Re:Federal Reserve slashes interest rates to zero
by kmonsen on Sunday March 15, 2020 @07:12PM
(#22587759)
The thing is, it will be a financial crisis at some point once people start loosing their jobs and can't afford to pay bills in addition to a medical disaster no-one can pay for.
Re:Federal Reserve slashes interest rates to zero
by cmurf on Sunday March 15, 2020 @08:15PM
(#22588237)
Combination government and market failure, where the market dispassionately says "you should all just lose your jobs, no demand for now", and the government doesn't intervene?
Most ski resorts in North America are shut down for at least a week, but Jackson Hole closed for the season and others are expected to follow. Hospitality and service industry workers who have seasonal jobs, are making a large chunk of their annual earnings during spring break, which is now. Already people are asking about rent reductions. How does that work? Landlord takes a haircut? Will the bank take a mortgage haircut? Who even owns the actual loan, do they take a hair cut? And if no one does, then that means the renter is effectively taking the full hit.
Maybe some of them will qualify for unemployment insurance, but I have no idea how long that lasts or what percent on the dollar it pays.
Does the Federal Reserve Bank do vaccines, now? This isn't a financial crisis. Money won't fix it. People aren't transacting in big chunks of the economy because they're immobilized by a plague.
Now... certainly once the virus is under control, economic recovery is going to depend on finance and liquidity, so it's not like the Fed has no role to play. But... it's not the Fed's fight to "lose". Until case counts are down and infection risk is negligible, we're looking at a depression regardless.