About friggin’ time...
Federal Reserve pledges asset purchases with no limit to support markets
11–20 of 368 posts
Re: Federal Reserve pledges asset purchases with no limit to support markets
#12How does injecting money solve a problem that’s not caused by lack of money? This market downturn isn’t a lack of liquidity, or a lack of money, or toxic assets like the mortgage backed securities. People aren’t going to stores, restaurants, and airlines because of SARS-CoV-2, not a lack of credit or money. Printing money isn’t going to create customers for businesses effected by this pandemic.
I guess the idea is to keep companies solvent so they'll still be there when the quarantine restrictions are lifted.
Why can’t they survive by issuing corporate bonds?
And as far as I know this Fed policy isn’t to buy failing stock it’s to inject cash overall through treasury bonds, since the Fed isn’t allowed to buy stock.
Re: Federal Reserve pledges asset purchases with no limit to support markets
#13Awful policy. The fed needed to hold off on this and the previous rate cut until Congress finally passed a useful bill. Powell had all the power to force Congress to act and he's blown it again.
The Fed's job is to keep the value of currency steady and support full employment, not to play games with Congress.
Re: Federal Reserve pledges asset purchases with no limit to support markets
#14How does injecting money solve a problem that’s not caused by lack of money? This market downturn isn’t a lack of liquidity, or a lack of money, or toxic assets like the mortgage backed securities. People aren’t going to stores, restaurants, and airlines because of SARS-CoV-2, not a lack of credit or money. Printing money isn’t going to create customers for businesses effected by this pandemic.
I bet lenders are getting nervous wondering if they're going to get their money back. "when you owe the bank $10k you have a problem, when you owe the bank $10B the bank has a problem".
Re: Federal Reserve pledges asset purchases with no limit to support markets
#15Keep in mind they're only able to buy US treasuries and mortgage backed securities. If Congress changes the rules to allow the Fed to purchase stocks, we'll be in for some very interesting times. It could be that we get an economy of zombie companies, or valuations soar beyond what we've come to expect as normal. In any case, this is unprecedented and in my opinion not the right move. They're sacrificing our future i…
> or valuations soar beyond
Can you explain why you think Fed purchases would cause stock market soar instead of decline to slow down a little?
Re: Federal Reserve pledges asset purchases with no limit to support markets
#16Keep in mind they're only able to buy US treasuries and mortgage backed securities. If Congress changes the rules to allow the Fed to purchase stocks, we'll be in for some very interesting times. It could be that we get an economy of zombie companies, or valuations soar beyond what we've come to expect as normal. In any case, this is unprecedented and in my opinion not the right move. They're sacrificing our future i…
> Keep in mind they're only able to buy US treasuries and mortgage backed securities.
They announced they will buy municiple bonds also.
https://www.cnbc.com/2020/03/20/the-federal-reserve-is-expan...
> If Congress changes the rules to allow the Fed to purchase stocks
Corporate bonds first. If that fails, then stocks. Baby steps.
Re: Federal Reserve pledges asset purchases with no limit to support markets
#17Hope this works
Define "it works" and for whom...
Re: Federal Reserve pledges asset purchases with no limit to support markets
#18I'm afraid this is another wealth grab similar to 2008 but x10 bigger. What was an international health emergency turned into another large scale robbery of the common folks.
Re: Federal Reserve pledges asset purchases with no limit to support markets
#19How does injecting money solve a problem that’s not caused by lack of money? This market downturn isn’t a lack of liquidity, or a lack of money, or toxic assets like the mortgage backed securities. People aren’t going to stores, restaurants, and airlines because of SARS-CoV-2, not a lack of credit or money. Printing money isn’t going to create customers for businesses effected by this pandemic.
> How does injecting money solve a problem that’s not caused by lack of money?
Not an expert on this but decreased money velocity (the thing we witness right now) can be seen from the outside in fact as "lack of money".
Re: Federal Reserve pledges asset purchases with no limit to support markets
#20Awful policy. The fed needed to hold off on this and the previous rate cut until Congress finally passed a useful bill. Powell had all the power to force Congress to act and he's blown it again.
If the fed plays politics, the politicians will play politics back, but harder.