Monetary Wonderland

Monetary conditions affect our psychology. A change in monetary conditions can transform our collective social behaviours, dictating our perceptions about political economy. This is a simple statement. But, to capture what it means, it requires some explanations.

In my case, I learned this notion through my own real life experience in two extreme monetary realities—deflationary Japan (1998-2011) and inflationary Argentina (2011-2014). I witnessed that their opposite monetary conditions shaped very contrasting social, economic, and political behaviours between these two countries. My experiences are outlined in "Enter the Monetary Wonderland, Part 1: Deflationary Japan and Inflationary Argentina."

Moreover, through Japan's economic experience, I witnessed a pendulum-like cyclical nature of monetary reality: a debt-driven hype of the bubble economy during the second half of the 1980s; the bursting of the bubble in 1991;  thereafter, a prolonged period of deflationary stagnation, called 'Lost Decades.' Furthurmore, by the time the word, 'Japan,' became a universal synonym for deflationary stagnation, the Global Financial Crisis broke out in 2007. I lived through those two great transformations in monetary conditions and experienced the cyclical nature of our monetary reality. To illustrate the cyclical nature of our monetary reality, I run through the case of Japan in "Enter the Monetary Wonderland, Part 2: Cycle of Paradox."

In a way, we live in a ‘Monetary Wonderland’ that is a manifestation of a series of ‘feed-in/feed-back’ interactive dynamics between our collective behaviours and monetary reality. On one hand, a given set of monetary conditions can shape our particular collective behaviours; on the other, our collective behaviours can also transform our monetary reality.

Ever since, my inquiries about ‘Monetary Wonderland’ have grown and obsessed me to explore the dynamic interactions between monetary cycle and transformations in our political economy.