I am going to give what *I think* is the intuition behind John Cochrane's paper (pdf), that is the subject of his recent post. (Or maybe what I'm doing is reverse-engineering his model's results.) **The key result of his paper is the "Neo-Fisherian" finding that an increase in the rate of interest set by the central bank results in an increase in the inflation rate.** **And this equilibrium is stable. And with sticky prices, if the central bank sets a higher interest rate this causes a boom.**

My old brain is tired, I can't do math, so I may have misunderstood him. (There is a lot of his paper I do not understand, and it's a long paper and I haven't read it all). *But my little "model" gets the same results as his and is also simpler and more general. And much easier to understand.*

It's based on exactly the same "model" I presented in my old post "If new money is always paid as interest on old money".

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