The creation of the Federal Deposit Insurance Corporation (FDIC) countered the problem of bank runs and panics by insuring the bank accounts of the vast majority of Americans. Along with preexisting restrictions in the National Banking Act and state laws, the Glass-Steagall Act established a regulatory system that largely confined commercial banks to traditional lending activities within a circumscribed geographic area.
Here I would like to take a moment to mention the following: It is odd that the intense public debate on the relationship between budgetary policy and economic growth, recently rekindled following publication of a box in the latest edition of the IMF’s World Economic Outlook, has focused only on the size of the short-term budgetary multipliers, when the wider and more dynamic view of the problem, which considers the negative effects of the macroeconomic uncertainty and the high indebtedness levels on growth, is also widely covered by the IMF in the same report.