But in seriousness, the next week is a critical time in the world. I remember sitting in an airport when news of Lehman Brothers collapse was flashing on the TV screens. I'm reminded of that time.
We learned later about how Hank Paulson got down on one knee and begged Nancy Pelosi to go along with is plan to save the economy. In retelling of that period, it's clear that the world's top economists felt we were perilously close to a full-blown disaster – trucks not bringing goods into cities, things grinding to a halt, etc.
Remember that when you see bold proposals in the coming days.
As I've commented over the past few weeks, I think we've missed critical steps in fighting coronavirus. The lack of testing will maybe turn out to be one of the biggest scandals of my lifetime.
My personal belief is that – at least in the United States – we did everything we could to prevent a short-term economic slowdown and instead we're on the verge of something much longer, much deeper.
But if there were ever a time for us not to be partisan and tribal, it's now. We blew the past few weeks. We can't afford to blow any more. We really do need to come together, globally, but particularly here in the US to try and agree on the right next steps. We need to act boldly, now.
The dysfunction in our government is due to years of slow decay that have culminated in the present situation. This crisis will hopefully force enough people to realize the problem exists and its scope that we can finally take steps to correct the issue.
Electing a different party won't help, because we still have the electoral college, voter suppression, unlimited corporate donations, the spoils system, seniority in the legislature, and partisan judges on the supreme court. The Democrats are Corrupt and the GOP is corrupt. The two party system and first past the post have to go. We need to amend the constitution to avoid the situation recurring in the future.
People are about to die because our president is a fool, and the fact that he's still in charge is the fault of all of us who voted or didn't vote over the past half century.
In all honesty, I don't see anything in the government changing for this crisis... they can't change. Lots of people are going to get sick and die, and hopefully in the aftermath people will finally be angry enough to repair our country.
Assuming there are enough of us left.
This point of view is sobering. I am tired of people thinking that replacing a politician with another would solve every problem.
If I had to choose one thing that should change right now, it is this. Aggressive testing of everyone, starting with contact persons, persons travelling from high risk areas and then basically everyone. Would allow a much better understanding of the situation and make any measures way more effective.
Other than that, the measures taken seem reasonable based on the situation when they ware taken (for expectations, refer to testing).
The poor without insurance also cannot afford the test or treatment.
Testing is important but providing real benefits to those that are potentially infected will incentivize them to get tested. Otherwise we are going to struggle with getting this contained.
But you are right. So right. Because I would do the same if I were in that position. And again the weakest people and families are hit worst. Maybe it serves as a wake-up call why universal health care is important. It enables so many things, not just robust disease response.
Edit: Fixed the first sentence.
Best we can do is "flatten the curve" by isolating people as much as possible. Realistically, all the hand washing and testing does next to nothing in terms of modifying behaviour.
Could be so, that once a certain number of people are infected, full quarantine measures will be taken anyway. So on could just jump to these measures right away. Which would leave increased transparency as the main benefit. Would still be worth it, even if actual countermeasures don't necessarily change.
The same top economists who didn't see the financial crisis coming? More like the top economists hired/backed by bankers felt that bankers would lose a lot of money and made the excuse of bread lines to dupe congress.
> But if there were ever a time for us not to be partisan and tribal, it's now.
No. I prefer the partisanship. It's when the government is united that you know bad things is going to happen. Everytime there is an illegal war, the government unites. Everytime the american people gets screwed over, it's always the united government. And the same messaging is used "if there were ever a time for us not to be partisan and tribal, it's now."
But then again, the partisanship is just for show anyways. They all work for the same masters.
> We need to act boldly, now.
Like what? Give more money to bankers and wall street? Like last time?
Every time there is a fear mongering event - 9/11, Financial Crisis, Red Scare, etc, it's the american public that loses more rights/privileges and the elites/government/state that gets more control.
No, "we" didn't blow anything. Plenty of us have been preparing for this for well over a month. And now, you want taxpayers, savers, the conscientious, and the prepared to bail out the people who were buying TSLA at $800 and selling VIX with a 10-handle with a pandemic on our doorstep, all while name-calling those of us who bothered to read the research "crazy"?
No, let them all blow up. They deserve to soak in their margin calls.
- The GOP (the current ruling party) bears a majority of the blame for the recent screw ups (though _both_ parties are to blame for the decades-long problems with the healthcare system)
Both things are true.
Maybe a lot of people
are so skeptical today about the virus because of the crisis fear mongering in 2008.
We are in the middle of a problem exacerbated by politics, that will require political decisions to solve.
When politicians are doing nothing, or making the problem worse, this is not the time to shrug our shoulders, and be apolitical. Political decisions have consequences.
