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

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

#381

Post by asdfman123 » Tue, Mar 03, 2020, 6:26 PM UTC

NicoJuicy wrote: post #241

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 was bearish yesterday, but looking at the raw data seems more reasonable ( spent a lot of time reading and analyzing). The statistic influencers currently are China, South Korea and Iran. Then it seems to help that people are more aware and numbers seem to be dropping. I'm short-term bearish, although it could change with an extreme outlier within the EU. It also helps that I can see what a big corporation ( where…

You also must consider that we're in the dark because of poor testing right now. A coworker pointed out that infection levels may be "leveling off" simply because the testing is rate limited.

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

#382

Post by AnthonyMouse » Tue, Mar 03, 2020, 6:27 PM UTC

AnimalMuppet wrote: post #270

quotemstr wrote: post #211

Earlier quoted context omitted.

What you're talking about is government spending crowding out private spending, which is what happens when the economy is already at full capacity. In this situation, all the spending does is cause inflation, since money alone does not cause goods to spring into existence. It's like pushing on a string. But are we close to full capacity?

Capacity dropped because China shut down. That's temporary (we trust), but it's a drop in global capacity.

That's a different question from whether capacity is available. You could have less than before and still have plenty.

There is also a question of short term vs. long term. In the short term if some things are made only in China they may become temporarily scarce. In the longer term either China will come back online or capacity will be created somewhere else (or both).

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

#383

Post by toomuchtodo » Tue, Mar 03, 2020, 6:27 PM UTC

Brain_Thief wrote: post #379

toomuchtodo wrote: post #358

Earlier quoted context omitted.

Data shows [1] educated, empowered women with access to contraceptives have less children overall, and defer having children until later in life, full stop. I also argue it is a net positive, regardless of the underlying mechanism(s), that the fertility rate is declining across the world considering the unsustainable consumption rate per capita of the first world. [1] https://ourworldindata.org/fertility-rate#empower…

I agree with those points but I have not seen evidence for the idea that the availability of social safety nets is not also a significant factor in fertility rate trend, which I took to be the thrust of your original post.

Conversely, I haven't seen evidence that the availability of social safety nets is a significant factor. More data is required, but I still believe my theory is on sound footing based on existing fertility data.

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

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Post by QuesnayJr » Tue, Mar 03, 2020, 6:28 PM UTC

codelitt wrote: post #234

aazaa wrote: post #51

For those saying the Fed is running out of ammunition, study what the Bank of Japan has done. It owns close to 80% of the Japanese ETF market currently, with no end to the expansion of balance sheet in sight. After buying long treasuries, it's not unreasonable to imagine the Fed buying stocks, either individual issues or ETFs. The President would be for it, and it would be hard to drum up any opposition to it in cong…

God help us all if our central bank starts taking cues from the Bank of Japan or the ECB and their zombie economies. Our inability to suffer short-term consequences for long-term prosperity is a real issue that we as a country need to figure out how to solve. (Can you solve for human nature?) The fed shouldn't have made cuts in 2019 at the height of the market, we should have let failing banks fail, we need to start…

The idea that we should bear short-term consequences for long-term prosperity is the human nature we need to solve for.

The Fed has been much more aggressive than the ECB, and it's why the US recovered faster than Europe.

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

#385

Post by bendbro » Tue, Mar 03, 2020, 6:28 PM UTC

coliveira wrote: post #202

wyxuan wrote: post #177

Earlier quoted context omitted.

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.

I am fine with this. Bernie Sanders once said mass immigration was a "koch brothers scheme." I agree with this sentiment. Increases in GDP don't seem to help the lower class. As GDP has risen, inflation adjusted income has flatlined. As population has increased, and as housing investment gone higher, housing prices have skyrocketed.

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

#386

Post by rory096 » Tue, Mar 03, 2020, 6:28 PM UTC

airstrike wrote: post #88

JumpCrisscross wrote: post #68

Earlier quoted context omitted.

> fiscal policy can't really affect the real economy Fiscal policy ( e.g. the government buying tanks) absolutely affects the real economy. The central bank doesn't control fiscal policy. It controls monetary policy. Monetary policy also affects the real economy, just indirectly.

Sorry and thank you – I meant to say fiscal or monetary specifically in the near term, meaning supply chain disruptions take much longer to undo. I've edited my post accordingly.

The near term is precisely what monetary policy affects...

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

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Post by shawnz » Tue, Mar 03, 2020, 6:31 PM UTC

darkerside wrote: post #288

samvher wrote: post #104

Earlier quoted context omitted.

Right. And from what I understand, even if monetary policy does not directly solve virus or supply chain issues, it can make life easier for corporations loaded with debt (there are many) which might get into trouble as the economy deteriorates.

And I think many would argue, better to let these companies die and be outcompeted

So that they can be replaced by companies that are more robust to things like Coronavirus?

Why would we care how robust our businesses are to such a rare event if we can mitigate it in other ways? You think it would be better to lose those businesses just for the chance at something better replacing them, just to avoid resorting to those mitigations?

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

#388

Post by seanmcdirmid » Tue, Mar 03, 2020, 6:33 PM UTC

QuesnayJr wrote: post #371

seanmcdirmid wrote: post #362

Earlier quoted context omitted.

Which should have happened along time ago in the current economy but haven’t, you can’t cut rates in bad times if you don’t raise them enough in good.

They started raising rates but then Trump successfully bullied the Fed. Though inflation had remained low, so it's not clear that it was necessary to raise rates.

Inflation remains low? Seriously, I have no idea how they are computing that rate when asparagus is $4.99/pound these days. It seems like low rates feed the housing bubble nicely, and if housing costs were more adequately represented in the CPI, it would be much higher.

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

#389

Post by tasty_freeze » Tue, Mar 03, 2020, 6:34 PM UTC

Pardon my cynicism, but it seems like many of the actions the administration is pushing are simply things they were pushing already and are using this health crisis as cudgel to help get what they want.

What we need are lower interest rates! What we need is to limit immigration from Mexico (even though the US has a higher infection rate and there isn't any talk of limiting flights from, say, England). What we need to do is silence domain experts and have communications controlled by politicians at the White House.

Maybe this rate cut is actually the right thing to do, what do I know? But I have little reason to believe it was made for the right reasons.

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

#390

Post by downerending » Tue, Mar 03, 2020, 6:34 PM UTC

WhompingWindows wrote: post #147

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-…

You should edit that 24 days fact, it's simply incorrect and will spread misinformation.

The actual distribution simply isn't known at this point.