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#1 As schools and businesses shut down, the Fed went into overdrive. Alongside COVID-19, another disease was spreading, and its progress could not be halted using N-95s or social distancing. This disease moved faster than any virus, and threatened economic harm as great as the pandemic itself.

#2 A panic is when a shock causes an initial round of selling, which in turn causes more selling. This downward spiral can lead the entire economy to collapse. Panics are usually the result of structural vulnerabilities in the financial system.

#3 The American banking system was designed so that only chartered banks could issue money claims. But over the past several decades, shadow banks have begun to issue similar but legally distinguishable forms of money that consumers do not consider to be deposits.

#4 The Fed stepped in to help the Wall Street firms, offering up to $1. 5 trillion in short-term loans. The Fed’s New York bank was their counterpart, and they were providing the money claims that the primary dealers used to finance their activities.

Summary of Lev Menand's The Fed Unbound

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