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Fed cuts half point in emergency move amid spreading virus

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

#311

Post by holtalanm »

thedance wrote: post #71
holtalanm wrote: post #58

Earlier quoted context omitted.

at the risk of getting into a political debate on the internet: I hadn't heard this. Do you have any sources backing up this claim?

Have your seen any of them open their mouths at the debate? Moderator: solve black poverty Candidate: we’ve got to get them into houses so they can build wealth.

that....doesn't necessarily correlate with making housing more expensive, though. There are government-funded housing programs in other countries that they may be referencing as a model, for example.

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

#312

Post by AnimalMuppet »

bluedevil2k wrote: post #168
learc83 wrote: post #116

Earlier quoted context omitted.

And you managed to both completely avoid my point and bring up generational politics.

You don't have a point, you have an opinion. You don't provide any facts or resources that prove the money spent in a fiscal stimulus returns a greater rate than the interest on it. You don't address the fact that the debt has gone up 300% over the last 20 years while the GDP is up only an average of 2.5% a year. Printing your way out of debt is not a solution, ask Argentina. Eventually your investors will lose faith…

No, learc83 has a point, in the abstract. If you borrow to spend the money, and the rate of return on what you spend it on is higher than the interest rate, then it's a good idea to go ahead and do it. That's true... in the abstract.

In the real world, though, Congress decides where to spend the money - not based on any kind of return on investment calculation, but based on political calculations. So in reality, a positive return, if it happens at all, will only happen by coincidence.

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

#313

Post by danenania »

capkutay wrote: post #300
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-…

I hate to say I'm 'bullish' about a situation where people will die, but the fact that 80% of cases are mild or asymptomatic bodes well for the working economy. conferences, travel, and tourism will take a huge hit, but I don't see other industries being significantly hurt. if this was more like SARS with a 10% IFR, with equally high mortality rates among young people, then I would be very worried. But this virus see…

"most factory workers fit in that cohort of people in that the virus effects the least so I don't see supply chains suffering."

I think supply chains are more affected by government attempts to contain the virus (quarantines/social distancing/restrictions on travel and trade) than by the virus itself, no?

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

#315

Post by kickopotomus »

hurricanetc wrote: post #283
tssva wrote: post #194

Earlier quoted context omitted.

I see 3 things driving the market now. An overdue market correction, reasonable reaction to supply chain issues and an irrational reaction to the virus. A temporary boost to the market gives more time for the true long term impact to the supply chain to play out. It may turn out that the boost only gave a short respite but it may also turn out that it saved the market unneeded turmoil. A short term boost also gives p…

People keep saying that responses are irrational but we know next to nothing about this virus. We don’t have a firm understanding of how deadly it is, how long it takes to incubate, how easily it can be spread, or what long term damage it could do to people who recover. There are reports of kidney damage and damage to fertility among men who have recovered. Are those true? We don’t know. We have no idea. The rational…

No, we know quite a bit about it at this point. The incubation period can range from 1-14 days but is 5 days on average[1][2]. The virus spreads through physical contact with commonly touched surfaces and through the air via droplets of saliva or mucus[2]. The deadliness of the disease is also becoming clear as time progresses. The current fatality rate is ~3% (likely overestimated) and most (almost all) deaths are either elderly or people with pre-existing heart or lung conditions[2][3].

Please refrain from fearmongering. Yes, COVID-19 is serious, but dishonestly inducing a public panic only makes matters worse.

[1]: https://www.who.int/news-room/q-a-detail/q-a-coronaviruses

[2]: https://www.health.harvard.edu/blog/as-coronavirus-spreads-m...

[3]: https://www.worldometers.info/coronavirus/coronavirus-age-se...

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

#316

Post by harryh »

76543210 wrote: post #215

I'm looking to refinance. If my lender says the rate hasn't changed from 3.25% since last week, that's bullshit Right? How long should I wait for the rates to move?

Mortgage rates do not move in lockstep with the fed overnight rate.

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

#317

Post by AnimalMuppet »

unreal37 wrote: post #184
yumraj wrote: post #176

China started with single digit cases, which then spread countrywide with tens of thousands of cases and many deaths. They quarantined cities, built 1000 bed hospitals in 10 days. And now after about 2 months they are seeing a slowdown. Why would this exact scenario regarding growth in the number of cases not play out in the US? The only difference is smaller population, but cities are dense here too. However, unlike…

Apparently China will have a massive economic cost to this. "New data on China that has trickled in over the last few days suggests the damage coronavirus has wrought on the world’s second-largest economy could be worse and more prolonged than previously expected, despite a decline this week in the number of new infections in the country." [0] https://business.financialpost.com/news/economy/five-signs-t...

The cost of doing nothing may have been far higher, though.

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

#318

Post by heartbeats »

a_tractor wrote: post #225
rtkwe wrote: post #154

Earlier quoted context omitted.

Stagnant or not the real question is what would have happened if the bank wasn't holding all those stocks? That is did buying all those stocks/ETFs successfully prop up the economy that would have otherwise gone into a recession or worse or did it cause the stagnation?

The argument could (and should more often) be made that recessions are sometimes healthy and that propping up failed or stagnant businesses or industries usually only prolongs the suffering. It also locks up resources that could be invested elsewhere in less entrenched but more promising new growth areas. So I would argue that it is likely to cause the stagnation To use an analogy from botany, its like how certain ty…

This is a very good and thought-out comment - I don't understand why it was marked as dead.

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

#319

Post by throw0101a »

QuesnayJr wrote: post #280
lottin wrote: post #153

Earlier quoted context omitted.

Monetary policy is about increasing or decreasing the money supply. The argument is that it cannot have long-term real effects because if it did we would all be incredibly rich, since it costs nothing to increase the money supply by whatever amount. Every underdeveloped nation would simply increase their money supply and poverty would be a thing of the past.

It has real effects until the economy is at full employment, after which it only causes inflation.

At which point rates are generally raised to cool things down.

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

#320

Post by kart23 »

unhashable wrote: post #41
liuliu wrote: post #17

Earlier quoted context omitted.

It can go negative, or Fed can do another round of QE, there are plenty of tools. The real question is whether the deficit can grow indefinitely without consequences, and if this is a moral hazard (e.g. no risk priced in borrowing).

It can grow larger than people realize. As long as other countries do business in USD and keep buying US debt, the party keeps going. With fiat, you can spend as much as the combined purchasing power of all your citizens through money printing. When you’re the reserve currency, that pool is extended to the purchasing power of many many countries. That’s probably why, from a strategic POV, the US must remain the large…

Yeah the party keeps going, but the crash will be worse. Worse crashes means more time to recover, more americans lose their jobs, and so on.
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