[LatteLazy]

One man's bubble is another man's under valuation.

Big moves when there is big news (like a global pandemic say) are normal events.

The thing I find concerning is why the FED are "intervening". Dumping cash made sense during a cash shortage. But when there are actual, real, concerns about the future (coronavirus), price falls are perfectly correct. They don't need "fixing". Happy to be corrected if anyone knows?

[treyfitty]

The idea is similar to the previous financial crisis, except this time, it’s abstracted a layer higher. The previous crisis was a severe drying of credit that had (what they literally called it) a “contagion” and systemic effect. This time, there’s an actual contagious virus that is threatening the banking system if people can’t pay their bills, and the banks can’t pay who they owe because too many borrowers default. In other words, the Fed stepped in proactively because they saw the writing on the wall and wanted to avoid any drying of credit.

The idea was never to keep the economy afloat- it was to build a bridge to prevent being exposed to the rough waters.

[peteradio]

I personally think the FED is under political pressure to make the DOW look good because that is tied to certain politicians reelection. Perhaps I read too much bullshit or am too cynical but it seems like they are pushing for good looking but entirely bullshit numbers because a dollar won't be worth what it used to be.

[solotronics]

It's happening at some layers above where personal finances occur. There is a massive demand for digital USD (bank liquidity) around the world, this is coming from a few directions such as domestic and international companies taking out new loans and calling in terms of existing loans to keep afloat without having income right now. International banks needing more USD to meet increased demand. It's like a perfect storm of massive hidden types of debt and leverage all came crashing down at once, there are 10x the amount of the stock market in derivatives such as futures and options so when these bets went bad it is causing the ultimate dollar black hole to occur worldwide at the same time.

[LatteLazy]

Thanks, the international side and "flight to safety" hadn't occurred ti me (and I am an international!). That makes more sense.

[shanty]

The fed provides a boost when demand-side goes down; that's one of its roles in emergencies. Their move here didn't make sense since the initial impact was largely supply-side (demand-side drop is coming...). These adjustments were somewhat knee-jerk and somewhat pressure from the public/Whitehouse.

Their moves so far might float us though a short recession, but it's not clear at this point if it will be enough.

[francisofascii]

You might be right, but this sounds like Austrian School policy thinking after the crash of 1929. That depressions are good in the long run, bankruptcies are fine, the economy will self correct, etc. https://en.wikipedia.org/wiki/Great_Depression#Common_positi...

[salawat]

You can't really deny that ABCT hasn't been accurate in predicting the results of ongoing QE.

I get mainstream econ looks down on it, but given the fact sticking strictly to Keynesian thinking has led to businesses being incentivized to create faulty product (Boeing), committing outright fraud (Wells Fargo), causing widespread destruction through abdication of due diligence (PG&E), exploiting addictive chemicals for business growth and engaging in unscrupulous price gouging (Shkreli, Pharma st al), and our current economic powerhouses are increasingly centered around consumer finacialization (every bloody major tech company), and for God's sake, Juicero happened; I'm honestly curious if the Austrian's might not be on to something.

Maybe the market does need to crash down to the basics. I just don't know if there is really a way for that to happen at this point given how capital is so damn centralized right now.

The problem is I just don't think it would be politically possible in the slightest to actually just sit back and hands off; and even if someone were that bold, they'd basically have just proven that there is no reason for them to exist as an institution anyway.

Which I don't necessarily think is an inconceivable state of affairs, but I don't see the economists of the world throwing in the towel and admitting that willingly.