[BostonCard]

The issue was one of liquidity, which is exactly what the Fed is supposed to address.  In early March, you had a unique situation in which both stocks and bonds (and gold, and other commodities) fell simultaneously, just as companies were drawing down their lines of credit.  That's not supposed to happen; generally when people sell stocks because they are worried about risk, they buy bonds.  What happened is that everyone was hoarding cash.  When this happens, the Fed has to "print money" so that everyone can calm themselves down that there will be plenty of cash to go around.  Since then, the markets have stabilized substantially.

What happened is not only ok, it prevented a massive financial crisis in which every asset froze up.

This emergency podcast by Planet money when the FEd announced the steps it was taking is worth a listen to:

https://www.npr.org/2020/03/16/816684372...-the-virus

BC

[BostonCard]

The issue was one of liquidity, which is exactly what the Fed is supposed to address.  In early March, you had a unique situation in which both stocks and bonds (and gold, and other commodities) fell simultaneously, just as companies were drawing down their lines of credit.  That's not supposed to happen; generally when people sell stocks because they are worried about risk, they buy bonds.  What happened is that everyone was hoarding cash.  When this happens, the Fed has to "print money" so that everyone can calm themselves down that there will be plenty of cash to go around.  Since then, the markets have stabilized substantially.

What happened is not only ok, it prevented a massive financial crisis in which every asset froze up.

This emergency podcast by Planet money when the FEd announced the steps it was taking is worth a listen to:

https://www.npr.org/2020/03/16/816684372...-the-virus

BC