Starting from the fundamental premise that money is a zero-sum game as every financial asset creates a liability and vice-versa, this book turns monetary theory on its head. By theorizing from first principles and employing rigorous empirical methods, we show that: (i) a loan creates a deposit and not vice-versa, (ii) banks create money but not NBFCs, (iii) the theory of the money multiplier is incorrect, (iv) bank reserves cannot be lent as bank loans, and (v) the “crowding-out” effect depends on whether the government borrows from banks or from households and corporates. We derive a comprehensive equation that describes all the determinants of money, called the V-S equation, to capture the essence of money in an economy.
Prof. Krishnamurthy V. Subramanian is a Professor of Finance at the Indian School of Business. He served as the 17th Chief Economic Adviser to the Government of India (2018–2021) and as Executive Director at the International Monetary Fund, representing India and South Asia. His work is distinguished by the application of first-principles economic reasoning to high-stakes policy challenges in emerging economies.
In 2026, Prof. Subramanian was selected as the first Indian economist in the 85-year history of the University of Chicago Alumni Award for Professional Achievement, a tradition that has previously honoured at least 14 Nobel laureates, including Paul Samuelson, Herbert Simon, Gary Becker, Myron Scholes, and Claudia Goldin, alongside global thinkers such as James Watson (co-discoverer of DNA), astronomer Carl Sagan, and marketing pioneer Philip Kotler. He belongs to an elite group of individuals to have received Distinguished Alumnus honours from all three of his alma maters: IIT Kanpur, IIM Calcutta, and the University of Chicago.
In its official citation, the University of Chicago described Prof. Subramanian's three Economic Surveys of India as "landmark" documents that provided "the intellectual foundation for India's approach to self-reliance, anchored in competitive markets, policy autonomy, and inclusive growth." The citation further noted that his early public articulation of a V-shaped economic recovery "helped anchor confidence in India's economic resilience at a time of deep global uncertainty.”
As India's Chief Economic Adviser during the once-in-a-century COVID-19 crisis, Prof. Subramanian worked with senior political leadership to help design the macro-financial and public-health architecture of India's response and to conceptualise Atmanirbhar Bharat (Self reliant India). He was among the few policymakers among G-20 economies to correctly diagnose the crisis as a supply-side disruption and articulated a balanced policy framework that delivered non-inflationary growth while preserving macroeconomic stability. His thematic Economic Surveys, a departure from past practice, introduced new frameworks emphasising ethical wealth creation, supply-side reform, and public-investment-led growth, and continue to guide India's economic approach. The scale of these decisions, affecting 1.4 billion people, underscored the real-world stakes of economic reasoning.
At the International Monetary Fund, Prof. Subramanian engaged directly with sovereign leadership during major balance-of-payments crises in South Asia, contributing to the design, negotiation, and oversight of stabilisation programmes that balanced fiscal credibility, social protection, and climate resilience. Across engagements with multilateral institutions including the United Nations, he has advanced data-driven reforms in global economic governance aimed at fairness, transparency, and institutional credibility.
Prof. Subramanian's scholarly research in financial economics has appeared in the world's leading journals. He is the author of India@100, a national bestseller presenting an evidence based framework for India's long-term growth trajectory toward its centenary in 2047, and Money: A Zero-Sum Game, which develops a first-principles, balance-sheet-based framework for understanding money creation and monetary transmission. Known for his ability to translate complex economic ideas into accessible language while remaining grounded in scholarly rigour, he has been described in the media as "the common man's economist," a reflection of his ability to combine scholarly rigour with public clarity.
His work reflects a central conviction: that rigorous economic reasoning, when combined with the courage to act under uncertainty, can shape outcomes for hundreds of millions of people.
Prof. Subramanian holds an MBA and a PhD from the University of Chicago Booth School of Business, an MBA from IIM Calcutta, and a B.Tech from IIT Kanpur.
K Vaidya Nathan is an Assistant Professor of Finance (Practice) at the Indian School of Business (ISB). Prior to joining ISB, he was a resident faculty member at the School of Business, University of Connecticut, where he continues to hold a Visiting Faculty position. Before becoming an academic, he worked as an investment banker with JPMorgan Chase Bank in Hong Kong, New York, and Singapore, and has advised financial institutions and corporates in the Asia-Pacific region on hedging and risk management. He specialises in credit derivative, foreign exchange, and fixed income products. He has also advised corporates in the telecom, media, and technology sectors on mergers and acquisitions, divestiture, acquisition financing, capital structure advisory, alternative investments, and debt restructuring. He is also a consultant with the World Bank.
He holds a BTech in Electrical Engineering from the Indian Institute of Technology (IIT) Kanpur and an MBA from the Indian Institute of Management (IIM), Ahmedabad. He is a Chartered Financial Analyst (CFA), certified by the CFA Institute, Charlottesville, and a Financial Risk Manager (FRM), certified by the Global Association for Risk Professionals (GARP), New York. He earned a PhD in Finance and completed a postdoctoral fellowship at the Leavey School of Business, Santa Clara University.
Professor Vaidya Nathan is a regular columnist with the Financial Express (http://archive.financialexpress.com/columnist/k/1). He is the author of two books: Credit Risk Management for Indian Banks (Sage Publications, London) and Credit Derivatives (McGrawHill Education, New York).
He received the Most Outstanding Faculty Award at the University of Connecticut School of Business in 2014 and the ISB Alumni Endowment Research Fellow in 2019. He has previously served as Associate Dean (RCI Programmes) at ISB and was appointed Chairman of the LOCF Committee for Economics by the University Grants Commission (UGC). He is currently Faculty Director-PGP Finance.
