Federal Reserve slashes interest rates to zero • Hacker News Board

Re: Federal Reserve slashes interest rates to zero

#261

Post by sershe » Mon, Mar 16, 2020, 4:27 AM UTC

hn_throwaway_99 wrote: post #207

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…

There is no option B like you seem to be implying. I guarantee if we did absolutely nothing, and the hospitals predictably became overwhelmed and people were dying without any access to care, and you'd also start to see significantly more cases of younger people dying, there would be mass panic and self quarantine in any case.

It's true that I didn't take that into account, I suppose. However, I'm not sure what the scope of the panic is going to be... self-imposed quarantine, again, will be selective location-wise, risk-wise, and overall won't prevent the economy from functioning nearly as much as what is currently going on. In fact, when Italian healthcare was collapsing a doctor on FB was railing at people for thinking it was bad and still going out to dinner.

But yeah that's another factor against this.

Re: Federal Reserve slashes interest rates to zero

#262

Post by sershe » Mon, Mar 16, 2020, 4:28 AM UTC

nimblegorilla wrote: post #199

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…

Sidestepping the issue of how much a human life is worth you are also missing that the death rate would skyrocket if everyone gets sick and needed treatment at the same time.

I did take that into account. From what I see reported, death rate with access to health care is 0.5%, without 2.5-3.5%. So the difference is the 2-3% that I was using.

Re: Federal Reserve slashes interest rates to zero

#263

Post by sershe » Mon, Mar 16, 2020, 4:32 AM UTC

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.

Only because of the panic. The narrative fairly recently was "why bother, more people die from the flu"; which isn't true, but basically the effect of everyone around merely being sick, with 80+% mild cases, would not be nearly as dramatic as envisioned, I think. I did not account for that in my original comment, but it's not going to be end of the world. And yes, we will eventually get to 40-60% infection rate unless we go into a permanent lockdown, the question is just how fast.

Re: Federal Reserve slashes interest rates to zero

#264

Post by legolas2412 » Mon, Mar 16, 2020, 4:33 AM UTC

colechristensen wrote: post #192

ineedasername wrote: post #55

Earlier quoted context omitted.

Precisely. This isn't an issue driven by obscure and multi-layers investment vehicles that can't survive when stressed. This is a decrease in the market driven by actual significantly reduced consumption and demand for a wide variety of services. The Fed keeping things liquid is important, as are things like low interest loans to small businesses. But it doesn't matter how cheap your credit is if you don't actually h…

An option not talked about much yet is cancelling debts. The Romans did it quite a few times. An effective redistribution of wealth from people who own things to people who do things.

Effective sure, but surely you could have a fairer way.

For example, one of the variant of debt cancellation I hear about is the proposal by Sanders and Warren to cancel all student debt. Isn't that extremely unfair to people who chose to not go to college because tuition is costly? Isn't it unfair to people who put financial prudence in front of needless consumerism, by saving more to pay down their student debt?

Re: Federal Reserve slashes interest rates to zero

#265

Post by sershe » Mon, Mar 16, 2020, 4:34 AM UTC

rogerthis wrote: post #217

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…

Poster probably not human.

Can you operationalize that? I find it very hard to be charitable with that kind of response; by "not human", do you mean "not donates-to-save-one-kid-with-cute-photo-and-a-story-instead-of-100-kids-without-those human"?

Re: Federal Reserve slashes interest rates to zero

#266

Post by legolas2412 » Mon, Mar 16, 2020, 4:35 AM UTC

dcftoapv wrote: post #256

onlyrealcuzzo wrote: post #254

Earlier quoted context omitted.

You can't avoid the bust unless you avoid the boom. But the Fed makes no effort to avoid the boom.

wtf are you talking about? They were raising interest rates and rolling assets off their balance sheet for the better part of 2018.

And they kept the interest rates zero from 2008 to 2015, and spent trillions to prop up asset prices via quantitive easing.

When they pumped the price to astonishing heights till 2015, what they did in 2018 was too late.

Re: Federal Reserve slashes interest rates to zero

#267

Post by sershe » Mon, Mar 16, 2020, 4:44 AM UTC

throwanem wrote: post #193

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…

This makes sense if you assume that tens of millions of people suddenly dying will have no effect on the economies in which they do so. That's quite an assumption!

That is true. Although, they (we?) won't all die at once. 100s of people are dying now, mostly very elderly. If the panic wasn't ramped up, people would have barely noticed this against the background rate of deaths from other diseases. They would have started noticing when it got to around Italian levels, and very ineffectual lockdown/self-quarantine would start that wouldn't affect the economy nearly as much as it has been currently affected in countries with barely any deaths. Then there'd be a month or so of panic as ~everyone gets it and lots of people die. Then it's back to normal.

Alternatively, as a base case we are going to have years of a recession. Evictions, foreclosures, wiped out retirements, divorces, ruined childhoods and early careers messing up millions of lives for decades, suicides, preventable deaths in the developing world where losing your livelihood is a much bigger deal, potential flare-up of wars as young men there don't have jobs, etc.

Re: Federal Reserve slashes interest rates to zero

#268

Post by sershe » Mon, Mar 16, 2020, 4:49 AM UTC

sdkaufman wrote: post #233

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 economi…

I did account for the death rate when the healthcare system is overwhelmed; I have no doubt it will save lives.

Then, as I also said, if you are 60 and your very old mother is on her death bed, and you get to buy her one more week of life by eliminating your entire retirements savings, would you do it? If not, after that we are so to speak just haggling about the price. Oh, and what if I came for your retirement savings because they could save my mother, that you don't even know?

There are trade-off on another level too. Recessions have very real human consequences that I mentioned in another comment. Many of them involve deaths, but many more just involve ruined lives. I'd sooner let one 80yo die than make one 40yo miserable for the rest of his life.

Re: Federal Reserve slashes interest rates to zero

#269

Post by dcftoapv » Mon, Mar 16, 2020, 5:46 AM UTC

legolas2412 wrote: post #266

dcftoapv wrote: post #256

Earlier quoted context omitted.

wtf are you talking about? They were raising interest rates and rolling assets off their balance sheet for the better part of 2018.

And they kept the interest rates zero from 2008 to 2015, and spent trillions to prop up asset prices via quantitive easing. When they pumped the price to astonishing heights till 2015, what they did in 2018 was too late.

Too late for what? This was going to happen no matter what the fed did. If the mkt blew up because of inflation then your argument would make sense. That's not what happened.

Re: Federal Reserve slashes interest rates to zero

#270

Post by trent_lott » Mon, Mar 16, 2020, 5:48 AM UTC

legolas2412 wrote: post #264

colechristensen wrote: post #192

Earlier quoted context omitted.

An option not talked about much yet is cancelling debts. The Romans did it quite a few times. An effective redistribution of wealth from people who own things to people who do things.

Effective sure, but surely you could have a fairer way. For example, one of the variant of debt cancellation I hear about is the proposal by Sanders and Warren to cancel all student debt. Isn't that extremely unfair to people who chose to not go to college because tuition is costly? Isn't it unfair to people who put financial prudence in front of needless consumerism, by saving more to pay down their student debt?

Isn't it unfair to allow some companies to profit on student loans when others were more prudent and didn't lend to 18 year olds?

All finance is done, of course, with pure equality!

The people who didn't take student loans haven't had to live with them. They had more years working, with better pay, and without loan interest - they got nothing for their decision! Certainly not a piece of paper that entitles the holder to work in a job unrelated to their studies and without any useful pay bump.