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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

More than a dozen injured in downtown Austin shooting

Police tape in Austin, Texas in 2018. Photo: y Carolyn Van Houten/The Washington Post via Getty Images

A shooting in a busy part of downtown Austin, Texas, early Saturday injured at least 13 people, including two who are in critical condition.

The state of play: Gunfire erupted around 1:30 a.m. along 6th Street, a popular area with bars and restaurants. The suspected shooter remains at large, Austin police said. "It is unknown if there is one, or multiple suspects involved," they noted, adding the shooting appears to be an isolated incident.

Biden to urge G7 to take unified approach to countering China

Photo: Hollie Adams/Bloomberg via Getty Images

President Biden on Saturday is expected to urge fellow G7 leaders to adopt a unified approach to countering China's rising global influence, AP reports.

Driving the news: The G7 leaders are set to unveil a multi-billion-dollar global infrastructure plan aimed at rivaling Beijing's efforts in the developing world.

Why America's post-vaccine summer is off to a slow start

Illustration: Sarah Grillo/Axios

Americans are itching to put pandemic life behind them, but many of the necessary ingredients for a summer of carefree fun — everything from neighborhood pools to car rentals — still aren't fully available.

The big picture: Labor shortages, scrambled supply chains and simple logistics are all making it harder for a whole range of businesses to meet post-pandemic demand, and that’s making “hot vax summer” a little harder to pull off.