So after the recent announcement from the Federal Reserve, a Reddit post on it quickly hit the front page. After making the mistake of reading the comments (COVID-19 cancelled everything fun, I have too much free time now), I quickly realized that seemingly no one understands anything about this. So instead of R1ing one comment, I will be R1ing a few comments. Most of this is very low-hanging fruit.

Comment:

SO we can afford this but not Medicare for All? Okay. Yeah, thanks.

Pretty basic distinction here, this action was undertaken by the Federal Reserve, which is not the same thing as the federal government. The Federal Reserve does not need to raise money from taxpayers, they have the authority to create new money for these operations.

Also, the Federal Reserve does not handle healthcare policy.

Comment (155 points and awarded Silver):

Nothing cause the dumb fuckers listened to Trump and dropped the rate twice before this shit even hit just trying to eek out a bit more money for greedy mother fuckers. There is zero reason the rates should have been anywhere below 5% before this when our economy and stocks were booming.

Suggesting that interest rates should of been above 5% is ridiculous. The Federal Reserve does not control the natural rate of interest, they merely accommodate it. The Fed doesn't just set interest rates at whatever number they think sounds nice. The natural rate of interest pre-COVID-19 was surely not above 5%. The Laubach-Williams model estimates the real natural rate of interest was around 0.5-1 percent in the time period leading up the COVID-19 shock. This would of put the nominal natural interest rate at 2.5 to 3 percent (assuming about 2% inflation). In any case, this is significantly below 5%.

Now perhaps this person was agreeing with economists like Larry Summers that think the inflation target should be increased so we could lift the nominal interest rate further from the zero-lower bound. Somehow though, I do not think that was the case.

Comment:

I don't think you understand what QE is. The FED prints new money out of thin air and hands it over to the the US Gov to spend

US Government can afford anything they want

That is not what QE is. QE is the Fed conducting a large-scale purchase of government bonds and mortgage-backed securities to attempt to push down longer-term interest rates.

The Federal Reserve is not giving money to the government. This person seems to be describing a helicopter money/debt monetization scenario, which is entirely different (and also not what the Federal Reserve is doing right now).

​

If you're a random Reddit commenter with no real credentials in economics and you believe you know better than the Federal Reserve....I can almost assure you you do not.

​

EDIT: Added in estimate of natural rate of interest.