... isconstantlychanging,generally for the better.In the realworld, a littleseculardeflation,alongwithupwardmovementsin the pricelevelmirroringadverse supply shocks, wouldbebetterthanzeroinflation. The Case for ZeroInflation The ideathatgeneralmacroeconomicstabilityrequiresstabilityofoutputpricesprobablypredates the productivitynormalternative,beingfoundin the writingsofcertainpreclassical ... realreturnof9·2percent. The equilibriummoneyrateofinterestonbondswillthenriseto9·2percent,making for a 9·2percentage-pointgapbetween the rateofreturnonbondsandthatonmoney.Equilibriummoneyholdingsthereforedecline, moving the economyfurtherfromFriedman'sideal. The above ... Sowhatdetermines the overalldemand for bankreserves? The answer,accordingtoreceivedtheory,isthat the demand for reserves willbeafunction,likethatshowninFigure5,of the totalvolumeof(gross)interbanktransactions,wherethatvolumeitselfisproportionaltonominalincome.Itfollowsthatanygivenquantityofbasemoneyreserves...