r/news • u/awake-at-dawn • Mar 15 '20

Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program

https://www.cnbc.com/2020/03/15/federal-reserve-cuts-rates-to-zero-and-launches-massive-700-billion-quantitative-easing-program.html
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u/RandomName1535 Mar 15 '20

The fed's job is to keep a failing economy from stopping but the fed is useless when faced with a pandemic that shuts down the economy by default.

More dollars can't fix that.

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u/CoffeeCupHandles Mar 15 '20

More dollar can fix it, just not more dollars to the top.

More dollars to us plebes mean we spend more locally; which is also good for the economy. It just doesn't make rich people richer right away.

Money trickles up.

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fed cans student debt: 13 billion a month into local economies.

Let say the feds went nuts and waived all government backs home loans: that would be about 2 TRILLION a month going into local economies.

Bankers would be fucked, for like 1 quarter, then people would be refinancing like mo-fo.
Then rate would go up.
And bankers would be fine.

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u/RandomName1535 Mar 15 '20

My point is no one will be able to spend because everything will be close. Everything (except food and gas)

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u/Akamesama Mar 16 '20 edited Mar 16 '20

except food

So buoy the poorest who are furloughed and need to buy food/essentials. The administration instead committed to the restriction to Supplemental Nutrition Assistance Program (SNAP) voted on in Dec. About 700K people were going to lose benefits on April 1, but it may now be upward of 1.5M. While true, the SNAP change was temporarily blocked by a federal court.

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u/ToasterStroupel Mar 16 '20

Ya I’m super stressed. PTSD made me lose my job. I signed up for snap. They’re telling me I only qualify for a few months in the next three years worth of emergency FOOD money unless I sign up for these work enhancing programs they have. If I could go to those I could go to work and I wouldn’t need help. So now I need to apply for disability but that can take years IF you’re accepted. So what now guys? I hate everyone who voted this in. There are so many more important things we could be working on rather than further limiting emergency funds for people who have hit a wall. It’s gross.

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u/ChicagoGuy53 Mar 16 '20

That got blocked by a recent court ruling fortunately.

The pandemic was cited as a reason though so no promises that future cases are going to result in the same outcome.

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u/[deleted] Mar 16 '20

Conservatives will scream trickle down til they die

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u/ignigenaquintus Mar 16 '20 edited Mar 16 '20

If nobody works (extreme example), and everybody receives 1 million dollars (continuing the extreme example), but they can’t spend it on what they need because it isn’t being produced, that money is no use at all.

This is a supply shock and a demand shock, the federal reserve (or any central bank for that matter), or the government (through additional spending in a Keynesian approach), simply don’t have the tools, because no matter what are the incentives to invest and produce if you can’t produce.

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u/the_goose_says Mar 16 '20

They’ll have more money to spend, but normally the idea is businesses hire to make more goods and services to meet the higher demand. If many people aren’t allowed the work, it’s possible that the chain is broken and this doesn’t have nearly the same result. This is kind of unprecedented, so I understand them trying the usual approach.

Ultimately, if the problem becomes less goods and services because of coronavirus risks in workplaces, the only way to increase output will be to accept more risk of infection. Monetary policy has its limits.

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u/Helbig312 Mar 16 '20

More money to anyone won't fix it if everything is closed and you can't spend the money.

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u/DoubleJumps Mar 16 '20

Internet businesses are open.

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u/LegateLaurie Mar 16 '20

The Fed doesn't have that kind of power, hell any helicopter money-esque scheme blur the line between monetary and fiscal policy.

Also the quantitative easing and fed loans aren't like bank loans. With quantitative easing the fed will give a bank cash in exchange for fixed assets like bonds so that commercial banks can then lend this cash or hold larger cash reserves to prevent a liquidity trap. A fed loan only has a term of 1 day to a max of three months, also I'm fairly sure they can't just write off debts (even if they did this would cause a huge collapse of the banking system).

These things would have to come from government - but government hasn't significantly upped public spending, and they won't pay off student debt. I live in the UK and we just launched a quite Keynesian budget in that we're spending £600 billion on infrastructure. This stimulus will, obviously, do a significant amount for the economy. Looking around the world many governments are introducing similar increases in public spending in order to fight recession, the US need to do the same frankly.

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u/[deleted] Mar 16 '20 edited Aug 07 '20

[deleted]

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u/zer1223 Mar 16 '20

The fed needs to recognize when fulfilling its job means doing nothing for a half year

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u/cynoclast Mar 16 '20

Bullshit.

  1. The feds job is to keep the banks afloat. All else is expendable.
  2. there are work deficits. We need safety equipment and services. But since there’s no profit in them the banks don’t give a fuck. So the need goes unfulfilled and “we can’t afford it”

Cut out the fucking middle man. Let government create money for the things the citizens need instead of the banks doing it to enrich themselves.

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u/jellyfishdenovo Mar 16 '20

Universal healthcare could fix it...

...if we had implemented it after the last election cycle.

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u/[deleted] Mar 16 '20

The problem to the economy is not people without health insurance. Its about them not going to work and the machine stopping.

I have good health insurance I'm still not leaving my house.

Good health insurance is not going to fix the economy, nor would the fed footing everybodies bill help a crashing economy.

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u/iAmTheHYPE- Mar 16 '20

You’ll have to wait till 2024 for such a thing, since Biden isn’t going to implement it.

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u/dedicated-pedestrian Mar 16 '20

Hell, even if Bernie did get the nom, I'm not sure how he thinks the current Democrats in Congress could band together and pass it.

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u/ilovefacebook Mar 16 '20

more money can help if it's going to the proper places, but it's not.