Re:Federal Reserve slashes interest rates to zero
by simonh on Monday March 16, 2020 @09:24AM
(#22592426)
We weren't dealing with a crisis before. Now we are.
You're quite correct that this is a fiscal and not monetary crisis, as I commented up-thread, but that doesn't mean it won't have monetary impact and implications. For example as I pointed out the primary problem is cash flow for companies and households, but that also means they may not be able to pay back bank loans when they otherwise would and that will impact bank balance sheets. It's a secondary issue, but still a real issue that banks need to have the flexibility to absorb.
You're quite correct that this is a fiscal and not monetary crisis, as I commented up-thread, but that doesn't mean it won't have monetary impact and implications. For example as I pointed out the primary problem is cash flow for companies and households, but that also means they may not be able to pay back bank loans when they otherwise would and that will impact bank balance sheets. It's a secondary issue, but still a real issue that banks need to have the flexibility to absorb.