know absolutely nothing about a topic but insist on talking about it anyway.
Since you had the good sense to ask, the Fed lends money to banks through what is colloquially known as the "discount window". That's not the only way it lends money, but when a LOT of it is needed at one time, the window is often the best way. Just shovel it out.
Why would the Fed just shovel money out? Well, watch again that movie with Jimmy Stewart dealing with bank failure during the Depression and see just how bad it can be when Joe Public and the small businesses who depend on his buying stuff lose all their money when the bank runs out. Bad as it may be to shovel money out, the Depression was worse.
The first time that I know of when the Fed saved the world doing this was when the Penn Central railroad went bankrupt, thanks to a couple of dumb crooks, and a few hundred million in loans, bonds, bills, and other stuff went "poof." (A few hundred million causing all that trouble-- how quaint, but that was the 70's) Anyway, to stop banks from failing, Wall Street from crashing, and mass suicide, the Fed shoveled record amounts of money out. When they realized that it actually worked, they made a habit of it.
Now that we're dealing with trillions, nobody really wants to ask how much is too much or if and when it will stop working.
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