Since the full institution of deregulation the mechanics of how monetary policy
operates has fundamentally changed. No longer can a change in stance be
shown as shijis in the exogenously-determined money supply function in the
Keynesian interest @amework, because in competitive banking systems the
money supply process is fully endogenous. Money endogeneity correctly
suggests a reinterpretation of the vertical money supply function. A vertical
money supply function drawn against bond yields does not automatically mean
exogeneity. Monetary policy is best shown as shijis in the money demand
function.