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Interest rates have historically been their biggest tool, but the buyer-of-last-resort things seems both better at propping up the market (probably worse at spu
by thedufer 6y ago
Interest rates have historically been their biggest tool, but the buyer-of-last-resort things seems both better at propping up the market (probably worse at spurring the actual economy, but again, all we're talking about here are investment returns!) and unlimited in power in a way that interest rates are not. Interest rates are bounded at 0, or at least start behaving oddly beyond that, while just buying stuff is bounded at having all of the stuff, and if the Fed has all the stuff you no longer care what prices the stuff has because you don't have any of it.
- bumby 6y agoWhile I now understand your first comment was about returns exclusively, where I disagree is that’s protecting returns is not the Feds primary goal. Their mission is to help stabilize prices and employment to cultivate a stable macroeconomic system. So I think their actions are more appropriately viewed throw that broader economic lens than simply assessing whether stock returns are going up