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There's no impact because people are sitting on cash rather than spending it. What the Fed accomplishes by handing out the $1 trillion is this: they kept all t

There's no impact because people are sitting on cash rather than spending it. What the Fed accomplishes by handing out the $1 trillion is this: they kept all the _other_ money circulating. If people wanted to hoard $1 trillion because they're scared about the future, well, now they've hoarded it. They feel safe and they spend the rest of their money, and the economy keeps humming along. If instead they'd tried to hoard that $1 trillion without Fed intervention, there'd be an economic collapse.

septillianator 6y ago
People or Corps? Seems like stimulus money is eventually just finds its way to a handful of companies that are making piles with it.
- true_religion 6y ago
  People run corporations. When you see a round of layoffs it doesn't come out of mere cold blooded economic necessity. The leadership gets scared, and no longer feels optimistic thus they cut projects. Sure, you can give all the money directly to the common people, but you'd end up having to do that forever since the wider economy would collapse as rich share holders first feel doubt, then have those doubts confirmed in a self fulfilling prophecy. Common people should have non emergency sources of welfare, and governmental aid to rely on. If they don't, then the situation is aleady dire.
  - germinalphrase 6y ago
    “ Common people should have non emergency sources of welfare, and governmental aid to rely on. If they don't, then the situation is aleady dire.” The pandemic is showing that most people and state governments are willfully unprepared to provide such welfare even in an emergency.
rootw0rm 6y ago
so basically...yes, it sucks either way.
rorykoehler 6y ago
If the Fed create $1T new money the worst thing you can do is sit on cash. That’s a guaranteed negative return.
- jdm2212 6y ago
  No, the guaranteed negative return is only if you expect rising inflation. Whether $1T in new money turns into inflation depends on what people choose to do with the new money. If they're all terrified about economic uncertainty, they won't spend the new money, and there won't be inflation. But you're right insofar as the Fed is trying to change inflation expectations by printing money. But so far they've failed because no one believes they'll actually let inflation happen once the economy recovers. Hence Jerome Powell's recent statements about the Fed changing how it trades off inflation against economic growth. It's a way to more credibly commit to letting inflation actually happen.
  - rorykoehler 6y ago
    It seems much of it got dumped into TSLA. Didn’t the fed announce they would run inflation a bit hot for a while just last week?
    - jdm2212 6y ago
      Even if a bunch of people used cheap money to buy TSLA, that means a bunch of other people now have lots of money they made selling TSLA. So someone, somewhere, is sitting on cash, which is deflationary and not what you want in a weak economy. The cure for that problem is cheap money plus expected inflation (cheap money so people can get cash, expected inflation so they go spend it). The Fed can make money cheap, but it can't force people to expect inflation. It can do stuff to encourage that expectation, though, and yeah it's doing just that.

septillianator 6y ago

People or Corps? Seems like stimulus money is eventually just finds its way to a handful of companies that are making piles with it.

true_religion 6y ago
People run corporations. When you see a round of layoffs it doesn't come out of mere cold blooded economic necessity. The leadership gets scared, and no longer feels optimistic thus they cut projects. Sure, you can give all the money directly to the common people, but you'd end up having to do that forever since the wider economy would collapse as rich share holders first feel doubt, then have those doubts confirmed in a self fulfilling prophecy. Common people should have non emergency sources of welfare, and governmental aid to rely on. If they don't, then the situation is aleady dire.
- germinalphrase 6y ago
  “ Common people should have non emergency sources of welfare, and governmental aid to rely on. If they don't, then the situation is aleady dire.” The pandemic is showing that most people and state governments are willfully unprepared to provide such welfare even in an emergency.

rootw0rm 6y ago

so basically...yes, it sucks either way.

rorykoehler 6y ago

If the Fed create $1T new money the worst thing you can do is sit on cash. That’s a guaranteed negative return.

jdm2212 6y ago
No, the guaranteed negative return is only if you expect rising inflation. Whether $1T in new money turns into inflation depends on what people choose to do with the new money. If they're all terrified about economic uncertainty, they won't spend the new money, and there won't be inflation. But you're right insofar as the Fed is trying to change inflation expectations by printing money. But so far they've failed because no one believes they'll actually let inflation happen once the economy recovers. Hence Jerome Powell's recent statements about the Fed changing how it trades off inflation against economic growth. It's a way to more credibly commit to letting inflation actually happen.
- rorykoehler 6y ago
  It seems much of it got dumped into TSLA. Didn’t the fed announce they would run inflation a bit hot for a while just last week?
  - jdm2212 6y ago
    Even if a bunch of people used cheap money to buy TSLA, that means a bunch of other people now have lots of money they made selling TSLA. So someone, somewhere, is sitting on cash, which is deflationary and not what you want in a weak economy. The cure for that problem is cheap money plus expected inflation (cheap money so people can get cash, expected inflation so they go spend it). The Fed can make money cheap, but it can't force people to expect inflation. It can do stuff to encourage that expectation, though, and yeah it's doing just that.