Since the cost of supplying money to the economy is practically zero (ignoring the cost of printing money) optimality requires that the economy should be satiated with money. In other words, money is a free good from the point of view of society as a whole; hence its quantity should be expanded to the point where it cannot increase utility (or output) in the economy, i.e., to the point where the alternative cost of holding it is zero. In a competitive economy this means that the money rate of interest should be driven down to zero. One way of doing this would be to pay interest on money equal to the real rate of return on real capital. An alternative possibility is a rate of price deflation equal again to the rate of return on real assets. Professor Johnson provides a convincing argument in favor of the first policy and against deflationary measures. We believe, however, that the "optimum" which both policies are designed to achieve is not, in general, an appropriate target of monetar