Fed cuts half point in emergency move amid spreading virus • Hacker News Board

Re: Fed cuts half point in emergency move amid spreading virus

#201

Post by mindslight » Tue, Mar 03, 2020, 4:25 PM UTC

Ericson2314 wrote: post #170

mindslight wrote: post #102

Earlier quoted context omitted.

> inflation has arguably been far too low for far too long anyway... Do you not need a roof over your head, health insurance, a car, college education, etc? Inflation has been rampant, it's just not apparent in manufactured goods because the actual cost of production dropped rapidly with offshoring and technological progress. Without significant inflation, we would have seen a steady march down of consumer prices, as…

Yes the not-so-hidden inflation has been rampant, but universal health care, basic income, and direct infrastructure investment would help, not hurt those. Let's go over Housing, healthcare, and education in turn: - Housing, overpriced because the jobs are concentrated, stupid zoning, etc. We deserve dense cities but UBI means no job, no stave, which in the short term takes away the demand to move. Let's not rest on…

Housing is overpriced because anyone can go to a bank and get as much cash as the house is appraised for, which is circular. So the actual constraint is just the inverse of interest rates. The same goes for education. There are underlying supply problems with each of these that need to be directly addressed, but they're exacerbated by the current economic policy of giving out as much rope needed to hang one's self.

I think much of healthcare could be solved if providers had to publish uniform prices and couldn't post-facto bill, you know, like every other business. Imagine going to the grocery store, paying at the register, and then two months later receiving a bill in the mail for the cashier's time!

Still, I am not opposed to single payer as a way forward - assuming it doesn't get transmuted into mandatory patronage of the same corrupt system. It's not like Medicare currently solves the underlying issues, it just absorbs the cost disease.

Basic income is a natural extension of quantitative easing. It will help people in rural areas, but do nothing for in-demand areas (being swallowed up by housing). I do agree it's much better than just giving the money to the banks though!

Direct infrastructure improvement - party on! Government "public works" is currently focused on the military, producing a surplus of chaos and misery abroad, while our infrastructure crumbles. I don't know that subsidizing suburban infrastructure fully makes sense, but I do know it's better than squandering the resources elsewhere.

Re: Fed cuts half point in emergency move amid spreading virus

#202

Post by coliveira » Tue, Mar 03, 2020, 4:25 PM UTC

wyxuan wrote: post #177

adrianN wrote: post #160

Earlier quoted context omitted.

GDP per capita doesn't look stagnant: https://tradingeconomics.com/japan/gdp-per-capita

Capita is decreasing thanks to demographic trends, and gdp had flat lined

The US is also moving into a demographic downturn, thanks to republican policies.

Re: Fed cuts half point in emergency move amid spreading virus

#203

Post by govg » Tue, Mar 03, 2020, 4:27 PM UTC

vnchr wrote: post #11

The Dow finished up 1,294 points yesterday, making it its best one-day point gain on record.

The DJIA is not as good a metric compared to say, S&P500. It considers a 1$ move in any of the constituents in the same manner, so a stock worth 200$ moving up by 1$ is given the same importance in terms of points change in the index value as a stock worth 2$ moving up by 1$ (whereas fundamentally speaking, the second movement is far more interesting than the first).

Re: Fed cuts half point in emergency move amid spreading virus

#204

Post by paganel » Tue, Mar 03, 2020, 4:27 PM UTC

gdubs wrote: post #82

atq2119 wrote: post #47

Earlier quoted context omitted.

Only because the toolset is artificially restricted for ideological reasons. Fiscal responses (having the government spend actual money, either on things like infrastructure it by just handing it out to the population, which will then largely spend that money as they see fit) rather than monetary policy responses (reduce rates and hope that people will borrow more) are known to work well in most cases. The Corona vir…

Keynes famously said you could hire people to dig ditches and it would stimulate the economy. However, if we were to take aggressive action on Climate Change, there’s a lot of potential jobs there. A massive potential stimulus. Also, you know, public funding of basic research which could explore, I don’t know, pandemic response, new therapeutics, etc. Like you said, ideological barriers are what’s keeping us stuck. B…

Climate Change is doing just fine with us doing no work, notice the recent news about the satellite-detectable pollution levels in China being at lows not seen in a long while. Of course, that means us not being as product- and services-rich as we are right now (farewell to cheap airplane rides, disposable clothes and easily replaceable electronics) but at the end of the day something will have to give.

Re: Fed cuts half point in emergency move amid spreading virus

#205

Post by mxschumacher » Tue, Mar 03, 2020, 4:27 PM UTC

onlyrealcuzzo wrote: post #191

airstrike wrote: post #27

From what I gather after spending more time than I'm willing to admit listening to every finance talking head out there, the consensus on the street seems to be that this will result in a temporary market recovery followed by the continued deterioration of stock prices given that fiscal or monetary* policy can't really affect the real economy in the near term* i.e. if the supply chain is indeed impacted due to COVID-…

The Fed's job is supposed to be to keep inflation stable. Inflation is as stable as it's ever been. If stock prices go down, that means nothing to inflation. Somehow, since Greenspan, the Fed's job evolved to include pumping up asset prices to benefit asset owners (the top 5% own 80% of assets).

