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Fed cuts half point in emergency move amid spreading virus

bloomberg.com

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

#51

Post by aazaa »

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 congress.

Not only that, but rates on long treasuries have stayed negative for long periods of time in other countries. It's an open question how negative long treasuries can go, but the evidence suggests we're not even close to the limit.

Recessions are politically unacceptable in today's world. Buy stocks. Buy treasuries. Do so with wild abandon, because the Fed has your back. Just watch out for the moment when the whole thing jumps into reverse and no amount of market manipulation will stop the bleeding.

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

#52

Post by tossAfterUsing »

JumpCrisscross wrote: post #34
ptyyy wrote: post #5

We're basically running out of tools to combat an actual financial crisis. https://www.investopedia.com/terms/l/liquiditytrap.asp

> We're basically running out of tools to combat an actual financial crisis Not really. This was extensively explored following the Great Depression, in part by Ben Bernanke, which is how we got QE. In summary, the Fed can buy more than just short-dated government bonds. Moreover, "liquidity trap" doesn't refer to the central bank running out of tools per se . It refers to investors calling a central bank's bluff. A…

> That doesn't apply here.

So long as the appearance of inflation never occurs.

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

#53

Post by ptyyy »

gonzo41 wrote: post #30
justinzollars wrote: post #21

Earlier quoted context omitted.

How does a half-point help us if Costco is out of toilet paper?

You can afford to install a bidet

I just installed a Tushy and let me tell you, it takes some getting used to. Especially when the water is very cold.

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

#54

Post by tossAfterUsing »

pmart123 wrote: post #50
pbrb wrote: post #38

Earlier quoted context omitted.

I'm pretty worried about this. I don't think this rate cut makes any sense. You can't stimulus away a virus.

There seem to be economic ways to help curtail it though. - sick pay for hourly employees for next year - backstop airlines, event planning and travel businesses in some capacity - offer Netflix rewards for vaccines, testing methods or other applicable things - cover cost of insurance for massive testing

> cover cost of insurance for massive testing

how about just massive testing. no insurance necessary

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

#55

Post by lonelappde »

wonderwonder wrote: post #20
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.

Because someone at the top with a limited grasp of economics but a great understanding of campaigning insisted on it.

The Fed is independent of the Executive except at appointment time.

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

#56

Post by budlightvirus »

mech1234 wrote: post #35

Interest rates have been on a secular decline over the course of the last century. Different economists have described this via various terms- "savings glut" is the one I like the most (even though I don't like Krugman). Right now there is so much saved cash out there looking to be lent out that any project looking for financing can find it for cheap. The Fed does not keep interest rates low in a vacuum. There is an…

What does "secular" mean to you?

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

#57

Post by bluedevil2k »

thedudeabides5 wrote: post #7
ptyyy wrote: post #5

We're basically running out of tools to combat an actual financial crisis. https://www.investopedia.com/terms/l/liquiditytrap.asp

Hey look on the bright side, we have another 100bps left in rates and then QE4. After that, yeah then it gets tough, but then again, maybe we get some actual fiscal stimulus which maybe buys the US some China style infrastructure!

A fiscal stimulus? Yes, let's go even more into debt than we already are.

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

#58

Post by holtalanm »

thedance wrote: post #33
rhexs wrote: post #19

This will further increase housing prices, no? How much more unobtainable for the average American could they possibly get? I suppose negative interest rates will let us know shortly!

Don’t worry, literally every single one of the presidential candidates in the democratic primary wants to “build wealth” by making housing ever more expensive. It’s practically state policy to make it impossible for a first-time buyer.

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?

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

#59

Post by usaar333 »

lisper wrote: post #9
seoulbran wrote: post #4

3-2-1, bull market returns. (I hope)

Why? Are you retired? Because if you aren't, if you're working and putting money into a retirement plan, you are much better off with a bear market, especially one like this that is practically guaranteed not to run for years. When you're a buyer you want prices to be low.

Disagree; you are best off if the economy is growing and doing well. Stocks being cheap is only secondary.

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

#60

Post by mywittyname »

scottmcf wrote: post #39
ptyyy wrote: post #5

We're basically running out of tools to combat an actual financial crisis. https://www.investopedia.com/terms/l/liquiditytrap.asp

We are in/at the start of an actual financial crisis, people just haven't internalized that yet.

Who could have known that using debt to purchase back stock for the purposes of artificially increasing company value without building value would cause a crisis?
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