Part 8/10:
Notably, historical patterns show that from 1940 to 2008, the growth in bank reserves did not correlate directly with liquidity crises or market collapses. In fact, it appears that commercial banks are adept at generating liquidity independent of the Fed’s actions, such as with the reverse repo facility. As seen in past events, the intricate web of finance does not solely hinge on the Fed’s balance sheet—liquidity tends to originate from commercial institutions capable of adapting as needed.