Reworked copy of a photo by Matthew Thompson (Shakespeare Theatre Company).

“I think it means the end of deflation is just around the corner.”

— Hirokaza Yuihama, Daiwa Institute of Research, on the Japanese economy (2006)

“The contractionary mindset of the Japanese economy caused by 15 years of the deflationary mindset is now beginning to change.”

— Shinzo Abe, Prime Minister of Japan (2013)

“Unlike snow, Japan’s deflationary mindset won’t melt easily.”

— Haruhiko Kuroda, Governor of the Bank of Japan (2018)

“Tomorrow when I wake or think I do, what shall I say of today? …


Ruby and the Problem of “the One and the Many”

How is that we are able to use a term like “dog” to refer to so many different beings in the world? We’ve got chihuahuas, pugs, poodles, golden retrievers, mastiffs, and the list goes on. Is there some universal essence that allows us to group certain particular beings together into one distinct category?

This problem of universals and particulars, also known as the problem of “the One and the Many”, is not a new one. Plato was asking the same question thousands of years ago. …


“The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes”

Adam Smith (1776)

The quotation above, from the “Introduction and Plan of the Work” of Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, speaks of labour in a way that may strike us as a bit odd. Smith describes it as a fund. We speak of all sorts of funds — mutual, pension, trust, sovereign wealth, etc. — and often use the word funding as a synonym for…


The pretence that the illiquid real assets of an economy — the factories, capital equipment, houses and offices — can suddenly be converted into money or liquidity is the essence of the alchemy of the present system.”

– Mervyn King, former governor of the Bank of England (2016)

Does money have a basic molecular substance or structure? Though some might argue that it is created ex nihilo, such an assertion does not help us to understand under what conditions, what constellations, or what processes, money takes its form and comes into being. …


The essence of financial distress is loss of confidence.”

– Charles P. Kindleberger (Manias, Panics and Crashes, originally published in 1978)

Ever have the fear that when you show up to the bank to withdraw some cash, the bank won’t actually have any to give you? No? That’s good. That means that banks, with a little help from the government, are doing a good job of safeguarding, not necessarily your money, but confidence in one of banking’s great fictions.

What do I mean by that? Let’s take a peek inside George Bailey’s Building & Loan Association bank to find out…


The Business of Banking and its Inherent Crises

In order to understand our economy it is necessary to take a critical, nononsense look at banking. It is a disruptive force that tends to induce and amplify instability even as it is an essential factor if investment and economic growth are to be financed.”

— Hyman Minsky in Stabilizing an Unstable Economy (1986)

How does a 158-year old U.S. investment bank with billions of dollars in assets suddenly collapse? The lines above from Hyman Minsky contain a clue.

The failure of Lehman Brothers at the end of the summer of 2008…


Apparently, a lot of people don’t seem to know how money is created, and some of these are arguably people who should know. As much as 85% of British MPs were unaware that most of the money in the British economy is created by private banks, each and every time a loan is made, according to an article published by the Guardian just over a month ago.

The article reminded me of a quote attributed to Keynes that I came across while reading Geoffrey Ingham’s The Nature of Money: “I know of only three people who really understand money. A…

Matt Johnston

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