WASHINGTON — Reading former Federal Reserve Chairman Ben Bernanke’s new memoir of the financial crisis — “The Courage to Act” — you are reminded how lucky we are. Despite a disappointingly slow economic recovery, it could have been much, much worse. The conventional wisdom is that we have dodged a second Great Depression, when the unemployment rate reached 25 percent. Nothing in Bernanke’s account contradicts that conclusion.

If ever Main Street depended on Wall Street — an unpopular reality that Bernanke kept repeating during the crisis’ darkest days — this was it. Businesses need credit to finance new investment, to smooth seasonal fluctuations and to cover daily expenses. As firms lost access to credit, or feared doing so, they saw their survival at stake. They conserved cash by any means available. They stopped hiring, started firing and delayed investment projects. From September 2008 to February 2010, payroll employment fell by 7.1 million.

The Fed helped check this downward spiral before what we now call the Great Recession became another Great Depression. With private lenders on strike, the Fed temporarily provided funds as “lender of last resort.” Its complex lending programs supported banks, securities dealers, money market funds, foreign lenders and the commercial paper market. The amounts were stupendous. At one point, lending through the traditional “discount” window approached $900 billion.

How does Bernanke’s memoir add to our knowledge?

For starters, it gives new credibility to his claim that the Fed couldn’t have prevented Lehman Brothers’ bankruptcy in September 2008. Recall that Lehman’s collapse triggered the financial panic. Recall also that Bernanke had argued that the Fed couldn’t lend to Lehman because the Fed needed collateral and Lehman didn’t have any (it was insolvent; its debts exceeded its assets). What makes this claim more believable now are the results of Lehman’s bankruptcy, which Bernanke cites. Losses were estimated near $200 billion and many creditors got only 25 cents on the dollar. (The subsequent $85 billion Fed loan to AIG, the giant insurer, did not suffer this defect; there was collateral.)

Next, Bernanke provides instructive numbers to explain why the financial system was so vulnerable. Years ago, banks dominated the system and got their funds mainly from household and business deposits. These were largely immune to panic because most were government insured. But in recent decades, a “wholesale” market for funds had developed consisting of the spare cash of corporations, pension funds, wealthy individuals and others. These uninsured funds were lent to banks and other financial institutions for short periods, often overnight. By late 2006, wholesale funds totaled $5.6 trillion, exceeding insured deposits of $4.1 trillion. It was the abrupt withdrawal of these funds that drove panic and threatened the financial system with collapse.

Finally, Bernanke convincingly argues that this ‘financial panic’ — and not defaults on subprime home mortgages — was the crux of the crisis. Subprime loans represented about 13 percent of outstanding home mortgages, he says. Though they triggered the crisis, their losses alone could have been absorbed by the financial system. The real economic damage, he contends, stemmed from the chaotic side effects of the mortgage write-downs: fears of more losses in other types of loans (credit card debt, auto loans); falling bond prices as financial institutions dumped “toxic” securities; and the flight of wholesale funds from banks, investment banks and others (much of their cash went into U.S. Treasury securities).

Thus battered, the financial system became comatose. It no longer provided credit where it was needed. The calamitous chain reaction for spending, production, jobs and confidence followed. The “financial turmoil,” writes Bernanke, “had direct consequences for Main Street.”

Up to a point, all this rings true. Still, as a theory of the crisis, it’s incomplete. Financial crises are not entirely random events. The system has to be vulnerable to a shock. Bernanke identifies one vulnerability, wholesale funding. But there was a larger source of vulnerability: the very prosperity that Americans had enjoyed for a quarter of a century. During this period, there were only two mild recessions. Inflation and interest rates declined. Stock and home prices increased. Feeling richer, Americans borrowed more and spent more. From 1982 to 2007, consumer spending went from 62 percent of the economy (gross domestic product) to 67 percent.

The good fortune had consequences. It nurtured overconfidence. The economy appeared to be less risky, in part because the Fed seemed capable of quickly defusing any serious threat to prosperity. The behaviors that ultimately led to the crisis — lax lending standards, more borrowing — were encouraged, because the economic landscape seemed less threatening. Too much pleasing prosperity led to crippling instability. That’s a central lesson of the crisis. Bernanke doesn’t acknowledge the troubling implications; in fairness, hardly anyone else does either.

Robert Samuelson is a columnist for The Washington Post.