literacy: the ability to understand a financial statement. One of the most important things you need to know to be financially successful is to know how to read an income statement and balance sheet. But even more important is understanding the relationship between them. Understanding the relationship between the two can allow you to easily see the direction of your cash flow to easily determine if something is making you money or not. If something is making money, it is an asset. If not, it is a liability. In the first quarter of 2020 on March 9, the Dow Jones fell 2,014 points, a 7.79% drop. On March 12, 2020, the Dow then set another record by falling 2,352 points to close at 21,200. It was a 9.99% drop, and the sixth-worst percentage drop in history. Finally, on March 16 the Dow plummeted nearly 3,000 points to close at 20,188, losing 12.9%. The drop in stock prices was so massive that the New York Stock Exchange suspended trading several times during those days. Between Feb. 12 and March 23 of 2020, the Dow lost 37% of its value. By the middle of March, panic was rising. As the US went into lockdown mode, over 20 million jobs were lost, businesses closed down, and the virus continued its spread. Investors watched as their retirement savings lost 30% in two weeks, and speculation about how bad it could get created even more fear among investors. During this time of crisis, the team-up of Federal Reserve headed by Jerome Powell and the U.S. Treasury made large asset purchases on the open market by adding newly created electronic dollars to the reserves of banks such as JP Morgan Chase, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley among others. In exchange, the Fed received large amounts of bonds – U.S. Treasury securities and agency securities that are backed by bundles of home mortgages. As a result, markets that had stopped working smoothly started to flow again. Banks get more dollars in reserve and are more prone to lend money without worrying about exhausting their funds because of a run on the bank in a time of panic. Such big purchases of securities
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