What do you think is the effect of Fed support on diminishing the severity of the depression?
Post by twetch#2584
Fed only makes things worse. They have bogus tools: 1. change interest rates and 2. print money. Printing money creates inflation, albeit there is a delay. Manipulating interest rates prevents/delays the corrective behavior of the free market.
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- twetch#2584
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So, the Fed printing money and buying bonds would increase or decrease the severity of a possible depression?
Obviously increases the severity. Just like everything the Fed is buying , the bond market is turning to shit. So it's really just more veiled printing of money.
I disagree, I think the sudden disappearance of credit and cash flows due to the pandemic would plunge the world in a much more painful crisis if it was not by the central banks injecting liquidity into the system.
Here's the endgame: USD loses so much buying power, due to money printing, that Fed can't buy debt or bail anyone out. Businesses can't transact in USD so neither can the Fed . Check and Mate ..depression happens whether anyone likes it or not.
I am not a fan of the system, though. I think the incentives on the credit creation are misplaced. This part of the system is responsible for crisis that push governments away from hard money.
OK. But you seem to think money grows on trees. The Fed is not doing anything other than delaying things and taking a shit on the USD. They certainly aren't making the problem smaller.