As we know, representatives within Washington have delayed the fiscal help to citizens further. However, there are bigger problems with this delay other than you and I not getting government aid. The Fed actually seems to be relying on the stimulus to be passed. What is interesting is that economists such as Mark Zandi stated that "(The Fed) just doesn't have much room to maneuver with regard to monetary policy".
While no chairman of the Fed will actually state this outlaid, economists are starting to believe the Fed is running out of "weapons in their arsenal". There are still some left such as adopting yield curve control through bond purchases, right? Well, these bond yields are at historic lows and even Fed officials are skeptical about the impact of yield curve control.
If the fed were to run out of options to help the economy during this time and COVID continues to go uncontrolled, what would this mean for our economic system? Could we see a potential "fail" like the Great Depression or will we continue to operate efficiently?
https://www.cnbc.com/2020/10/28/the-fed-.html
6 comments:
It is highly unlikely that the US economy would fail. If we look at the data, we can see that the economy is getting back on track. Although the rate at which it is growing is slow, but it is still recovering. It may take us a while before we are at pre-pandemic levels, but we'll eventually get there.
I agree that the economy will continue to struggle for some amount of time. What differentiates this recession from others is that the big banks still have access to capital as opposed to being completely strapped for cash which happened in 2008. In terms of the fed managing the recession I agree. It will be interesting to see what happens after the election.
I think at this point they are all waiting on election results. Who comes into power, how bad the COVID situation is, and vaccine delays will be a few of the many things which will affect another stimulus. Yes, people need help and are struggling but we have to wait out a few days and let nature play its course. Hopefully, a vaccine will appear by January which would be miraculous. Unemployment will definitely improve in my opinion everything will pick itself back up together naturally. If not then yes another stimulus will be one of the very few solutions available.
I think that they are delaying the stimulus to see who takes the presidential power. The FED doesn't have a whole lot of options with the monetary policy. In my opinion we won't "fail" we just are slowly digging a bigger hole that we will have to work out way out of. I do believe we will slowly work our way out of it, especially once a vaccine is released.
I think a delay in stimulus check will definitely affect the rate at which the economies recovers but I don't think that we will see a total fail in our economy but I do think we may see a slip back into a recession if the checks are delayed
I believe a stimulus package will not be able to be passed until after the election. If Democrats win they will have power to push a larger stimulus as they have wanted to. The Republicans would look weak if they try and push a stimulus out now, and likely have to settle on what they feel is a good package. With the economy struggling and jobless claims increasing, it does seem a stimulus is a pressing issue. I do not think the Fed will be able to have a large enough impact with policy change to offset a lack of stimulus.
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