Plans, Prices, Coordination, and Clearing: A Rejoinder to Rapka

Przemysaw Rapka (2025) has responded to my recent arguments (Newman 2025a; 2025b) against monetary disequilibrium theory (MDT).In "A Note on 'Desired Money Balances' and Menu Costs" (2025a), I argued that MDT proponents have a view of money demand that is disconnected from demonstrated preferences and is instead based on unobservable plans and "desires."This implies that MDT proponents misdiagnose monetary disequilibrium and that, therefore, their policy/institutional prescriptions regarding changing the money supply to immediately accommodate changes in money demand are unwarranted and distortive.In "There Ain't No Such Thing as a Sticky Price" (2025b), I argued that all realized exchanges in unhampered markets reflect momentary clearing: The quantity of the good supplied equals the quantity of the good demanded.This logic extends to the money side of exchanges, meaning that monetary equilibrium in the marketclearing sense is repeatedly established as long as there are no widespread price controls.Non-market-clearing sticky prices are a myth and cannot be used as a basis for diagnosing monetary disequilibrium or for identifying the causes of the increased unemployment and decreased productivity in recessions.