Where the "buck was broken" -- which was very rare -- the sponsoring firm often stepped in to bail out their MM funds. Sponsors did that to protect their reputation. For example, it wouldn't look good for investors in, say, the Fidelity Money Market Fund to suffer losses.
Later, during the great recession, federal deposit insurance was expanded to cover most, maybe all, MM deposits.
For newbies: MM funds do well in highly inflationary periods because they hold extremely short maturity debt, sometimes just a few days long.
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