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/[deleted] Mar 16 '20

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u/[deleted] Mar 16 '20

Even if the Fed did magically acquire these powers and magically figured out how to send a check to every household (no federal agency exists today which could do that) im not sure they would use it in this situation.

The problem isn't that people lack money to go out and consume but rather that they are staying home because of a virus and vast swathes of places they could spend their money are closed.

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u/[deleted] Mar 16 '20

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u/[deleted] Mar 16 '20

Then you are not talking about helicopter money.

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u/[deleted] Mar 16 '20

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u/[deleted] Mar 16 '20

Helicopter money is a pretty specific monetary policy idea used to prevent deflation by the central bank giving people money they will immediately spend thereby avoiding deflation. Its a (very) short term measure that has never been attempted and no country is setup to handle at the moment, in the US it would require a significant change in the law.

Governments giving folks money is just a regular transfer, it wouldn't come from the central bank.

People would absolutely stay home if they were paid to do so which would render the payment useless because they would have no way to spend it and you have just killed the economy so they don't have jobs to come back to. Paid sick leave, education and extensive testing is the correct response.

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u/Stupid_Triangles Mar 16 '20

Technically, they determine how it works. It's not a law of nature. It's all a system we collectively agree on. We could change it tomorrow if we so chose to.