[Snorlax94]

While I think this discussion runs a minor risk because people can have heated opinions about monetary policy just like politics, so far, I think it's reasonably on-topic, because it relates to the government response to the crisis.

Yes, Jerome Powell's statement, if he said that, is not literally true, but it covers a concept that is sort of true -- that the United States, because it repays its debts in dollars and because of the US's unique position in the world, has within the reasonable domain of actions, an "unlimited" ability to take actions like these -- buying bonds, buying corporate debt, providing free loans.

To the extent as it relates to the current situation, I have mixed feelings. The Fed has emerged as the key player during the last few economic crises because they can take rapid, unilateral action that is supposedly not politically-based or biased.

However, one of the frustrations is that they have a near unlimited ability to help certain businesses and certain industries -- financial companies and firms that use the financial markets in some way end up being saved more. It can create the wrong long-term incentives -- as businesses "know" that their business conduct (like taking on unreasonable amounts of debt while buying back shares) is risky and inappropriate, they may keep doing it knowing that the Fed will bail them out. At least during the financial crisis of 2008, they let a few banks fail (investment and commercial) and let the stockholders get wiped out, as a warning.

So, in the short run, I am supportive of the Fed taking quick action and would give them good leeway. As a taxpayer and voter, I want this to be the last time. When the dust settles, Congress should pass laws to make things more fair. One thought off the top of my head -- they could require, in the future, if the Fed buys up corporate bonds to save companies, they could require the companies to issue options to the Fed. It helps the Fed act rapidly in future crises to stop an economic meltdown, but it dilutes upside so in a way that punishes inappropriately risky behavior, but it doesn't punish them *immediately* (which helps the economy recover), and it could also generate some bucks for the government.

[Snorlax94]

While I think this discussion runs a minor risk because people can have heated opinions about monetary policy just like politics, so far, I think it's reasonably on-topic, because it relates to the government response to the crisis.

Yes, Jerome Powell's statement, if he said that, is not literally true, but it covers a concept that is sort of true -- that the United States, because it repays its debts in dollars and because of the US's unique position in the world, has within the reasonable domain of actions, an "unlimited" ability to take actions like these -- buying bonds, buying corporate debt, providing free loans.

To the extent as it relates to the current situation, I have mixed feelings. The Fed has emerged as the key player during the last few economic crises because they can take rapid, unilateral action that is supposedly not politically-based or biased.

However, one of the frustrations is that they have a near unlimited ability to help certain businesses and certain industries -- financial companies and firms that use the financial markets in some way end up being saved more. It can create the wrong long-term incentives -- as businesses "know" that their business conduct (like taking on unreasonable amounts of debt while buying back shares) is risky and inappropriate, they may keep doing it knowing that the Fed will bail them out. At least during the financial crisis of 2008, they let a few banks fail (investment and commercial) and let the stockholders get wiped out, as a warning.

So, in the short run, I am supportive of the Fed taking quick action and would give them good leeway. As a taxpayer and voter, I want this to be the last time. When the dust settles, Congress should pass laws to make things more fair. One thought off the top of my head -- they could require, in the future, if the Fed buys up corporate bonds to save companies, they could require the companies to issue options to the Fed. It helps the Fed act rapidly in future crises to stop an economic meltdown, but it dilutes upside so in a way that punishes inappropriately risky behavior, but it doesn't punish them *immediately* (which helps the economy recover), and it could also generate some bucks for the government.