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U.S. Labor Department allows unemployment benefits for coronavirus

reuters.com

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Re: U.S. Labor Department allows unemployment benefits for coronavirus

#91

Post by QuesnayJr »

SilasX wrote: post #88
ivalm wrote: post #84

Earlier quoted context omitted.

Except for they are not using random bonds, they are using Treasuries. This isn't random toxic debt, it's the debt of the US government to itself. More akin to "if banks are insolvent this ensures a certain degree of quantitative easing", which is a good thing since we are undershooting our inflation targets as is.

They’re not technically toxic debt, but the market definitely prefers cash now, so they’re unwanted just the same.

If they were unwanted, the 30 day interest rate would spike, but it hasn't. This is purely a move to provide liquidity, which is the essential job of the Fed.

Re: U.S. Labor Department allows unemployment benefits for coronavirus

#92

Post by SilasX »

QuesnayJr wrote: post #91
SilasX wrote: post #88

Earlier quoted context omitted.

They’re not technically toxic debt, but the market definitely prefers cash now, so they’re unwanted just the same.

If they were unwanted, the 30 day interest rate would spike, but it hasn't. This is purely a move to provide liquidity, which is the essential job of the Fed.

They only not unwanted because the Fed is providing demand the market isn’t. That would be just as true of anything else where a glut hit the market.

Re: U.S. Labor Department allows unemployment benefits for coronavirus

#93

Post by QuesnayJr »

QuesnayJr wrote: post #91
SilasX wrote: post #88

Earlier quoted context omitted.

They’re not technically toxic debt, but the market definitely prefers cash now, so they’re unwanted just the same.

If they were unwanted, the 30 day interest rate would spike, but it hasn't. This is purely a move to provide liquidity, which is the essential job of the Fed.

What's the story here? Banks are buying 30-day bonds so they can borrow overnight with the Fed? They can only borrow up to the amount of the bond, so why don't they just... use the money directly rather than in this roundabout fashion.

If the Fed wants to keep the 30-day interest rate down, they can just buy the bonds directly themselves. They don't need to wait for the banks to buy the bonds and then repo them.

Re: U.S. Labor Department allows unemployment benefits for coronavirus

#94

Post by ivalm »

QuesnayJr wrote: post #93
QuesnayJr wrote: post #91

Earlier quoted context omitted.

If they were unwanted, the 30 day interest rate would spike, but it hasn't. This is purely a move to provide liquidity, which is the essential job of the Fed.

What's the story here? Banks are buying 30-day bonds so they can borrow overnight with the Fed? They can only borrow up to the amount of the bond, so why don't they just... use the money directly rather than in this roundabout fashion. If the Fed wants to keep the 30-day interest rate down, they can just buy the bonds directly themselves. They don't need to wait for the banks to buy the bonds and then repo them.

They are buying treasury and selling a treasury future, which nets them some premium. They then fulfill overnight capitalization requirements with the very same treasuries. Future premiums are higher than overnight lending rate.

Re: U.S. Labor Department allows unemployment benefits for coronavirus

#95

Post by kortilla »

claudeganon wrote: post #73
kortilla wrote: post #38

Earlier quoted context omitted.

If a payday loan required full collateral this comparison would make sense.

Title loans on cars and second mortgages do just that, yet the people borrowing never get bailed out the same way by the fed. And guess what, medical bills are the number one cause of bankruptcy in the US, insurance companies are refusing to guarantee coverage for Coronavirus treatment, and the Trump administration just blocked states expanding Medicaid to do the same. Might need to think about systemic risk a little…

There is no bailout here. It would be like the fed stepping in to offer title loans because the title loan companies get too scared. No debts are being forgiven here.

Re: U.S. Labor Department allows unemployment benefits for coronavirus

#96

Post by kortilla »

nostrademons wrote: post #58
kortilla wrote: post #37

Earlier quoted context omitted.

> Technically lowering the SS age doesn't cost any money either. The government controls the money supply; they could just print money and hand it out. The government doesn’t do this though. That’s why there is confidence in the USD.

The government does, actually: Article 1, Section 8 of the U.S. Constitution explicitly gives Congress the power "to collect taxes; to coin money and regulate its value; provide for punishment for counterfeiting", among other powers. It's just that Congress has delegated this to multiple independent organizations within the government. The U.S. Mint makes physical coins and paper money. The U.S. Treasury issues gover…

“Has the ability to” != “does”. There is faith in the US dollar because the US government doesn’t exercise that right.
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