ABSTRACT
As Leland Yeager establishes impressively in The Fluttering Veil (Yeager 1997a), the notion of monetary disequilibrium is one of the core ideas of macroeconomic theory. That monetary distortions originating on either the supply or demand side of the “money market” can have important impacts on the price level and on real income is decisively argued in his volume. That these impacts are likely to be stronger in the event of monetary change than they are for changes in other major macroeconomic magnitudes is a proposition for which an ample and impressive case appears in this book. That money has unique status not only as medium of exchange but also as the sole asset without a “price” of its own, so that consequences of excess demands for, or supplies of, money must be worked out piecemeal among the millions of markets that employ money for transactions purposes, is, properly, the central insight of the volume. That this central insight, which I have not seen emphasized elsewhere in modern macro-theory, substantially simplifies monetary theory by establishing a uniqueness factor to the monetary asset that the existence of numerous “near-moneys” cannot overturn is one of the book’s major achievements. That this uniqueness, when considered in combination with the existence of a complex, interlocking business structure where the fact that costs of some businesses are revenues of others, and cost changes for some lag behind price changes for others, leads directly to a monetary theory of the business cycle, follows quickly from the analysis. That all this matters crucially for macroeconomic theory is difficult to deny once one has read the volume.