The fed's target is 2% inflation, not stability of the inflation rate. You could say the relative stability of the value of money is a goal

Re: Fed cuts half point in emergency move amid spreading virus

#206

Post by seirl » Tue, Mar 03, 2020, 4:27 PM UTC

onlyrealcuzzo wrote: post #191

airstrike wrote: post #27

From what I gather after spending more time than I'm willing to admit listening to every finance talking head out there, the consensus on the street seems to be that this will result in a temporary market recovery followed by the continued deterioration of stock prices given that fiscal or monetary* policy can't really affect the real economy in the near term* i.e. if the supply chain is indeed impacted due to COVID-…

The Fed's job is supposed to be to keep inflation stable. Inflation is as stable as it's ever been. If stock prices go down, that means nothing to inflation. Somehow, since Greenspan, the Fed's job evolved to include pumping up asset prices to benefit asset owners (the top 5% own 80% of assets).

Wrong. The Fed has a dual mandate, they have to keep inflation and unemployment stable. Recessions are bad for employment, it turns out.

Re: Fed cuts half point in emergency move amid spreading virus

#207

Post by usaar333 » Tue, Mar 03, 2020, 4:27 PM UTC

lisper wrote: post #66

repsilat wrote: post #37

Earlier quoted context omitted.

This assumes a return to trend, right? If stocks are temporarily depressed you can get them at a discount. If stock prices are permanently lower as a result, though, it's certainly not good for you. And, believe it or not, this is probably the more accepted idea -- that price movements are memoryless, that we shouldn't subscribe to the gamblers fallacy (that down today means up tomorrow), and that being happy for a p…

> If stock prices are permanently lower The only way that can happen is if the economy is permanently less productive. There are things that can make that happen (climate change, for example) but the corona virus is not among them. Fear of the virus is causing vastly more damage than the virus itself. The virus itself is mainly killing old, unproductive people. I don't want to minimize the severity of the problem or…

This is the reason why more than a 10% drop or so (assuming this doesn't chain-cause a recession) isn't justified. That doesn't mean stock prices aren't permanently lower.

Re: Fed cuts half point in emergency move amid spreading virus

#208

Post by mumblemumble » Tue, Mar 03, 2020, 4:29 PM UTC

derrick_jensen wrote: post #186

jvanderbot wrote: post #172

Earlier quoted context omitted.

"Spurious" * No documentation ties it to its putative originator. * Its earliest known reference did not appear until long after the death of its supposed originator. * Multiple sources are claimed for its origins. * Contextual information indicates the words are of more recent origin than claimed. (deflation/inflation) 1. https://www.monticello.org/site/research-and-collections/pri... 2. https://www.snopes.com/fact-…

To be fair, within the Constitution there is a clause where the Gold standard is required for all debts and tender ( https://en.m.wikipedia.org/wiki/Contract_Clause ), of which Thomas Jefferson wrote the majority. Even if he didn't say it himself, the sentiment was strong enough between all parties that it was included in the beginning.

It's worth noting here that The Wealth of Nations was published in 1776.

Perhaps the people who drafted the US Constitution would have had a chance to read Smith by 1787, but I can't imagine they would have really had a chance to fully digest and internalize the ideas being presented. They were almost certainly working from a firmly mercantilist mindset.

Re: Fed cuts half point in emergency move amid spreading virus

#209

Post by lawn » Tue, Mar 03, 2020, 4:29 PM UTC

pastor_elm wrote: post #8

>The Fed also said in the statement that the “fundamentals of the U.S. economy remain strong.” So why cut the rate? Doesn't make any sense.

They said the exact same thing in 2008, only a few months before the collapse.

It's fair to say, that the FED has no clue.

Re: Fed cuts half point in emergency move amid spreading virus

#210

Post by coliveira » Tue, Mar 03, 2020, 4:31 PM UTC

heartbeats wrote: post #138

A4ET8a8uTh0 wrote: post #134

Earlier quoted context omitted.

It is weird for me to read this. On the surface, it is factually correct, but I am not absolutely certain the conclusions drawn are valid. Your initial paragraph seeks to address point raised by others that FED is running out of ammunition and you list of Japan as an example with other pointing out the price Japan paid for that pollicy. I suppose FED could buy all US equities on national credit card ( and if you thin…

Prudent move? It's the only move. If it's either that or a recession, then they will do it, consequences be damned.

This is a problem that the Fed created for itself. In the 20th century, a recession was a normal thing to be expected, even textbooks said this. It seems now that we have a whole generation that is afraid of going through a recession and apparently will do almost anything to avoid one. The Fed created this problem by manipulating the markets to avoid recessions when they should be occurring. Now it seems that the only thing guaranteed is that the country will burst when the next inevitable one happens.