It's not "partisan and tribal" to criticize this administration and the GOP for their failure to respond.
If they were doing a good job here, it would be one thing. But they're not, and for that we need to hold them accountable.
Question 1) Is the spread inevitable, or can we achieve containment?
Question 2) If it can't be contained, and worldwide spread is inevitable, approximately how many new cases per day do you want to see for the next 6 months?
I would say the answer to #1 is that spread is absolutely inevitable. There are way too many vectors, and it is way too virulent. I'd go further and say that I believe tens if not hundreds of millions of people have already been infected and will never have serious illness, but such a claim is really besides the point.
I would say the answer to #2 is; just so many as you don't run out of ventilators. And absolutely start setting up rows of ventilators in dedicated facilities in major cities.
So to those saying we should have done more, sooner... I ask, to what end? Follow through on the hypothetical "done more sooner" scenario. Worldometer says the US has 1,518 active cases, of which 10 are serious. So 10 people in the country are in an ICU for COVID-19 right now?
"Test everyone!" To what end? You don't need to test people in order to know if they need an ICU. The ICUs are not full - and you don't need more testing to tell you that. The main benefit to more testing would be that people who are self-quarantining due to potential exposure could maybe stop self-quarantining earlier. That's a fairly marginal benefit.
This isn't a situation where the world is going to shut down until a vaccine is available and administered to a billion people. This is a situation where the vast majority of people have mild symptoms, then herd immunity, and then will very much need to get back to work in order to buy groceries and pay their mortgage.
The WHO disagrees: https://www.who.int/dg/speeches/detail/who-director-general-...
> "Test everyone!" To what end? You don't need to test people in order to know if they need an ICU. The ICUs are not full - and you don't need more testing to tell you that. The main benefit to more testing would be that people who are self-quarantining due to potential exposure could maybe stop self-quarantining earlier. That's a fairly marginal benefit.
Germany was ahead of the curve testing people and as a result (so far) they are weathering the virus much better than most other countries (including the US):
It's not all about the testing for them but in the article they do count it as a key reason why they are doing well so far.
Germany apparently has 10 people in serious condition. Availability of resources obviously isn’t a factor...
You underestimate human stupidity :) People self-quarantaing is a sign of great awarenes of the danger. Meanwhile there are millions of people who ignore symptoms because "it's just a common flu, not coronavirus, don't be paranoid". Testing everyone would help identify and quarantaine those people (against their will, if necessary).
Otherwise politicians can hide behind relatively low numbers of confirmed cases as an excuse for inaction.
You say that like both parties are trying to deny testing and are refusing to provide the social safety net for workers to stay home when they're sick. This is very much not a "both sides" discussion. This is: the GOP needs to stop trying to pretend like nothing is wrong and actually DO SOMETHING to prevent this from becoming an even bigger disaster.
Ahh, the old cowardly downvote without comment because you don't like the reality of the situation that there is one party that's very much to blame.
Yes, the administration bears a huge amount of responsibility for sandbagging and obstructing the initial response, mis-informing the public, ignoring their own subject experts, etc.
Fresh Air did a great long-form report today summarizing the ways the administration has obstructed and worsened the crisis. No transcript yet but it's worth a listen.
(<3 Terry Gross, she's a wonderful interviewer who is fantastic at asking insightful and probing questions while being incredibly kind and gentle. Probably the single most informative show on the air, for whatever topic she covers.)
The focus needs to be on slowing the spread and treatment.
The treatment is about supporting the body while it fights the virus, and highly dependent on how & where the virus manifests. Some need oxygen therapy, some need antivirals, some even need lung transplants. In cases where the virus affects other organs, totally different treatment applies. The resource constraint there is general medical capacity - doctors, beds, ICUs, oxygen support, and probably a hundred other things.
The issue with our lack of testing is that we have no idea what we're dealing with, which is a big part of why the market's freaking out. If we had been ramping up testing months ago, when it was already a massive disruption in China and should have been clear that it was only a matter of time before it got to the US, then we would have a lot more information now.
This is why we need competent administrators running things like the CDC, the DoE, Homeland Security etc..., not political hacks.
The GOP has a conflict of interest here. They don't want to give evidence that government can work. Their goal is to break government and then go "see, government doesn't work!" It's a splendid position to take, because anything that comes up you simply shrug and wipe your hands clean. You're not responsible for anything.
While we all sit and ponder whether we're all going to die and if the economy will disappear overnight, let's all just remember the travesty that is Puerto Rico. If that's not enough, then kids in concentration camps. Oh? People care now because it impacts their little world?
"No time for politics" says the people actively breaking the world.
We needed information 2 months ago, we needed early action like quarantines, travel bans a month ago. Testing is the response to an old problem at this point.
