The financial markets — stocks, bonds, commodities and options — are more interconnected globally than they’ve ever been.
That’s because of growing international trade and cross-border investments, and highly liquid, nimble capital markets. As one part of the world sneezes, the rest of the world catches a cold almost instantaneously.
This cascading risk is what the U.S. and worldwide markets faced in March 2020 with a rapid decline in asset values — stocks
and even gold
all at once — that led to the precipice of a systemic meltdown.
Fortunately, due to the fiscal and monetary intervention of the Treasury, Federal Reserve and Congress, the worst-case scenario was averted.
Their actions injected liquidity into the short-term funding markets, which rippled through credit markets and…