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.
K. V. Subramanian is a Professor of Finance at the Indian School of Business (ISB). He served as Executive Director at the International Monetary Fund representing India and South Asia and was the 17th Chief Economic Advisor to the Government of India from 2018 to 2021.
Professor Subramanian is a financial economist with significant experience in economic policymaking. His work bridges academic research and public policy, with a focus on applying first-principles economic reasoning to complex, high-stakes problems in emerging economies. His scholarly research in financial economics has appeared in the leading journals, while his policy work has addressed issues of growth, financial stability, and institutional reform across India and South Asia.
As India’s Chief Economic Adviser, Professor Subramanian worked with senior political leadership to help design the macro-financial and public-health architecture of India’s COVID-19 response and to conceptualize Atmanirbhar Bharat (Self-reliant India), contributing to the intellectual foundations of structural reforms. He authored three Economic Surveys of India that introduced new policy frameworks emphasizing ethical wealth creation, supply-side reform, and public-investment-led growth. The thematic Surveys—a departure from past practice—were widely discussed within government, cited by senior political leadership for reshaping the policy discourse, and continue to guide India’s economic approach, illustrating how first-principles economic analysis can inform large-scale reform.
As Executive Director at the International Monetary Fund, Professor Subramanian worked with senior sovereign leadership during major balance-of-payments crises in South Asia and contributed to the design, negotiation, and oversight of stabilization programs emphasizing fiscal credibility, social protection, and climate resilience. Across engagements with multilateral institutions, including the United Nations, Professor Subramanian has advanced data-driven reforms in global economic governance aimed at fairness, transparency, and institutional credibility.
Alongside academic and policy work, Professor Subramanian has written books on economic policy and monetary economics. including India@100, a national bestseller that presents 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 by combining theoretical reasoning with empirical analysis. He has also engaged extensively with the public to improve economic literacy by communicating complex ideas in accessible ways while remaining grounded in scholarly rigor—efforts that have led to him being described in the media as “the common man’s economist.”
Professor Subramanian has been conferred the Distinguished Alumnus award by both his alma maters at IIT Kanpur and IIM Calcutta. He holds a PhD from the University of Chicago.
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.
