Good monetarism, bad monetarism

This is a sort of response to a recent Nick Rowe post.

Good monetarism uses the excess cash balance mechanism.  It relies on the thought experiment that if you double the supply of base money in the economy, and the demand for base money is unchanged, then nominal expenditure levels must also double in order for money supply and demand to reach equilibrium. And that in the long run monetary shocks don’t have real effects, so any change in NGDP is attributable to prices, not output.

Bad monetarism is focused on the banking system.  Like hydraulic Keynesianism it is obsessed with all sorts of mechanical transmission mechanisms.  Bad monetarism sees monetary policy affecting the economy by first impacting the monetary aggregates through a “multiplier process.”  In fact, the aggregates respond endogenously to the overall macro environment, which is determined by expectations of future changes in the supply and demand for base money, and hence NGDP. 
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