Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program

CNBC ^ | 3/15/2020

[billyboy15]

The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus.

Facing highly disrupted financial markets, the Fed also slashed the rate of emergency lending at the discount window for banks by 125 bps to 0.25%, and lengthened the term of loans to 90 days.

The Fed also cut reserve requirement ratios for thousands of banks to zero. In addition, in a global coordinated move by centrals banks, the Fed said the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank took action to enhance dollar liquidity around the world through existing dollar swap arrangements.

The banks lowered the rate on these swap line loans and extended the period for such loans. Fed Chairman Jerome Powell is scheduled to hold a press conference via telephone at 6 pm eastern time. The actions by the Fed appeared to be the largest single day set of moves the bank had ever taken, mirroring in many ways its efforts during the financial crisis that were rolled out over several months.

The quantitative easing will take the form of $500 billion of treasuries and $200 billion of agency-backed mortgage securities. The Fed said the purchases will begin Monday with a $40 billion installment.

The Fed cut rates to a new range of 0% to 0.25% from 1% to 1.25% and said it would remain there “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

[NRx]

Dow futures down 1041. Trading suspended due to circuit breakers kicking in to prevent crash. Gold and silver both up sharply.

[stockpirate]

The banks borrow the money at zero percent, then buy stocks. The price of the stocks go up. People sitting on cash het back in the market thinking alls well again. The the correction/crash as is happing now....

[no-s]

>>Please provide evidence for the claim that a deli lunch doubled in the three years from 2008/9 to 2011/12.

How about going to lunch every day at a deli near where I worked. Sorry I didn't take notes for you.

My speculation is the inflation numbers are manipulated. The price of dining out (i.e. a nice evening out) has roughly tripled here in the last 4 years. When I left NorCal a cheap meal was $15 there vs $6 here (Tucson). Now it's about $15 here 3 years later...

Frankly economic statistics are not gospel, and the burden of proof is still on the claim made by the statistic and the responsibility of the claimant.

[RckyRaCoCo]

modern monetary theory...

[aimhigh]

Please provide evidence for the claim that a deli lunch doubled in the three years from 2008/9 to 2011/12.

You forget that food is excluded from inflation formulas.

[mulligan]

More stupidity. We need to go back to normal conditions. There is a choice, either die from viruses or die from hunger, or civil war or financial problems. For me, I take the virus route. But get back to work now.

[Sarah Barracuda]

Seems the futures are going down the tubes guess they are not a fan

[CPT Clay]

All just so people can buy Toilet paper?

[palmer]

Dow futures down 1041. Trading suspended

That's fine. They should have suspended on Friday after it went up 1000 points. If it does retest Thursday's low it will be a good short term buying opportunity like Friday. But the excessive rise on Friday only invited short term profit taking tomorrow (or right now in the futures market).

The only way we can say the market has recovered is after three months (or more) of 100 point up days.

[Vermont Lt]

No...your CDs and MM will drop to zero.

The price of a bond rises when interest rates go down.

Do you own a lot of bonds? No? Me neither.

[Flick Lives]

Whoever is behind this mess, needs to be brought to justice

You are going to bring a virus to justice?

- -

We’re gonna need a tinier jail cell.

[ronnie raygun]

This is a generate crisis that they know is snowballing, we need to make sure we punish those involved, enough is enough!

[Varsity Flight]

Yep, Bailout all along. Buying MBSs again folks.

[af_vet_1981]

Here is some evidence for the rate of increase in the price of a hamburger over those years. It seems to have more to due with the company. The standard McDonalds hamburger(which I remember at ten cents), rose from $0.71 to $1.00 from 2008 to 2013, well above the average inflation rate but not close to "doubling."

• In 2008, your burger cost an average of $0.71.
  Price at McDonald's: $0.89
  Price at White Castle: $0.53
  
• In 2010, your burger cost an average of $0.77.
  Price at McDonald's: $0.89
  Price at White Castle: $0.64
  In inflated August 2018 prices, you'd pay $0.90 for the $0.77 average burger.
  
• In 2012, your burger cost an average of $2.61.
  Price at McDonald's: $1.00
  Price at Burger King: $3.15
  Price at Wendy's: $3.69
  
• In 2013, your burger cost an average of $2.20.
  Price at McDonald's: $1.00
  Price at Burger King: $3.25
  Price at White Castle: $0.64
  Price at Wendy's: $3.89
  ...
• In 2018, your burger costs an average of $2.64.
  Price at McDonald's: $1.09
  Price at Burger King: $4.29
  Price at White Castle: $0.75
  Price at Wendy's: $4.44

[af_vet_1981]

I discount assertions which have no evidence.

[Steely Tom]

I didn't mean to say that because the price of a lunch doubled, the price of everything doubled.

The price of a gigabyte of memory — or a gigabyte of wireless data transmission from a mobile device — fell quite a lot between 2008/9 and 2011/12. The price of computing power fell during that period; the price of a large flat-screen TV fell a lot too.

But the price of things that are labor intensive, like making someone a sandwich or doing a brake job, went up quite a bit also.

The things that went down get averaged in with the things that went up. The result is somewhere in between.

I just remember that the price of a sandwich, side order, and drink went from around $5 to around $10 during the Obama administration, at least where I live. It's seared into my memory.

[Steely Tom]

I discount assertions which have no evidence.

So don't believe me. I'm just reporting what I experienced. Ignore it if you like, doesn't change what happened.

[LouAvul]

............

[Sleeping Freeper]

Cutting banks reserve percentage to zero is IMO the most problematic move. Bank failures on the horizon....

[Blue Highway]

I’m seeing the Dow Futures down 1041 points.