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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

#231

Post by ummonk »

dmix wrote: post #221
ummonk wrote: post #209

Earlier quoted context omitted.

> At this point everybody seems to admit it's beyond containment and the only thing we are trying to do is flatten the curve and prevent the deaths. No. Only the UK is operating on that fatalist assumption. South Korea, China, Taiwan, and Singapore have all successfully contained it, and Italy is starting to do so as well.

I keep hearing this is the UK policy on HN but it’s been repeatedly denied by the authorities? The UK’s reactive containment policy is also what almost every country is doing as well, even in Europe, besides a few exceptions like Italy and Spain who have way higher rates. For one thing the UK has already announced harsher law enforcement policies than what we have here in Canada. > Matt Hancock insists 'herd immunity…

The UK government has been explicit that they don't expect to new able to contain the virus in the long term, and are merely trying flatten the curve. They might not be trying to build herd immunity intentionally, but they certainly have given up on being able to contain the virus isn the long run, according to their own statements.

Re: Federal Reserve slashes interest rates to zero

#232

Post by dcftoapv »

dcftoapv wrote: post #90
csense wrote: post #78

Earlier quoted context omitted.

So people are willing to accept small negative rates if it would be less than the operational costs of shipping enormous truckloads of bills around, storing them, securing them, and insuring them against theft / fire? Is that's what's going on here?

That's kind of the thought, yes. Negative rates should not be sustainable for any significant period of time and most interest rate models are built on that assumption.

Sorry, I want to clarify quickly that appleiigs is right that it isn't cost of insuring cash so much as depository risk. When I say cash, I mean currency as opposed to debt/equity, not physical bills.

Re: Federal Reserve slashes interest rates to zero

#233

Post by sdkaufman »

sershe wrote: post #181

At this point, I'm actually starting to wonder. If we literally do nothing about the virus, or do the bare minimum, the worst case scenario based on the numbers I hear is 7.7b * 0.6 (total infections) * 0.02-0.03 (presumed mortality rate after the healthcare system collapses MINUS the rate if it doesn't), ~115m people are going to die worldwide. This appears to me to be the absolute worst case scenario given current…

First of all, let's be clear that flattening the curve WILL save lives, even if the same number of people ultimately get exposed to the virus. Not only will we avoid overrunning hospitals, we also buy ourselves valuable time to ramp up production on equipment like ventilators, necessary medicine and protective gear, find better treatments and cures, and perhaps develop a vaccine.

So, is saving lives worth the economic impact? I think the answer is very simple.

Would you rather lose your job or your parents?

Re: Federal Reserve slashes interest rates to zero

#234

Post by tcbawo »

MuffinFlavored wrote: post #214
sershe wrote: post #181

At this point, I'm actually starting to wonder. If we literally do nothing about the virus, or do the bare minimum, the worst case scenario based on the numbers I hear is 7.7b * 0.6 (total infections) * 0.02-0.03 (presumed mortality rate after the healthcare system collapses MINUS the rate if it doesn't), ~115m people are going to die worldwide. This appears to me to be the absolute worst case scenario given current…

The US will go under extreme lockdown at 100k cases. No way we will see 327m * 0.6 cases.

The US may have already passed 100k cases. Is anyone performing randomized tests and publishing the results? That should give us a real sense for how far it's spread. The trouble is that the growth rate is so great, it's a moving target.

Re: Federal Reserve slashes interest rates to zero

#235

Post by triangleman »

vkou wrote: post #133
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…

> If the Fed loses this fight, game over. The fed is pushing on a rope. Any upcoming depression will be driven by collapse in demand, not supply. Slashing interest rates won't do anything to prop spending when consumers are sitting at home, not working, and not buying anything. All this is, is an attempt to boost asset prices, to bailout investors.

The "pushing on a rope" analogy is usually used to describe how monetary policy stimulates demand but not supply. I do agree with you about asset prices.

Re: Federal Reserve slashes interest rates to zero

#236

Post by triangleman »

bluedevil2k wrote: post #4
majos wrote: post #2

Dumb question: does this mean normal citizens can take out loans at near-0% interest, or something close to that? I know credit card interest rates are typically tied to “the fed rate” but a but higher?

The Fed rate is the interest rates that the Fed pays banks for their deposits in the Fed. By lowering it, they’re incentivizing the banks to loan the money and provide liquidity into the market. Since banks need to make a profit on everything, they’ll loan the money out at a higher rate for things like mortgage, car loans, and credit cards. Depending on the credit worthiness and the collateral, the rates will differ…

The federal funds rate is the rate banks pay when they borrow from the Fed.

Re: Federal Reserve slashes interest rates to zero

#237

Post by HenryKissinger »

allovernow wrote: post #141

Bank runs are coming. We are witnessing financial collapse and possibly the early failure of the American empire. Futures trading was halted today. Market will tank tomorrow. That's after a $1.5T stimulus. This is it.

This comment won't age well.

No bank run is coming, and we are not witnessing financial collapse, nor the failure of the American empire.

Re: Federal Reserve slashes interest rates to zero

#238

Post by kmonsen »

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).

I kind of agree with what you said, but not at this time. We need focus on value, but after the corona situation has passed. Right now we need to focus on not letting the whole system collapse.

We don't need to merge two different ways for the financial system to collapse.

Re: Federal Reserve slashes interest rates to zero

#239

Post by js2 »

sershe wrote: post #181

At this point, I'm actually starting to wonder. If we literally do nothing about the virus, or do the bare minimum, the worst case scenario based on the numbers I hear is 7.7b * 0.6 (total infections) * 0.02-0.03 (presumed mortality rate after the healthcare system collapses MINUS the rate if it doesn't), ~115m people are going to die worldwide. This appears to me to be the absolute worst case scenario given current…

I'll burn karma for this: Shit hacker news says.

Re: Federal Reserve slashes interest rates to zero

#240

Post by js2 »

SARS-CoV-2 doesn't care about monetary policy. Why not give money directly to the people who need it? They'll spend the money right away.

I'm willing to sacrifice my 401(k) and retire on just SS if need be if my government is willing to help everyone worse off than me.

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