On St. Patrick’s Day 2008, the author appeared on Fox Business News as Bear Stearns collapsed. Presenter Liz Claman pivoted from discussing his book to asking how the disaster happened. The author explained that both the American and Irish crises began with housing markets, driven by a volatile mixture of economics and human psychology.

When the Federal Reserve maintained unusually low interest rates, borrowing surged. Leverage—borrowed money—became the primary tool for inflating asset prices, creating a self-reinforcing cycle in which rising values attracted more buyers. Banks financed both developers and purchasers, their profits soaring as the boom intensified. Eventually, creditworthy borrowers grew scarce, leading banks to extend loans to subprime borrowers with weaker credit profiles.

Traditional economics, with its equilibrium models, misses the emotional dynamics of bubbles. The real economy is a complex, adaptive system where rising prices generate powerful psychological responses—excitement for owners and fear of missing out for non-owners. Modern leverage amplifies these dynamics beyond historical episodes like Tulipmania. The author identifies two investor types: rational value investors (a minority) and emotional momentum investors (the majority). Through margin financing, rising collateral values enable additional borrowing, fueling an exhilaration phase in which participants recruit others into the market.

The boom inflated personal, government, and corporate balance sheets simultaneously. Governments enjoyed increased tax revenues from construction and consumption, leading to surpluses and tax cuts. Corporations employed cheap debt for mergers and risky ventures. The author categorizes three borrower types: hedge borrowers who can repay both interest and principal, speculative borrowers who can pay only interest, and Ponzi borrowers who cannot pay either and depend entirely on rising prices.

Downturns began when savvy investors took profits. After an initial wobble dismissed as temporary—a trading phenomenon known as a “bull trap”—panic spread as sellers overwhelmed buyers. A paradox of aggregation emerged: when all banks simultaneously demanded clients sell assets to cover margins, the market flooded and prices collapsed for everyone. Ponzi borrowers defaulted first, followed by speculative borrowers as credit evaporated in a crunch.

Bank deposits, essentially loans from customers to banks, became precarious as loan portfolios deteriorated. Banks faced a mismatch between long-term assets like 30-year mortgages and short-term liabilities that depositors could withdraw immediately. When trust eroded, depositors fled, creating a run. Bear Stearns, unable to borrow from other banks or find buyers, exemplified this dynamic. Six months later, the full 2008 global financial crisis erupted.

The collapse produced a balance sheet recession in which asset values plummeted but debts remained fixed. In this Keynesian liquidity trap, neither low interest rates nor traditional policy could revive the economy because overleveraged consumers refused to borrow and stressed banks refused to lend. The Federal Reserve implemented quantitative easing, creating new money to purchase bonds from banks, forcing liquidity into the system while buying long-term government bonds to eliminate safe savings options. The new money flowed primarily to wealthy clients, driving up asset prices and disproportionately benefiting those who already owned substantial assets. The author contends that the resulting wealth inequality was not an unintended consequence but the policy’s objective. Those left behind retained voting rights, fueling populist movements. He argues that Donald Trump’s rise and Brexit were political offspring of central bank policies, with populism rooted in those institutions’ actions.

On October 13, 2023, the author attends an event in Dublin where Michael Lewis discusses his book about Sam Bankman-Fried and the cryptocurrency exchange FTX. Once valued in the billions, FTX collapsed as a bubble inflated by quantitative easing’s ultra-low interest rates. A jury ultimately convicts Bankman-Fried of stealing customer funds. Speaking beneath the pulpit where Jonathan Swift once preached, the author recalls Swift’s 1720 satirical poem about the South Sea Bubble, noting that human nature and speculation remain unchanged across three centuries.

The FTX saga represents the latest chapter in the millennia-old battle over who controls money. The current system reflects a truce: States issue currency through central banks while commercial banks create credit under regulatory oversight. Cryptocurrency attempts to privatize money, promising liberation from establishment control but ultimately benefiting the wealthy who own it.

McWilliams describes most crypto as digital counterfeiting that exploited low public trust in institutions. Bitcoin, governed by a fixed-supply algorithm on blockchain technology, faces fundamental flaws. Its finite supply causes extreme price volatility—the very characteristic that makes it unsuitable as money while rendering it attractive for speculation. Rather than functioning as a medium of exchange, Bitcoin is hoarded for potential gains. Crypto-assets fail all three essential monetary functions: unit of account, medium of exchange, and store of value. Unlike bonds or equities, they generate no income and represent no legal claim on real-world value. Trading them amounts to unregulated, zero-sum gambling rather than investment. Stablecoins are essentially money market funds in disguise.

Early Bitcoin adopters, he argues, formed a doomsday cult betting on Western civilization’s collapse through hyperinflation. In a striking reversal, they have partnered with Wall Street to create exchange-traded funds, lobbying the Securities and Exchange Commission for legitimacy. In January 2024, the SEC approved Bitcoin ETFs for mainstream trading. The author concludes that crypto solves no real problem and compares it to Esperanto—a constructed language with few speakers.

At the opposite extreme, Modern Monetary Theory, promoted by economists like Stephanie Kelton, argues that governments issuing their own currency spend first and tax later, constrained only by inflation rather than debt levels. COVID-19 stimulus payments are cited as evidence. However, practical obstacles exist. Eurozone countries lack currency sovereignty, and financial markets impose real constraints, as demonstrated when Liz Truss’s 2022 government triggered a gilt market crisis and currency run despite Britain’s theoretical ability to issue unlimited sterling.

Both crypto and MMT represent impractical extremes. Genuine monetary innovation is emerging organically in Africa. M-Pesa, introduced in Kenya in 2007, transforms mobile phone airtime into functional currency. The mobile provider Safaricom exchanges phone credit for shillings, enabling deposits, payments, transfers, and loans via basic text messaging. This solved the real problem of expensive and risky remittances—previously, sending money home meant giving cash to bus drivers who charged up to 30% and often stole it. Today, 70% of Kenya’s population uses M-Pesa, which accounts for 30% of the nation’s GDP. The system passed the evolutionary test that crypto failed: solving an actual problem with appropriate technology.

Walking through Trinity College Dublin’s gates to teach monetary economics, the author reflects that a Kenyan worker can now instantly transfer money home via mobile phone. Money has propelled humanity’s achievements—from electric cars to global supply chains—acting as civilization’s central nervous system. Humans have become plutophytes, a species shaped by and continuously adapting with money. M-Pesa embodies this organic evolution, now spreading to the Democratic Republic of the Congo in the same river basin where the Ishango Bone, an ancient counting tool, was discovered. Money’s evolution, like humanity’s, constantly surprises.