Swapnil Pawar is a fintech entrepreneur working on bringing blockchain into the mainstream finance. Newrl - the public blockchain developed by Swapnil’s company - is a ‘Trust Network’ to enable asset tokenization, trading, lending as well as a wide array of typical economic activities, in a decentralised and yet scalable manner. He has been a quantitative finance professional with an experience of over 17 years. He is a keen researcher of macroeconomic theory and its practical applications. His first book (Anatomy of Froth) focussed on the Global Financial Crisis of 2008-09. He writes regularly in various media on finance and economics.

Swapnil is a graduate from IIT Bombay and a post-graduate from IIM Ahmedabad. He lives with his wife, Chhavi, in Ahmedabad. He can be reached at [email protected]

1 One may argue that firms also demand a base value of return on equity or minimum net profit margin and this demand should be considered a part of the rigid demand of savings. That deserves additional thought. At present, we are moving forward with the assumption that while firms exist to make profits, they can survive indefinitely by making zero profits so long as they do not make losses. Clearly, a real-life firm in our times that makes zero profits for a long time may be sold by its owners to someone else that may improve that state of affairs! Even in this case, we still don’t expect the firm to shut down.

2 In reality, even in the early days of banking, there were financial assets, especially government debt and some equity stocks

3 The US Fed was acutely aware of this concern in the immediate aftermath of the GFC and thus flooded the banking system with excess HPM. The Indian case of PSU Banks being hit by excessive bad loans through 2014-17 was not handled with the same alacrity. The results were not quite pleasant – with multiple large company failures and questions over the viability of public sector banks.

4 There is some research to suggest that defined benefits retirement funds are forced to ask for more contributions because of fall in rates of return on their corpus

5 Is his seminal work – ‘The Great Transformation’ – Karl Polanyi insists that there is no point in analyzing an abstracted economy; any relevant economic analysis is inherently political. At least in this section of our own analysis of monetary macroeconomics, we are following his guidance!

6 The US Fed is technically owned, in terms of its stock, by its member banks. However, the appointments are done by the government, by law. Also, the net earnings of the Fed have to be transferred to the treasury of the US Government. So, the beneficial owner is the US Government.