The Slack Wire

Investment, Animal Spirits and Algae

A recent webinar on *Against Money* used Matt Levine’s algae‑fuel startup scenario to illustrate how financing decisions stem from planner optimism rather than market signals. The piece argues that banks function as modern planners, granting soft budget constraints that let entrepreneurs pursue speculative, long‑term projects. It links this dynamic to Keynes’s “animal spirits,” Schumpeter’s view of banks, and Minsky’s non‑neutrality of money, showing that interest rates and financing terms shape perceived profitability. Historical examples from the Industrial Revolution reinforce that transformative innovation depends on speculative capital, not rational market calculations.