adding @__durrani
basically you can stimulate effectively(ish) in some short-term circumstances, in others you get lots of inflation and it stops working
I highly doubt negative rates would be passed on to consumers, this mostly applies to institutions + paper holders . . .
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Inflation is probably not a concern at current margins, at least from monetary policy. I saw a claim that TIPS rates were implying ongoing /deflation/, which is super bad mojo in a crisis.
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in 08 a major concern was related to moral hazard (if we bail out banks are they just gonna lever up again and fuck us once more) and that also doesn't really apply right now the greater risk is a rapid contraction made worse by agents hoarding cash
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mostly we want to make it really easy for firms to (i) weather losses incurred as a consequence of people staying home, people taking sick leave, and having supply chains disrupted; (ii) to the extent there are opportunities to alter production to fit new needs,
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or to move out of china / abroad generally if trade collapses, to have funds readily available for that. usual caveats, I was never really a macroeconomist and I've been out of the game for years in any case
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Probably serious supply-side issues from supply chains breaking and/or people being sick, but that's relatively mild and probably healthy We're a long way from hyperinflation a la Venezuela or Zimbabwe. We could get there but it's not gonna happen right now, from this rate move
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market suggests it's definitely more of a risk right nowpic.twitter.com/AjanIt3idN
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related reading :) http://www.bondeconomics.com/2014/05/primer-what-is-breakeven-inflation.html?m=1 …
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