Large democratic, decentralized institutions are uniquely bad at the kind of fast response needed here and the government continues to act 1 months behind, so I have little faith that much will change. Most of the world will get it, but medical systems are mobilizing and hopefully most people will make it out ok.
During H1N1 in 2009, within 30 days we tested 1 million people. This led to a vaccine developed within 6 months. Testing is core to understand spread.
"Containment is making sure all the cases are identified, controlled, and isolated. It’s what Singapore, Hong Kong, Japan or Taiwan are doing so well: They very quickly limit people coming in, identify the sick, immediately isolate them, use heavy protective gear to protect their health workers, track all their contacts, quarantine them…"
Lack of testing does not appear to have been a technology or supply chain problem, possible supply chain probs in future...
do any of these commentators have any idea how long it takes to develop a reliable, sensitive and hopefully specific test
The CDC forbade King County from using their own home grown test.
that probably didn't exist in its current form until around 3 months ago.
The US CDC also declined to use the WHO test (and presumably the Chinese and Korean ones as well)... even as a temporary measure.
why not criticize them for not yet developing an effective antiviral treatment and vaccine for the condition too?
Because the tests were widely available, widely distributed, and non-CDC labs have already developed tests. The same is not true with a vaccine. IIRC antivirals are being tested in Seattle.
A pandemic is not the time to be picky - if anything, a high false positive rate helps. Would you rather 10 people quarantined, of whom only 2 are sick, or all 10 released into the wild because no test kit (of any sort) was available?
Not saying that's what happened here (perfect is the enemy of the good!), just that it could be worse. It could always be worse.
Now is the time to unite and act. We can fight, argue and point fingers once this is all behind us.
if we are lucky, hopefully he’s learned from that but i’m not holding my breath
This is time to fall in line or be thrown out of your job.
Sorry, I am perfectly capable of acting while still pointing my finger at the people who are actively trying to make this worse.
Maybe you can afford to play kum-bay-yah but perhaps it's not your life or the lives of your loved ones which have been doomed by this ineptitude. Civility is poison to irrational discourse.
I don't expect to be able to craft useful public health policy in discussion with an antivaxxer or space exploration policy with a flat earther – the idea of "unite and act" is be absurd when dealing with people who lack the ability to admit they can be wrong/consider multiple perspectives/think critically. And yet that's basically where we stand today politically.
> Fact-checkers and scientists have scrambled to correct the misinformation coming out of the White House. (No, the virus has not been “contained” in America; no, testing is not available to anybody who wants it; no, people shouldn’t go to work if they’re sick.) But Trump’s message seems to have resonated with his base: A Quinnipiac University poll released this week found that just 35 percent of Republicans are concerned about the virus, compared with 68 percent of Democrats. 
If the other side doesn't even agree with you this is a problem that needs serious attention to be solved, how are we going to get our act together?
Now is absolutely the time, because:
> We have to get our act together and handle the situation.
And identifying the problems in the approach to date is an essential element of course correction.
> Now is the time to unite and act.
No, now is the time to identify the problems in our actions to date and course correct to appropriate actions. “Unite and act” is pointless or counterproductive without that.
The states with "local outbreaks" (NY, CA, WA) are the ones that told the CDC to get bent and did it anyway. It's everywhere, the states with low case numbers just aren't testing for it.
This is what I can't get people around me to understand.
No cases near me simply means no one has been tested for it at this point.
On a phone call the day after the C.D.C. and F.D.A. had told Dr. Chu to stop, officials relented, but only partially, the researchers recalled. They would allow the study’s laboratories to test cases and report the results only in future samples. They would need to use a new consent form that explicitly mentioned that results of the coronavirus tests might be shared with the local health department.
The problem is it's ramping up to where it should've been weeks (months?) ago. We're way behind.
The US is not built that way the CDC can't just fix it. That's the power and weakness of our system compared to other countries.
Here the leaders of CDC explains the problem in a nutshell.
People are probably downvoting silently this time because explaining to you that you're obliviously consuming propaganda is one step deeper into flamewar territory which is unpopular on HN (and against the rules).
Case in point? Media reports that bill forcing employers to provide sick leave failed to pass because of evil Republicans. What you won't see on the news is the nuance that such a bill can't be passed without possibly bankrupting small businesses.
That's just one example. The administration shut down the border early on and was enthusiastically rewarded with accusations of sinophobia.
All politicians play this game. The US government institution has been rotting for decades, and yes, it really is a "both sides" issue when one side is so blinded by hatred that they refuse to acknowledge positive decisions.
There are literally almost as many people on the Republican side blindly dismissing everything Democrats do. Remember, Trump only lost the popular vote by 3%. Now is not the time for partisan idiocy.
