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Illustration: Sarah Grillo/Axios

One of the biggest silver linings of the current crisis is the fact that the U.S. has the deepest capital markets in the world.

Why it matters: The stock and bond markets are places for people to store their wealth in case they need it in the future. We're currently experiencing a major global crisis in which millions of individuals and businesses need liquidity. By selling investments, those fortunate enough to have stored wealth can access much-needed cash almost immediately.

  • Think of the market as a rainy-day fund, and the COVID-19 pandemic as a thunderstorm of unprecedented magnitude.
  • The global selling pressure has driven down the prices of stocks and corporate bonds, which is exactly how markets should work. They went up when people were saving their money, and now they're going down when people are withdrawing it.

The big picture: Wealth is deferred consumption, a way of storing your income so that you can use it in the future. That storage always comes with risks, to both the upside and the downside.

  • Sometimes investments rise impressively in value, as stocks broadly did over the past decade. Sometimes they are eroded by inflation, or get hammered by a low-probability event such as a global pandemic.

How it works: The Federal Reserve has effectively unlimited capacity to provide the liquidity needed to keep the markets functioning. Meanwhile, risk-averse global investors have similarly unlimited desire to buy Treasury bonds to fund any U.S. stimulus.

  • This isn't a financial crisis. Markets aren't the problem; they're the solution. They provided the money that companies and entrepreneurs needed to grow, and, thanks to the Fed, the markets now provide the same companies with cash to get them through the current crisis.

The bottom line: Thanks to the markets, $454 billion in the just-passed stimulus bill will be leveraged up to more than $4 trillion of total lending to needy companies. At the median wage of $936 per week, that's enough to support 50 million workers for well over 18 months.

Data: FDIC via Goldman Sachs; Chart: Axios Visuals

Markets would have collapsed over the past couple of weeks if it weren't for the "whatever it takes" attitude of the Fed.

  • The Fed's muscle memory from 2008-09 kicked in, and almost every financial crisis program was resuscitated. (Similarly, one big reason for the success of Hong Kong and Singapore in navigating this crisis is that their own memories of SARS and H1N1 kicked in very quickly.)
  • Banks didn't need to be rescued this time around because after the financial crisis they were forced to take on much more capital. America's banks now have more than $1.7 trillion of "tier 1" capital — basically the amount of losses that they can easily absorb without going insolvent.
  • The banks' strength has made them an important part of the government's rescue package. They are being asked to lend trillions of dollars of bailout money to small- and medium-size businesses across the country, with the loans guaranteed by the government.

Go deeper: The Fed goes to war with coronavirus

Go deeper

House passes sweeping election and anti-corruption bill

Photo: Win McNamee via Getty Images

The House voted 220-210Wednesday to pass Democrats' expansive election and anti-corruption bill.

Why it matters: Expanding voting access has been a top priority for Democrats for years, but the House passage of the For the People Act (H.R. 1) comes as states across the country consider legislation to rollback voting access in the aftermath of former President Trump's loss.

Updated 1 hour ago - Politics & Policy

House passes George Floyd Justice in Policing Act

Photo: Stephen Maturen via Getty Images

The House voted 220 to 212 on Wednesday evening to pass a policing bill named for George Floyd, the Black man whose death in Minneapolis last year led to nationwide protests against police brutality and racial injustice.

Why it matters: The legislation overhauls qualified immunity for police officers, bans chokeholds at the federal level, prohibits no-knock warrants in federal drug cases and outlaws racial profiling.

3 hours ago - Politics & Policy

Senate Republicans plan to exact pain before COVID relief vote

Sen. Ron Johnson. Photo: Stefani Reynolds/Bloomberg via Getty Images

Republicans are demanding a full, 600-page bill reading — and painful, multi-hour "vote-a-rama" — as Democrats forge ahead with their plan to pass President Biden's $1.9 trillion COVID-19 relief package.

Why it matters: The procedural war is aimed at forcing Democrats to defend several parts the GOP considers unnecessary and partisan. While the process won't substantially impact the final version of the mammoth bill, it'll provide plenty of ammunition for future campaign messaging.