In 1829 the then-young economist John Stuart Mill put his finger on how it was that there could be excess supply of everything in the economy – of pretty much all currently produced goods and services and all kinds of workers. Previous economists had asserted a “metaphysical necessity” that excess supply of one commodity be matched by excess demand for another: that if there were unemployed cobblers then there were desperate consumers frantically looking for more seamstresses, and thus the economy's problems were never those of a general shortage of demand but of structural adjustment. These thinkers, Mill was the first to point out, had forgotten about the financial sector. If there was an excess demand for financial assets, then there could be an excess supply of everything else – what we call a depression.

But what is the financial excess demand, exactly? Milton Friedmanite monetarist dogma says the key excess demand in finance is always and everywhere for money – and you can always cure depression by bringing the money supply up so that there would no longer be excess demand for money. According to the British economist Sir John Hicks and his students the key financial excess demand is almost invariably for bonds, and you can almost invariably cure the depression by (i) raising business confidence so that the private sector would issue more bonds and build capacity or (ii) getting the government to borrow and spend and so boost the supply of bonds.

Followers of the US economist Hyman Minsky say the monetarists and the Hicksians (usually called Keynesians, much to the distress of many who actually knew Keynes) are sometimes right but definitely wrong when the chips are down and a big depression is the result of a financial crisis. Then the key financial excess demand is for high-quality assets: safe financial places in which you can park your wealth and still be confident it will be there when you return.