About the author – Fernando Fominaya

The 2008 crisis was a shock to many people. A lot of them suffered a shock in their pockets, I was luckier and it only shook my brain.

How could international finance have the power to ruin so many people’s lives?
How could the responses to this crisis be so disparate? Some governments printed money, and others imposed austerity; some said to raise taxes, others said to lower them.
How can economists have such different views on a problem? Have they not all studied the same?
And this has not been a singular episode.
Right now there are questions of enormous impact on our lives on the table:

• Why do systemic crises happen?
• Why are there negative interests?
• Where is the inflation that so many economists predict?
• Why is there more production than ever before, yet most people are paid less than before?
• Why is inequality increasing in our society?

The official economy has no answers to this. With some honourable exception, the other economic schools take refuge in recipes such as going back to the gold standard, denying reality or exalting bitcoin as a solution. In the meantime, governments improvise and the only good news is that COVID is putting a mirror in front of us that is putting an end to many of the prejudices of lifelong economists.

I come from the hard sciences, and it is difficult for me to understand this situation. Can’t we really agree on a common story about the origin and behaviour of money?

Now money is no longer “born honest in the Indies “, as Quevedo said, but in the banks’ balance sheets. The consequences of its birth are enormous and are shaping our society, not exactly for the better. It’s disturbing how little we are aware of it.

And then there is technology. The sum of fiat money and technological hyper development is, in my opinion, responsible for the lately strange behaviour of the economy.

This blog is an attempt to explain it myself. If, by the way, it helps you to understand something or inspire you, I consider the time well spent.

About me: I am a businessman, Ph.D. in Physics, university professor, I have worked as a scientist, in technology consultancy, metal mechanics, logistics, training and I have travelled around the industrial estates of half of Spain, so I know the real economy from the bottom up. I have worked in SMEs and multinationals. I like history, anthropology and politics. Among many other things…

I have learned and been inspired by authors of all kinds: Keynes, Paul Krugman, Ray Dalio, Milton Friedman, the Economics Explained videos, the MMT economists, Juan Ramón Rallo or M. Mazzucato and many others of all ideological tendencies. Even if no two agree on their opinions, we can learn from them all.

The reflections on the origin of money come from different sources. I try to quote them, but even though I am aware that the references can be much improved, I do not have the time for exhaustive research. On the other hand, the ideas on technological deflation, such as the substitution effect or the “Matrix” effect, I think are mine, because I have not found anyone else who talks about it.

More on Fernando Fominaya.
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