The bill literally includes the funding to pay for sick leave. That's why it's a FUNDING bill - I think you're confused about who is being mislead by propaganda.
Meanwhile, the GOP is trying to insert language about abortion into the bill because...?
However, the press release from Murray and DeLauro makes it sound like businesses are paying:
If you have a primary source that shows that government, not businesses, are paying for the costs of sick leave as it relates to S.3415 and HR.6150, please share it.
I also can't find a single search result that includes the term abortion as it relates to either S.3415 or HR.6150.
And all I could think was 'it's a PATRIOT act...'
My experience in large enterprises are that there are two kinds of "politics" that get played.
In one form, the leadership makes moves or take actions that benefit themselves but also help the company. Often that is called out as "leadership."
In the other form, the leadership makes moves or take actions that benefit themselves but hurts the company. That form is called "politics."
You can see examples all around of this. For example a CEO that buys another company, the result of which is hitting a milestone that triggers a big bonus for them but saddles the company with a bunch of debt and expense that drags down its productivity. That is bad. Versus the same example where the CEO buys another company and the combination results both in them getting a bonus as well as the combined company doing better than the sum of the individual companies. That is good.
So I agree with you that both parties are playing games, the differentiator for me is what is the ratio of benefit to the country vs benefit to the party/individual from the game being played? If that ration is 1:1 or greater I see it as a positive thing rather than a negative thing.
In my experience, if the move "benefits the company" and the overall company governance is not dysfunctional, then the leader responsible does not get hurt by it. At least not in the long term.
Mergers are always risky. CEO can do all the analysis possible but can't know for sure if combined company will do better or worse than individual parts. That part of the job is called "taking calculated risks".
True, but growth-by-acquisition is a lot "easier" than organic (R&D-driven) growth, particularly when money is cheap.
A CEO looking for a quick win - usually quarterly, sometimes annually - will almost always default to an acquisition. It won't be clear for at least 2-3 years whether or not it was worthwhile.
I think a CEO who spurns acquisitions in favour of organic R&D will always, almost by definition, be putting the company's interests ahead of his/her own.
The gp's(grandposter) comment uses the word companies. Which companies? Well we're talking about the US and health care so it has gotta be the health insurance companies? No, the bill Lamar disagreed with was to make employer's provide sick time to their employees.
Also, pp(parentposter) is what I use. OP is reserved for poster of the content.
No, the bill Lamar disagreed with was to make employer's provide sick time to their employees
It's also a mistake to just look at who controls the White House to figure out which party is in control when the economy does well economically. Both the executive and legislative branches matter and for the legislative, you need to control both houses. Even if one party controls the excutive and both houses of congress, it's hard to attribute the success of the economy to the current controlling party. Somethings the economy might be doing better because of current policies and sometimes it might be doing better because of policies enacted by the previous administration and congress, but the effects were latent.
In general, you can't take a macro look to determine which party is better for business. Instead you've got to look at things on a policy by policy basis and look at the first and second order economic impacts of specific policies.
Also, while Republicans haven't been very fiscally conservative in many years, most of the "huge bills being run up" are only sometimes from new spending. Most of the time, running up the bills is just from tax cuts. The democrats pass spending bills with accompanying taxes and the republicans are unable to undo both the spending and the taxes at the same time, so they negotiate for at least cutting taxes to help the economy, but the spending gets left in place.
The truth is that both parties are generally drunken spenders, but that one party has no issue taking more money from productive Americans to pay for their drunken spending.
FWIW, I'm neither a republican nor a democrat. Both parties are awful, but at least the Republicans try to let people keep money they've earned and rarely try to raise new taxes.
The US has run less than 10k in total. That is a colossal failure.
Question claim in fact, although it is persistently being repeated everywhere constantly, for propaganda purposes. Three of the major private lab companies indicate they'll be at a 10,000 combined per day test capacity before the week is out.
The US doesn't know how many tests have been run in total nationally. A large volume of tests have been distributed to hospitals and private labs around the US, the majority of which do not report their numbers back to a central authority (such as the CDC). That's a failure of centralized reporting and organization, due to the US having dozens of separate healthcare systems which the Feds do not control.
State infectious disease registries are absolutely receiving ELRs (electronic lab reports) and transmitting case reporting back to CDC and data is currently moving for novel coronavirus as well.
The term you are looking for is NEDSS/NETSS reporting.
> Today, all 50 states and Washington, D.C., use NEDSS-compatible integrated surveillance information systems to send case notifications to NNDSS.
So you think we should celebrate that after a month to get ready, we'll have finally caught up with a country 1/7 our size in testing capacity?
