ABSTRACT
John Maynard Keynes's work on money in the 1930s had established that the quantity of money available affected output and employment. Keynes described the production of goods and services intended to support future production as investment, and the diversion of resources from the production of consumption goods and services to the production of investment goods and services as saving. First-home buyers were expected to demonstrate a savings record and provide a substantial deposit before obtaining a mortgage. In the nineteenth century, US banking regulation was extremely lax, and many small-town banks accepted deposits and made loans, relative to their resources, that would be considered wildly reckless today. A bank's reserves are comprised of cash and other assets owned by the bank; its depositors' balances are the bank's liabilities. Modern banking regulation is based on the rules set out by the Bank of International Settlements (BIS) and generally referred to as the Basel Accords.
