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Working your ass off for a buck, to pay for your rent and food, feels rather pointless, when the government just prints money out of thin air, and hands it to t

Working your ass off for a buck, to pay for your rent and food, feels rather pointless, when the government just prints money out of thin air, and hands it to the rich, and those that don’t need or deserve the help. Meanwhile, you’re taxed like crazy. Health insurance costs is a heavy burden on your earnings. And any savings you have, will now be cut in half. I feel like we just got robbed by the Fed. Again.

kortilla 7y ago
The Fed doesn’t hand out money. PPP grants, etc are administered by different departments. The FED is strictly a lender in this scenario.
- jcbrand 7y ago
  In a way the Fed does hand out free money to the rich, because well-connected institutions that can borrow money from the Fed, do so at a lower interest rate than everyone else who can't. They can then turn around and lend that money out to the rest of us at a higher interest rate, pocketing the difference. Free money.
  - deleted 7y ago
    [deleted]
  - kortilla 7y ago
    No, not free money. The people that can’t loan from the FED are higher risk than the ones that can, so the bank is taking on default risk the FED wouldn’t have.
    - jcbrand 7y ago
      No, some of the banks that get these artificially low interest rate loans from the FED would go bankrupt without them. They're being propped up.
- TekMol 7y ago
  Depending on the interest rate, lended money wery well can be a gift to the borrower. Imagine a company that borrows $1M vs a company that borrwos $1B and both pay an interest of 0%. The company that borrowed $1B has 1000x more firepower to build a big business. While the downside is the same for both companies: They could go bancrupt and pay back nothing. Combine that with the fact that a big enough borrower will be "too big to fail" and will always be able to borrow more money to pay back the last round. In that case, the lended money is a gift independent of the interest rate.
  - kortilla 7y ago
    Nope, rolling loans still aren’t gifts and if the company goes bankrupt that’s not exactly a shareholder bailout.
- gridlockd 7y ago
  Fed policy inflates asset prices, those assets are owned in large part by wealthy people. Let's say you bought a house ten years ago and the price has quadrupled. If you sold now, you could buy the same kind of house. No win, no loss. However, if you took the money to (for example) hire people whose wages have merely doubled, you can now hire twice as many workers. This is practically free money. Of course there's some speculative risk involved (the Powell Put) but it's modest. Meanwhile, average consumers have to work their asses off to pay mortgages on overpriced houses.
  - kortilla 7y ago
    No, asset prices are still lower than pre-covid crisis.
    - gridlockd 7y ago
      ...after having been inflated for years through low-interest rates and QE. Of course asset prices have taken a hit from an unfolding economic crisis - that's to be expected. Yet, the new money on the FED balance sheet (an extra two trillion as of late) is going somewhere. The cheap loans are going somewhere. It's going to prop up asset prices, no question about it.
- blackrock 7y ago
  Apparently, you don’t understand how everything works, and how everything is tied together. What the Fed is doing, and what they have done for the past 13 years, had significant ramifications across the board. Like, have you noticed your rent increase? While your salary remained stagnant? This is the result of the Fed. They have distorted all markets for everyone. This is the hidden inflation for everyone, that the government refuses to acknowledge.
  - kortilla 7y ago
    There is no hidden inflation. Inflation numbers are very public and housing is a problem independent of the rest of inflation. If the FED were devaluing the currency worse than actual inflation like you imply, it would show up in all kinds of core product prices (materials, energy, etc).

kortilla 7y ago

The Fed doesn’t hand out money. PPP grants, etc are administered by different departments. The FED is strictly a lender in this scenario.

jcbrand 7y ago
In a way the Fed does hand out free money to the rich, because well-connected institutions that can borrow money from the Fed, do so at a lower interest rate than everyone else who can't. They can then turn around and lend that money out to the rest of us at a higher interest rate, pocketing the difference. Free money.
- deleted 7y ago
  [deleted]
- kortilla 7y ago
  No, not free money. The people that can’t loan from the FED are higher risk than the ones that can, so the bank is taking on default risk the FED wouldn’t have.
  - jcbrand 7y ago
    No, some of the banks that get these artificially low interest rate loans from the FED would go bankrupt without them. They're being propped up.
TekMol 7y ago
Depending on the interest rate, lended money wery well can be a gift to the borrower. Imagine a company that borrows $1M vs a company that borrwos $1B and both pay an interest of 0%. The company that borrowed $1B has 1000x more firepower to build a big business. While the downside is the same for both companies: They could go bancrupt and pay back nothing. Combine that with the fact that a big enough borrower will be "too big to fail" and will always be able to borrow more money to pay back the last round. In that case, the lended money is a gift independent of the interest rate.
- kortilla 7y ago
  Nope, rolling loans still aren’t gifts and if the company goes bankrupt that’s not exactly a shareholder bailout.
gridlockd 7y ago
Fed policy inflates asset prices, those assets are owned in large part by wealthy people. Let's say you bought a house ten years ago and the price has quadrupled. If you sold now, you could buy the same kind of house. No win, no loss. However, if you took the money to (for example) hire people whose wages have merely doubled, you can now hire twice as many workers. This is practically free money. Of course there's some speculative risk involved (the Powell Put) but it's modest. Meanwhile, average consumers have to work their asses off to pay mortgages on overpriced houses.
- kortilla 7y ago
  No, asset prices are still lower than pre-covid crisis.
  - gridlockd 7y ago
    ...after having been inflated for years through low-interest rates and QE. Of course asset prices have taken a hit from an unfolding economic crisis - that's to be expected. Yet, the new money on the FED balance sheet (an extra two trillion as of late) is going somewhere. The cheap loans are going somewhere. It's going to prop up asset prices, no question about it.
blackrock 7y ago
Apparently, you don’t understand how everything works, and how everything is tied together. What the Fed is doing, and what they have done for the past 13 years, had significant ramifications across the board. Like, have you noticed your rent increase? While your salary remained stagnant? This is the result of the Fed. They have distorted all markets for everyone. This is the hidden inflation for everyone, that the government refuses to acknowledge.
- kortilla 7y ago
  There is no hidden inflation. Inflation numbers are very public and housing is a problem independent of the rest of inflation. If the FED were devaluing the currency worse than actual inflation like you imply, it would show up in all kinds of core product prices (materials, energy, etc).