The US is currently testing the smallest percentage of its population of any developed nation: https://twitter.com/nick_kapur/status/1238156462708477958
China, too, if you can trust their numbers, and South Korea's look positive after a big starting spike. Each of these countries took early (except for China, but they shut down Wuhan with fewer cases than the US has now), aggressive steps that should be considered a model for others.
No, it probably doesn't. It probably reflects the fact that we're not finding folks, because we're not testing enough.
Ohio's (Republican, incidentally) governor, for example, is stating that their five confirmed cases likely indicate 100,000 undetected in the community so far: https://twitter.com/GovMikeDeWine/status/1238177953126604801
If you don't think that affects how our numbers net out, I'm not sure we can have a rational discussion beyond here.
> In terms of per capita testing, Korea has run 3,600 tests per 1 million population. In contrast, U.S. has just run five tests per 1 million people.
Testing more people is not going to change anything, this virus is so easy to transmit that we should take for granted that we will catch it anyway.
What we can do instead is realize that we are facing something big and protect vulnerable people from it by asking them to stay at home and create a system to send them food safely, it is almost useless to prevent healthy and young people to work as it will just block the economy/transportation/health work/everything
The markets wouldn't be so important if there were a safety net.
edit: "from making profitable trades" -> "from not making trades"
They're also buying assets, e.g. Treasuries. This is about increasing liquidity, not printing money.
Lets remember what causes slowdowns in productivity, panics, the great depression, the recession etc: people being slammed with too high interest rates for what's feasible for them to repay when times are tough. If the fed offered low interest rates directly it would be a different world. Remember also, the world is an auction house, so when people get these kinds of perks and you don't, your money doesnt go as far.
If I want to give my friend a loan, I need to earn that money first by working hard. FED does not conduct any profitable activity that would earn them any money, they DO PRINT that money from thin air.
I mean you just magically put $15T into circulation?
Won't this lead to inflation?
If you have ever taken a loan from a bank you are aware that you must prove to the bank that you are able to repay the sum. Based on the information they receive they will calculate the default risk and increase the interest rate accordingly.
Warning. Extremely simplified for ease of demonstration.
If you have a 50% default risk then someone else has to cover your missed payments. For every $10k you want to borrow the bank has to ask for another $10k in additional interest to cover the default risk. If your loan lasts 8 years that means $833 additional interest per year or around 8%.
Now, if you are a young poor person with a bad credit score then you might end up paying 5% on top of the actual interest rate. Negative interest: 5% - 0.1% = 4.9%. Positive interest: 5% + 1% = 6%. I'm glossing over compounding interest but the picture is clear. Negative interest rates are not going to meaningfully change the cost of borrowing money for the average person unless they get a mortgage that is backed by the value of the house. Meanwhile for rich people and companies who can get rates as low as 1% lowering the interest rate to -0.1% is almost like a cheat code. At those rates the money might as well be free.
The situation is exactly as kylebenzle inferred; the Fed is injecting new fiat money into the economy and it's going straight into the pockets of rich financial institutions which add no value whatsoever to the economy or society.
The alternative is, the bank collapsing, taking some part of the economy with it.
I remember 2 years ago the market throwing a tantrum because of the fed unwinding it balance sheet. Doesn’t that mean that typical loans are never repaid and the Fed just let the bonds mature?
Financial institutions control who gets levered money (loans). They provide a huge value to an economy and society in a fractional reserve banking system.
You are upset about the Fed, when you should be upset about the government who controls fiscal policy. The government can provide tax holidays and other benefits more directly to people, as is their role, not the Fed.
Both the government and the Fed are to blame; one for designing the whole scheme and the other for implementing it. I'm upset about the idea that the Fed can inject money into the economy based on obscure criteria. From the perspective of an average citizen, who is legally obliged to accept Fed money in exchange for their labor, whatever set of criteria the Fed chooses is going to be inherently inadequate; the mere lack of transparency behind the Fed's operation is by itself sufficient to discredit the validity of the entire operation.
Money backed by gold was good money precisely and fundamentally because everyone understood what gold was and where it came from. Now, essentially nobody knows what fiat money is or where it comes from and yet everyone is legally obliged to accept it.
Even when "money backed by gold" was a slightly less completely inaccurate fiction than it is now, what people "knew" to be money was many, many, many different things, depending on where they were and what they did for work.
Stories like this are like religious narratives, and "money backed by gold" is like the story of the angry god allegedly giving tablets to some dude. It is at BEST an allegory but yall go and read it like it happened.
Money is a much more interesting topic that goldbugs give it...um...credit for.
There is another recent discussion on HN:
that has a lot of pointers to good resources from which to begin the discovery process.
Personal finance and monetary policy are not similar even though they both involve money. Money in your bank account is not the same as money in the Federal Reserve or even money printed at a mint.
