Federal Reserve slashes interest rates to zero • Hacker News Board

Re: Federal Reserve slashes interest rates to zero

#301

Post by colechristensen » Mon, Mar 16, 2020, 4:52 PM 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?

The idea is eliminating advantages people have over each other, not preserving them.

Re: Federal Reserve slashes interest rates to zero

#302

Post by BenoitEssiambre » Mon, Mar 16, 2020, 4:53 PM UTC

igonvalue wrote: post #218

BenoitEssiambre wrote: post #126

Earlier quoted context omitted.

Game over happens when, fiat money seems to have, on a risk adjusted, liquidity adjusted basis, a better return and better appeal than holding existing real private assets, therefore a process starts where people, businesses and banks try to hoard government paper all at the same time instead of holding private assets. Demand shifts so far towards government paper and away from private assets that the supply of the l…

Is there a specific name for this general phenomenon?

Low aggregate demand. Note that when they talk about low aggregate demand they mean demand for stuff versus money.

So low aggregate demand for stuff (this includes consumables but also investments stuff such as factories) is the same as high aggregate demand for money (including money like instruments such as gov bonds).

Re: Federal Reserve slashes interest rates to zero

#303

Post by [deleted] » Mon, Mar 16, 2020, 5:16 PM UTC

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?

[deleted]

Re: Federal Reserve slashes interest rates to zero

#304

Post by sershe » Mon, Mar 16, 2020, 5:40 PM UTC

gentleman11 wrote: post #191

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 mortality rate explodes when there is a shortage of medical equipment

Interestingly, currently shortages are being caused by the reaction, not the virus. King County is reporting "Growing COVID-19 concerns and closures have led to canceled blood drives and 2500 lost donations, putting our local blood supply in danger of collapse." Factory closures and disrupted supply chains put manufactured supplies in danger going forward, too. Again, we need to make sure that the cure is worse than the disease.

Re: Federal Reserve slashes interest rates to zero

#305

Post by sershe » Mon, Mar 16, 2020, 6:19 PM UTC

throwanem wrote: post #297

sershe wrote: post #267

Earlier quoted context omitted.

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…

"Then it's back to normal" remains an utterly risible claim for what happens after two or three million Americans die in the span of a month.

Why? What, exactly, do you predict is going to happen economically once the spike would have passed esp. given the age distribution of the deaths?

I honestly tried to think about it and the only tangential thing I could definitely predict is LOTS of people from the city councils all the way to the white house not being re-elected. Which, obviously, made me even more cynical.

Re: Federal Reserve slashes interest rates to zero

#306

Post by dnautics » Mon, Mar 16, 2020, 6:28 PM UTC

dcftoapv wrote: post #229

bcrosby95 wrote: post #155

Earlier quoted context omitted.

It's foolish because it's literally impossible to avoid a heavy recession or depression when people are told to stay inside and do nothing. The odds of this action working out well now are slim to none. Then when it's actually needed they will have to do it again. You'll end up with the same non recovery recovery where people are barely getting by but certain asset classes are inflated to the moon.

No, it's not foolish. We need to keep markets liquid to avoid a lending crisis. That's why the fed announced asset purchases. They don't do them all at once. They buy steadily over a period of time to help keep prices stable. That's very important. They had to do rate cuts now because it takes a long, long time for them to work (measured in years rather than months). That was a preventative measure, not a band-aid. L…

> Look, guys, I promise you the fed knows wtf they're doing. These guys live and breath to be ready to respond to these type of emergencies.

There's no possible way this could go wrong.

Re: Federal Reserve slashes interest rates to zero

#307

Post by allovernow » Mon, Mar 16, 2020, 9:04 PM UTC

allovernow wrote: post #241

HenryKissinger wrote: post #237

Earlier quoted context omitted.

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.

The fed had now pushed one $1.5T stimulus package and lowered rates to zero in an absolutely desperate attempt to prop up a market when the entire country is about to shut down - what are they propping up when no one is going to spend any money? Don't believe me? China. Iran. Italy. Spain. Austria. Multiple Nordic countries. Nationwide shutdown. Coming to a state near you. 300MM people just panicked at the same time,…

Just documenting for the future: today the NYSE halted at least once and Dow dropped 13%. PA announced shutdown of all non essential businesses.

Re: Federal Reserve slashes interest rates to zero

#308

Post by ta999999171 » Mon, Mar 16, 2020, 10:09 PM UTC

dcftoapv wrote: post #57

onlyrealcuzzo wrote: post #51

Earlier quoted context omitted.

A lot of people seem to think the Fed's job evolved to include preventing recessions. I guess the Fed isn't accountable to the US public, so their job can be whatever they want it to be?

The feds mandate is to maximize employment, stabilize prices, and moderate long-term interest rates. A big part of that is trying to avoid the 'bust' part of a boom-bust cycle. As evidenced by your post, the fed should not be accountable to the public because the public cannot be expected to spend anytime trying to understand what they do and their methods of action.

So don't educate people, just trust the Pharisees. Got it.

Re: Federal Reserve slashes interest rates to zero

#309

Post by shartshooter » Mon, Mar 16, 2020, 10:28 PM UTC

matt_the_bass wrote: post #293

shartshooter wrote: post #230

Stopping production for a significant period of time was the first gut punch covid is throwing. The second one seems to be landing on Europe and third will be North America. This means China will have a head start on getting supply up and running. If the ROW is at a standstill in production, China will fill that gap which could further displace a lot of production in the west. China getting containment in order didn’…

I think that may be plausible. But I also think that a lot of companies relying on Chinese manufacturing all suddenly saw they had all their manufacturing eggs in one basket. I’m not suggesting that we should move manufacturing back to US, but we should diversify. I’m seeing that some of my suppliers have already moved to other Asian countries. I expect that diversification to continue.

Agreed. The fallout from this, beyond loss of life and impact to day-to-day, will be really interesting and will seem obvious in hindsight.

Re: Federal Reserve slashes interest rates to zero

#310

Post by toomuchtodo » Tue, Mar 17, 2020, 12:30 AM UTC

lbotos wrote: post #300

toomuchtodo wrote: post #298

Earlier quoted context omitted.

> Exclusive: Fed is ‘throwing money in the wrong place,’ says Sheila Bair, former top banking regulator | Published: March 16, 2020 at 6:50 a.m. ET > Sheila Bair, a top U.S. banking regulator during the 2007-’08 global financial crisis, said the Federal Reserve needs to quickly shift its focus to getting credit flowing to U.S. businesses crippled by the spreading coronavirus and workers losing their jobs. > “They are…

Because you may be in a position to educate me, how does the fed shift it's focus to getting credit flowing? a new loan program for businesses?

Ray Dalio has some suggestions, although I don't think they go far enough. You literally want to get cash into the hands of businesses and people who will spend it.

https://www.linkedin.com/pulse/implications-hitting-hard-0-i...