The article introduces a new economic model that focuses on how financial systems and monetary policies interact. By simplifying the model into four equations, researchers can better understand how credit shocks and unconventional monetary policies like quantitative easing (QE) affect the economy. The study shows that adjusting short-term interest rates can help stabilize the economy during normal times, but QE is crucial in times of credit market disruptions. The ability to use QE can help reduce the negative impacts of reaching the zero lower bound on interest rates.