So what finance and what money should money people and finance people, respectively, be trying to learn?

A great example, according to me, is provided by the recent BIS paper on ”Helicopter Money.” The authors draw attention to the institutional fact that short term interest rates are determined in the market for bank reserves. Helicopter money would amount to a massive increase in the supply of bank reserves, but with what consequence for the rate of interest? If the central bank continues present practice of setting the floor on short term interest rates by paying interest on reserves, then the rate of interest stays wherever the central bank sets it. The fact that cash pays no interest does not mean it is a free lunch because excess cash becomes excess bank reserves, which do pay interest.

“The ‘decoupling’ of interest rates from reserves is obviously well known to central banks but, surprisingly, it has not yet found its way into textbooks and economic thinking more generally.” This gem, which the authors bury in the middle of the paper, is the key point for present purposes. New thinking about money is needed, by both money people and finance people. It’s not in the textbooks, or the heavily vetted academic journals, precisely because it is new. So don’t look there. Look instead to the writings of practitioners, whose daily engagement with the workings of the actual system forces development of new thinking, pragmatically. They have jobs to do, and when conventional thinking doesn’t help, they have to find other ways of thinking.

Actually current textbooks are mostly away from the reality we have been living in for past 10 years or so.

Lot has to be done to stop making economics a silo subject. Ironically the way forward for economics is to go backward when economics was taught more holistically. I am pretty sure that scholars who studied economics earlier would be really surprised and disappointed to see this super specialisation nature of the subject which is obviously not going anywhere..