•Scared, people tried to take their money out of banks.

•The banks didn’t have enough money, and had to close.

•Millions of dollars disappeared when the banks closed.

•The government had no way to directly help so they called JP Morgan.

•JP Morgan used his own money to save the banks he wanted to save and let others die.

•The economy was fixed, and JP Morgan had direct or indirect control of 80% of the wealth on the New York Stock Exchange.

https://www.investopedia.com/terms/s/sl-crisis.asp

When not in a recession, the economy often grew at annual rates it has seldom mustered since, with real Gross Domestic Product (GDP) growth above 5% in 1972-73 and mostly above 5% in 1976-78, ahead of oil price shocks that would curb growth while fueling inflation.

High inflation and uneven economic performance still soured the national mood. In November 1979, only 19% of Americans were satisfied with the way things were going in the U.S.

https://www.investopedia.com/articles/economics/08/1970-stagflation.asp

By October 1982, less than a year after the Fed increased the rate to 19%, inflation was back to 5% and unemployment reduced with reduced inflation, going back below 10% by 1983. 

https://www.federalreservehistory.org/essays/recession-of-1981-82#:~:text=Prior%20to%20the%202007-09%20recession%2C%20the%201981-82%20recession,II%20era%20%28Federal%20Reserve%20Bank%20of%20St.%20Louis%29.

•In 2000, the Fed raised its rate to stop the economy from growing too fast, which was leading to inflation.

•Post-Y2K and post 9/11, investment slowed greatly, leading to a recession

•The Fed responded by cutting the rate to 1.25% by November 2002

•Many homeowners took loans with rates matched to the Fed rate.

•When there was too much investment, the Fed raised the rate to 5.25% in 2006
•When the rate raised, many home-owners could not pay their mortgage. 

•They also could not sell their houses to pay the loan because of low demand.

•Banks started losing a lot of money

Fed Response:
1. Rate reduced to 0.25%

2. Quantitative Easing: The Fed began buying $500 billion in mortgage-backed securities and $100 billion in other debt.

3. By June 2010, the Fed's portfolio had expanded to $2.1 trillion.

•That recession was the worst recession since the Great Depression.

•The nearly 11 percent unemployment rate reached late in 1982 remains the highest since the Great Depression. Unemployment during the 1981-82 recession was widespread, but manufacturing, construction, and the auto industries were particularly affected. 90 percent of job losses in 1982 were to those sectors and most never came back. 

•Making this even worse, the Fed was the reason for the high inflation in 1980 that the Fed then triggered the recession to prevent. The Fed’s own website says, and I quote “Both the 1980 and 1981-82 recessions were triggered by tight monetary policy in an effort to fight mounting inflation… In the 1970s, the Fed pursued what economists would call “stop-go” monetary policy… [which] proved unstable in the long-run, as inflation …increased … in the mid-1970s… reaching 11 percent in June 1979”

•I’ll emphasize for the judge that manufacturing, construction, and the auto industries jobs used to be stable middle class jobs, and the 1982 recession, caused by the Fed, destroyed them.

•The impact of this is obvious: It increased inequality by harming the poor to protect the rich. 

https://www.investopedia.com/articles/stocks/09/how-interest-rates-affect-markets.asp

https://www.federalreservehistory.org/essays/recession-of-1981-82#:~:text=Prior%20to%20the%202007-09%20recession%2C%20the%201981-82%20recession,II%20era%20%28Federal%20Reserve%20Bank%20of%20St.%20Louis%29.