That's what central banks want you to believe: that what they are doing is something special, "God's work" - as some drunk Goldman Sachs executive put it. Truth is: law of economics are pretty much like laws of physics - they work the same in small and large scale. It is no coincidence that Great Depression happened in 1929, mere 16 years after FED was created - that was just a first of many consequences of central bank's irresponsible actions.
This injection isn't really comparable because those other things are expenditures, while the 1.5t refers to short-term loans to very creditworthy borrowers. It really doesn't come at the cost of providing universal healthcare.
> The Federal Reserve System is an independent government institution that has private aspects. The System is not a private organization and does not operate for the purpose of making a profit.
>As an independent institution, the Federal Reserve System has the authority to act on its own without prior approval from Congress or the President.
>The twelve Federal Reserve banks provide the financial means to operate the Federal Reserve System. Each reserve bank is organized much like a private corporation so that it can provide the necessary revenue to cover operational expenses and implement the demands of the board. A member bank is a privately owned bank that must buy an amount equal to 3% of its combined capital and surplus of stock in the Reserve Bank within its region of the Federal Reserve System.
*edit - Also, the source for your quote is cited as "BoG 2005", with a dead/nonexistent URL
Fed = Monetary policy == Make sure money can flow "appropriately"
Government = Fiscal Policy == "Who gets money"
I don't know how your quote is relevant at all.
Not saying the OP is a goldbug or currency conspiracy theorist, but they're the only people I ever see tossing that out so quickly and without any elaboration on what they mean.
> Specifically, "the fed is a private bank" is a common refrain among goldbugs and currency conspiracy theorists, and it's not true, no matter how often it's repeated.
I'd recommend reading The Creature from Jekyll Island. Once you understand the origins of the Fed you will understand that it's an institution founded by public and private individuals and entities to drive profit and leverage the system and taxpayers where it can. It's a creature with public/private/independent parts. It requires no conspiracy because much is known about it, although most people are unaware. JP Morgan, Wells Fargo, Citibank, the government and others founded it together!
"At the end of November 1910, Senator Nelson W. Aldrich and Assistant Secretary of the U.S. Treasury Department A. Piatt Andrew, and five of the country's leading financiers (Frank Vanderlip, Henry P. Davison, Benjamin Strong, and Paul Warburg) arrived at the Jekyll Island Club to conduct a secret meeting to plan the country's monetary policy and banking system, formulating during the meeting the Federal Reserve as America's next central bank.  According to the Federal Reserve Bank of Atlanta, the 1910 Jekyll Island meeting resulted in draft legislation for the creation of a U.S. central bank. Parts of this draft (the Aldrich plan) were incorporated into the 1913 Federal Reserve Act." 
That aside, the common misperception of TARP is that the government gave away $400+B of taxpayer money, which is a very, very far cry from a small inflation-adjusted loss.
I don't think this is a common misconception, I think it's a strawman argument to deflect criticism of the bailouts.
Regardless of whether or not the government made money, we created a massive moral hazard by allowing banks to engage in shady behavior, avoid any criminal prosecution, get below-rate loans to avoid the market consequences of their actions, and left the common people out in the cold.
On top of that, we supposedly fixed the problem by expanding banks' reserve requirements, but when they got into trouble in the repo market, the FED runs to their rescue with even more below-market-rate loans, which seem to get larger and larger by the week.
Banking clients are demanding more liquid assets (ie cash) than banks have access to, so they are swapping treasuries for cash from the Fed.
It's not like this is banking profits; would you rather the bank fail and you or your business or your employer lose everything you had there? Because that is also an option.
Central bank ≠ treasury.
It's the opposite: it's a step toward removing the moral hazard that allowed predatory loans to be offered to students in the first place. The logical end-point is to get back to free or affordable tuition.
> Instead, you should give each young person $300k
Admirable suggestion, but how does that _not_ create perverse incentives to e.g. blow it all speculating on Hearthstone cards?
Yes, this means the Fed is very very worried about the state of the market, it means they think it's at risk of stopping normal operation. Maybe not ongoing crisis but they're worried about crisis in the near future.
The fact that the stock market circuit breaker has been hit a grand total of once before, back when it used a different set of rules and was easier to hit, and then we've hit it twice in a week is pretty fucking bad news, if that sets the backstory for you at all.
The markets literally pay for the entirety of any safety net. Without the markets there are no jobs, so no payroll or income tax revenue. Without tax revenue, there are no safety nets.
Without the markets, there are no investments, so no capital gains tax revenue.
Without the markets, there is nothing to sell, so no sales tax revenue.
Without the markets, there is capacity for charity.
If you don't understand how critical the markets are to the functioning of the country, you don't understand how countries function.
