sometimes… only the strong will survive.

Re: Federal Reserve slashes interest rates to zero

#159

Post by peteradio »

michaelyoshika wrote: post #106
yalogin wrote: post #92

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 on…

Earlier this weekend Trump said he could have fired Powell but choose not too. Imagine you were Powell, what would you do?

Somehow I doubt Powell is living paycheck to paycheck. Professionals shouldn't cave under pressure that's why they make the big bucks. This is only a rebuttal to the "what would you do?" I have no idea whether or not he was pressured or if this is a good or bad move.

Re: Federal Reserve slashes interest rates to zero

#160

Post by deelowe »

Goladus wrote: post #140
deelowe wrote: post #104

Earlier quoted context omitted.

Does that stuff help? Did Italy do that? Im seeing tons of people on IG using this time as a means to take vacations.

Does that stuff help? Yes, if practiced as intended, which there is no guarantee. Did Italy do that? Perhaps not as quickly as they should have. The rest of the world is learning from Italy's experience (they should have been paying closer attention to China, but that's another story) Another thing to realize is that these numbers you are seeing are WITH CONTROLS. Sure, "only" 3,000 Chinese have died. Maybe it's more…

Didn't one model show over 100M?
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