Three hundred years after the rise and collapse of the world’s first financial market bubble, that of the Mississippi System in France, it may be appropriate to characterise John Law (1671-1729) not only as the first great macroeconomic choreographer but also as the spiritual father of the modern policy of quantitative easing.
Every choreographer formulates his work in two parts: (1) the design stage and (2) the implementation phase. John Law came to macroeconomics, initially as a theorist, when he designed theoretical structures to solve the macroeconomic problems caused by monetary shortages and excessively high interest rates in economies ranging from Britain to Scotland to France.
His macroeconomic designs were presented in a remarkably modern style which distanced him from contemporary writers. Whilst his initial designs for Britain and Scotland were rejected, he eventually evoked a positive response from Philippe duc d’Orleans, the Regent of France during the minority of Louis XV, enabling him to move from the design stage to the implementation phase on the French economy between 1716 and 1720, a phase that produced a significant amount of quantitative easing by the newly created Banque Royale (Royal Bank).1.