I completely agree that in the long term this is completely faulty and just helps to exacerbate the underlying causes of economic crisis. But our government (typically) does not act in long-term interests. We as a people do not hold our politicians accountable.
I'm pretty sure its treasury bonds that are "Backed by the full faith and credit of the United States". Dollars are backed essentially by what you can buy with them.
This is why each note has “Backed by the full faith and credit of the United States” printed on it.
No they don't. I just checked three different bills in my pocket (a $1, a $10 and a $100) and none of them say this. They say "This note is legal tender for all debts public and private" but there is absolutely no reference to "the full faith and credit of the united states"
The "budget" is equity.
These are the companies you are actively shorting. Think about that. This isn’t the same as 2008.
This article is much less PR: https://www.forexlive.com/centralbank/!/new-york-fed-to-cond...
That said, yeah I see how you are right. Lots of businesses run month to month. When they run out of cash they go bankrupt. Once enough companies do so, the economy takes much longer to recover.
I see some people saying this should alleviate some of the losses incurred by the recent market crash. I however, don’t see how that is the case. To me this seems like a move from the fed to make sure we don’t enter into a liquidity crisis which doesn’t necessarily do anything to signify substantial move upwards in equities. Sure, the fact that investors and traders can now be fairly confident we won’t hit a liquidity crunch and therefore kill some fear in the market, but was that the biggest factor causing the fear and selling in the first place?
My understanding was the selling, and rightfully so, comes from the affects of CoVid. Travel bans, event bans, trade bans, lower consumer activity, etc. I don’t see how injecting capital into the treasuries market alleviates any of these factors.
If anything I think this would cause equity markets to sell off more in the mid to long term knowing that the fed had to do this to keep shops open and liquidity available to those that need it (I'm talking to you banks). On top of this factor, this move by the fed surely will push inflation higher and I would assume production would slow given all the virus affects mentioned above. This puts our economy in stagflation which has a lot of the hallmarks of a recession...
I would not be surprised if we see inflation though. The virus is going to lower productivity due to all the extra overhead. Prices in many areas will probably go up even as the economy stalls. Hopefully the governments react appropriately.
Also side note which is interesting, but not entirely sure how it effects things.
This article hints that the Fed might be moving to a longer term asset purchase plan
From my understanding the US treasury market is the most liquid and largest market for any asset in the world. Up until recently these treasuries had a positive real interest rate, so if you are a corporation with large amounts of cash (typically a bank) you don't want to hold this as cash in a banking account but rather you want to hold treasuries and get a small return. If there aren't enough people trading treasuries anymore and liquidity dries up this can have devastating effects on companies because they might hold lots of assets in the form of treasuries but they need to convert them to dollars to pay their employees or suppliers and need to sell treasuries for that. The repo facility of the FED is a buyer (or seller) of last resort that can hand out dollars for treasuries thus ensuring that there's no shortage of dollars.
> On top of this factor, this move by the fed surely will push inflation higher and I would assume production would slow given all the virus affects mentioned above.
I don't think this will push inflation higher. This is not QE (though there is a meme that it is) where the FED buys treasuries (and MBS) outright and holds them until expiry. If a bank sells treasuries to the repo facility then it will have to buy them back until a pre-determined date. So if the repo facility works it will compress the spread in the treasury market and thus reduce funding costs for banks and ensure that enough dollars are around. Right now it seems like lots of companies are hoarding cash and drawing close to the full amount of their credit lines which means banks are short dollars. Because most of these credit lines will probably be used to fund ongoing operations (pay employees, etc.) or bridge a shortfall in revenues they are unlikely to cause companies to invest more or hire more and drive up prices.
Christine Lagarde today announced TLTRO III (https://www.ecb.europa.eu/mopo/implement/omo/tltro/html/inde...) which serves the same purpose. Helping companies and households to survive a shortfall in income. In short, you don't want to have a bunch of companies going bankrupt just because the economy stopped for a couple of months - the bureaucratic costs and resulting uncertainty for consumers would be much too costly.
> It comes to your desk. Do you veto it?
he replied with
> I would veto anything that delays providing the security and the certainty of healthcare being available now. If they got that through in by some miracle or there`s an epiphany that occurred and some miracle occurred that said, OK, it`s passed. Then you got to look at the cost.
Unlike on hackernews politician's statements shouldn't be read charitably and in the best light possible because not saying "no" is a clear signal to a lot of the folks listening to the interview. I think reading it in the light of "yes" is fair, but he at least waffled a lot more than was warranted.
[edit: (charitably) and (uncharitably), not (charitably) and (charitably)]
Additionally, I don't take the words I hear from politicians on my side (if that's really an accurate term) charitably either. I err on reading both interpretations cynically, and one needs look no further than the "hyperbole" of trump's primary rallies to see where a charitable reading fell far short of the truth.
