Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Fed cuts half point in emergency move amid spreading virus

bloomberg.com

Post reply on HN
Print view View original

441–450 of 499 posts

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

#441

Post by OCASM »

atq2119 wrote: post #404
OCASM wrote: post #264

Earlier quoted context omitted.

Keynes's ideas also fail all over the globe. Saving and investing is what grows an economy.

Saving doesn't grow the economy, pretty much by definition as was already pointed out. (Real) investment, in the sense of building up new productive capacity, is an important part of growing the economy. However, investment at least by the private sector cannot thrive in a vacuum. It needs a context of either existing or plausible demand. If the demand is missing, you'd be a fool to spend money on increasing producti…

Indeed, real investment requires market interest, something the government is pretty bad at discerning

Saving goes hand in hand with investment since by putting money in the bank it can be borrowed by entrepreneurs and they can hopefully do something productive with it. Merely spending it doesn't have that effect.

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

#442

Post by throw0101a »

seanmcdirmid wrote: post #362
throw0101a wrote: post #319

Earlier quoted context omitted.

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

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.

The Fed isn't seeing any inflation, so it's not seeing a reason to raise rates.

But you're right that it doesn't give them much monetary room--I guess if/when the downturn comes resorting to fiscal stimulus be the only answer. Not that the GOP deficit chickenhawks have given any room there: remember when GOP was against deficits? US$ 1T later Pepperidge Farms remembers.

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

#443

Post by tachyonbeam »

coliveira wrote: post #255
chewz wrote: post #126

Earlier quoted context omitted.

Bank of Japan had been achieving new heights of monetary policy year after year for the last 30 years with little impact on real economy.

BoJ is the biggest proof that the traditional notion that creating money generates inflation is incorrect. The issue is that inflation is narrowly defined, and will only happen when people buy daily commodities. Inflation in stocks is not considered to be inflation, although prices will go up the same way.

Housing costs in big cities keep increasing at very high rates though. Clearly this affects everyone. Food and services (ie: electricity, internet) are also rising in price much faster than the claimed 2-3% a year. Many people (myself included) believe that official inflation rate calculations are fudged (the metrics keep changing). It's in the government's interest to pretend that inflation is low.

To quote this Forbes article[1] : "the way that inflation is measured over the decades has changed numerous times. If it was still measured the same way as it was in 1990, it would be closer to 6%. Which seems a lot more accurate. If inflation was calculated as it was in 1980, it would be closer to 10%."

[1] https://forbeswealthblog.ca/2018/06/are-the-posted-inflation...

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

#444

Post by makomk »

samvher wrote: post #363
NicoJuicy wrote: post #241

Earlier quoted context omitted.

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…

I don't know, Italy is doing pretty poorly with 79 dead on 160 recovered (2502 total cases). Only the numbers in China really seem to be dropping, and I wonder how that will hold up when people get back to work. This is not going to be the end of the world as we know it but I think it will take quite some more time before it's behind us.

Italy has an extremely old population compared to most of the rest of the world, and the initial outbreak was detected in a hospital which didn't help. Apparently all the deaths there so far have been people over 60 with existing serious health conditions: https://www.theguardian.com/world/2020/mar/03/italy-elderly-...

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

#445

Post by throw0101a »

seanmcdirmid wrote: post #388
QuesnayJr wrote: post #371

Earlier quoted context omitted.

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.

* https://fred.stlouisfed.org/series/FPCPITOTLZGUSA

If you doubt the official numbers, the Billion Prices Project goes out scrapes price data, and it matched pretty well with the CPI:

* https://en.wikipedia.org/wiki/MIT_Billion_Prices_project

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

#446

Post by OCASM »

hnarn wrote: post #375
OCASM wrote: post #264

Earlier quoted context omitted.

Keynes's ideas also fail all over the globe. Saving and investing is what grows an economy.

In what universe does saving stimulate the economy? It's literally the opposite of consumption.

Saving allows the banks to lend the money to entrepreneurs who increase productive capacity and hence grow the economy.

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

#447

Post by wpietri »

lawrenceyan wrote: post #439
wpietri wrote: post #346

Earlier quoted context omitted.

I think there's an enormous difference between "I have some polite questions about your level of expertise" and "I will repeatedly jump on a possibly-innocent error". I will note that airstrike is not "unable to differentiate the two". They have quite clearly gone on to demonstrate that ability. It is important to make sure false information doesn't circulate. But I don't think that excuses being "harsh".

Ahh, I see. I think I understand the confusion now. I believe our primary disagreement here lies in the fact that you don't see /u/airstrike not differentiating between fiscal and monetary policy in his/her original comment, as a major red flag, whereas from my perspective I do. Please correct me if I'm wrong.

You're wrong. That is not our primary disagreement.

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

#448

Post by foogazi »

thorwasdfasdf wrote: post #330
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…

this is a good point. there is something deeply disturbing when the Fed manipulates on a scale that controls the pricing of the entire stock market

Print money to then outbid people on price - what could go wrong?

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

#449

Post by nostrademons »

NicoJuicy wrote: post #376
danenania wrote: post #324

Earlier quoted context omitted.

I feel like the slowing infection rate in China (if it's actually true) is both very encouraging in the sense that it could show the virus actually is possible to contain, and also pretty scary in that so far the only measures that seem to be working at all are extremely widespread and draconian quarantines.

China was handling it after 2 months of spreading ( hurray censorship). This isn't happening anywhere else in the world.

Hard to tell if this is sarcasm, given that researchers just announced that coronavirus has been spreading undetected for 6 weeks in the Seattle area:

https://www.msn.com/en-us/news/us/coronavirus-may-have-sprea...

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

#450

Post by tossAfterUsing »

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-…

> this will result in a temporary market recovery followed by the continued deterioration of stock prices

that's what zerohedge calls "the dead cat bounce" right?

Post reply on HN