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Fed will inject $1.5 TRILLION into financial markets
- Thread starter Deleted member 18944
- Start date
So you should probably get used to people bringing up the same points bernie would be (and will continue to) going forward because he's not actually the mother brain of the hive mind. If your future arguments are going to be "bernie lost", i fear they might not work as well as you hope.
the fed doesn't answer to the president. just look at what trump has had to say about the chairman's use of monetary policy during his term.
I do not think Bernie would be so irresponsible as to deliberately conflate monetary policy aimed at maintaining liquidity with government appropriations.
Thank you to the like 3 people in this thread that has explained this properly. Seems a lot more reasonable now, albeit still an overreaction.
it doesn't answer to the president, true, but the president appoints the fed chairperson and they have been complicit in inflating this market to the bursting point with their irresponsible bull market rate cuts
For real. It's painful how illiterate the populous is about this. It's impossible to not understand this stuff and claim to be informed.
Question since it's unfortunately been a few years since I've been in an econ class so my memory is hazy. This is gonna be a doozey on inflation right?
The fed doesn't answer the to president, but the president has been using the bully pulpit to try and get the fed to do what he wants all term.
In 2008 a lot of companies went bankrupt over night as they suddenly didn't have access to funds to cover short term expenses, this is to prevent that happening again if I understand correctly.
Yep credit and lending need to be shored up to prevent further chaos.
But everything else is still in play, a recession being the big one.
not likely. money velocity decreases so we increase the money supply. If the velocity falls and the money supply doesn't increase then we'd be facing deflation
Velocity of money - Wikipedia
No, these funds aren't going into general circulation where they'd be amplified by the force multipier. If the Fed were literally spending 1.5T directly in the open market, that would be an inflation disaster.
I don't like this move for reasons articulated above, but this isn't like... money in the way you're thinking.
It would be irresponsible to talk about what money gets allocated where during a presidential debate and tie it back to your central campaign message that is at an intersection of economics and healthcare during a pandemic and a precarious stock market, but i like bernie because he's a rebel like that.
the real effects of this won't be felt until further down the road. it's basically an insurance policy to give banks a lot of leeway to adjust to however the market goes during corona's run.
Oh shit I forgot about that this was a thing. I need to re read my Econ books. Been 3 years since I last read them and I already feel alliterate when the fed does anything.not likely. money velocity decreases so we increase the money supply. If the velocity falls and the money supply doesn't increase then we'd be facing deflation
Velocity of money - Wikipedia
en.wikipedia.org
Yes, this won't stop a recession. We're just not going to have a recession because securities can't be converted to cash fast enough
No tax dollars are going to this. Really no dollars are going to it, but certainly not tax dollars
Ohh I see where I goofed. Just bank circulation money for lending purposes.
I'm just going to quote this so people see it on every page and that I don't also have to go into detail.
Right, there are REAL reasons to criticize this move, we should stop with the disingenuous "but what about socialism" criticisms.
The raw cost of M4A is estimated in the ballpark of 3.4 trillion annually. It's one thing to dump 1.5 trillion in the market as a one-time emergency and another thing entirely to rework the financial and healthcare systems to support those costs annually.
Yeah, in part, I don't think it's the only aspect they're targeting as 198B of the total 1.5T. https://www.cnbc.com/2020/03/12/fed...-short-term-repo-bank-funding-operations.html
Because that's not what's going on at all whatsoever. This is making sure there's enough currency circulating to compensate for a slowdown caused by reduced trading volume. The fed doesn't spend money on things directly, they manage the amount circulating.
edit: sarcasm was way too real unfortunately.
It's hard to tell when this thread is full of takes suggesting this is money that could be spent on healthcare
On reflection though, I do get the joke
I got it -- it's just a false equivalence.
The 2008 bailouts, on the other hand...