Charitable interpretation, cynical trust.
Biden would veto the bill.
Unfortunately, previous recessions were caused by demand-side shocks. So increasing the money supply increases demand and mitigates the deflation that usually accompanies a demand driven recession.
It's not clear whether the upcoming recession is supply or demand driven. Shutting down factories in China causes supply shocks; laying people off because of social isolating will cause demand shocks.
If it's a supply shock recession, they usually come with significant inflation and more money will make it a lot worse.
Surely in the beginning, with just China impacted, that was the case. But right now with a global pandemic it's not clear if its a supply shock, or both.
Curious, if supply is lower and the demand lowers more, then what does it mean. A depression??
There is plenty of evidence for this. Consider that the US money supply more than doubled since 2008, yet our purchasing power for general goods didn't halve.
Asset prices have doubled, though. Fueled by QE or real growth? I'm inclined to think the former. Food for thought.
That is the idea, anyway.
The true cause of a crisis is pumping money into institutions which should bankrupt years ago. Pumping because we were too much afraid of normal crisis back then and now we get that crisis, but multiplied by 10 in terms of impact and time period.
Crisis is good in economy. It let big, old and damaged trees to fall and to give more sun light to small healthy trees which may start to grow.
Instead of pumping money into stock market which only feeds the richest ones, we should let them bankrupt to make a space for more healthy businesses. Unfortunately people on average do not understand it and still elect interventionists. It postpones crisis, increases income gap and make crisis at the end much more damaging.
We are very close to see a bankruptcy of Italy. Then banks which bought their bonds will follow. With the Deutche Bank on top.
I agree with you!
Need to see wood not just trees.
That's also why I'm so triggered all the time when some bozo talks about "recession risk" again as if that was the problem.
This is a systemic crisis (in fact, my bet is on system collapse) and it's been years in fact decades in the making. If it hadn't been "coronavirus" hysteria it would have been something else to ignite the tinderbox.
Good riddance. It's kind of inconvenient for me personally but I think the system is stupid, evil and not accessible to reason or even pleading for change. As long as some portion of people can happily profit from status quo, they ride roughshod over everybody else and compensate their conscience with meaningless social wokeness and virtue signaling on IG/Fakebook.
Let the system burn down, maybe then people will listen to reason.
Then the economy will pick up the pieces again, with actual technology, hard capital, and active workers in the workforce still existing after the hard times. I expect this market crash to look most like 1987, which saw new highs 2 years later.
The long term consequences, besides loss of life, are that most market interventions will protect interest rates for large businesses with huge credit lines and existing debt, while small businesses go under, furthering consolidating income inequality.
Would a crash be worse without intervention? Perhaps. But the long term consequences would also be more natural and redistribute resources more fairly, in my opinion.
Not to imply we should panic over a low probability event, just pointing out that we should be careful about Kurtosis.
Worst possible scenario is not really useful for short to mid term planning in an unconstrained event space (gamma ray burst or massive meteor hits Earth, etc.).
The facts remain that children, young adults, adults and even elderly without comorbidities will survive. Deaths are still restricted to those with existing health problems, particularly the elderly.
From an economic perspective, this is the perfect pandemic. We should maintain all schooling and social activities to spread the virus as far and rapidly as possible, to gain herd immunity as quickly as possible. The vulnerable can self-isolate.
The savings in pensions and long-term healthcare for the elderly, as well as a reduction in housing prices owing to the deceased estates, will promote an economic boom that may even - in the long term - offset the short terms costs we are facing right now.
You can imagine a situation where the USA has survived the virus and gained mass immunity, with 5% of its elderly population perishing along the way, giving the USA a long-term advantage due to lower payroll taxes, versus Europe who shut down early, have continual flareups due to lack of herd immunity, and continue with a heavy taxation burden due to elderly losses of only 0.5%.
The money they make isn't "fake" in some sense, like you're making it out to be. It's real utility that they have generated by providing liquidity. Loaning money is not a get rich quick scheme. There is risk involved.
Also, this is getting a little into the weeds philosophically, but injecting large amounts of capital in this way increases the money supply (and by much more than the amount of capital injected). In a sense, this is a tax on everyone who was not a recipient of that capital via a reduction in the purchasing power of their capital. Generally, consumer prices aren't going to go up in this case... but tons of people who had no investments have been looking at this crash as an opportunity to get in the game, and these efforts to prop up the markets with monetary policy in the face of an honest-to-goodness crisis can feel a little gatekeeper-ish.
The market and the Fed have been disagreeing with that rate for what over two years now?