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Liquidity! because there's not enough oil to soothe the gears of the economy? Or is the root cause people hoarding money instead of pushing it back into the wo
by stazz1 7y ago
Liquidity! because there's not enough oil to soothe the gears of the economy? Or is the root cause people hoarding money instead of pushing it back into the world?
- DethNinja 7y agoWell injecting this money will definitely not help if it is the case of people hoarding money. Also how come they cannot inject this money directly to citizens instead of large companies? Sure, inflation might be larger but what guarantees are there that injecting money to large companies won’t create inflation later down the road.
- jonahbenton 7y agoCitizens are not assets.
- Red_Leaves_Flyy 7y agoJeff bezos, and countless others before him, have consistently proven this false.
- aaronblohowiak 7y agoMonetary policy is harder to change in the current environment / would have “detrimental” effects for the trade war.
- Consultant32452 7y agoThe traditional way to inject money directly to citizens is the government hiring them to do work. Sometimes this is public works, sometimes this is hiring people who join the military. I have no idea what the govt job numbers look like, but I do know we're debt spending at incredible rates.
- Mikeb85 7y agoWhen interest rates are this low it doesn't make sense to not borrow money...
- raducu 7y agoEspecially if you buy high-yield bonds with those borrowed money knowing the rating agencies are a joke and the people issuing the bonds hold the central banks hostage, lest their default tanks the economy. Or use the money to buy back stocks, knowing that all your privileged buddies are doing the same, and if central banks would dare to raise interest rates you wouldn't be able to repay those loans, again holding the economy hostage with your scheme.
- stazz1 7y agoWow, "holding the economy hostage," i think you nailed it on the head.
- deleted 7y ago[deleted]
- nightski 7y agoBecause citizens generally are not interested in an overnight loan? This repo funding is repaid the next day.
- raducu 7y ago"overnight" -- yeah, right, as if you cannot make another, and another "overnight" loan in perpetuity if you are a big player.
- deleted 7y ago[deleted]
- cryptica 7y agoThe Fed doesn't work anymore. Loans were invented to encourage productive risk taking, but what risks are corporations taking? They already have more money than they know what to do with. They just use debt as a tool to avoid tax or to pay for online ads to deceive consumers to buy their inferior quality products and services and to create noisy anti-competitive environments. When it comes to regular people; they will use the new Fed money to take loans to buy houses in speculative areas where those same corporations are headquartered. The economy doesn't work. It has no incentive for value creation. It just takes money from people who have little capital and gives it to people who have big capital. Then, as the economy depletes capital from its most productive workers, it effectively enslaves them to capital holders who know everything about job creation but don't know the first thing about value creation.
- rapsey 7y agoCorporations are using debt to buy their own stock.
- cryptica 7y agoGood point. Buy-backs are even worse than paying for ads because the Fed money goes straight to existing shareholders. Actually this explains rising inequality very neatly.
- rapsey 7y agoI don’t know why you are being down voted. Fed policies since 2008 clearly benefitted the wealthy class almost exclusively.
- paganel 7y agoWhich means bigger dividends for the stake-holders invested in said corporations, which dividends oftentimes receive preferential tax-treatment.
- raducu 7y agoThe root cause is low interest rates, people being able to issue junk, high interest bonds at AAA ratings, and the FED being willing to exchange dollars for those bonds. The FED is replacing the regular markets providing properly priced liquidity, it is only staving off a due recession in unhealthy sectors while completely fucking up the entire financial system; the next recession will be so severe, that the great recession will look like a walk in the park. When everybody is too big to fail, capitalsim is dead.
- specialist 7y agoEconomy is a measure of the movement of money. To spend up the economy, we have to keep the money moving. Isn't the problem hoarding? Everyone hoards. Rich people hoard wealth. Right? Not a moral statement. Preferential attachment (winner takes all) is just math. The problem for society (the economy): we have all this unproductive capital (wealth) lying around, AND we have all this work that needs doing, BUT it's not efficient for rich people to manage a large basket of smaller investments. So to grow the economy, we need better strategies to keep the money moving. Progressive taxation has worked in the past. YCombinator seems to have found a new way to match investors to opportunities more efficiently. (Sorry, being a simple bear, I don't know of any other strategies. Maybe "Buy Local", which keeps the money moving in smaller networks.) To me -- a person who barely understands "money", finance, economics -- it's really just that simple. Keep the money moving.
- Fjolsvith 7y agoTrump is pushing for negative interest rates. Wouldn't that break Capital free?
- specialist 7y agoSorry, I have no idea. I can only repeat what I've read. Others have compared inflation to taxation; both reduce capital over time. So is the converse true? Does lower, or even negative, inflation favor the hoarding of wealth?