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So off the tops of their heads, they might make silly arguments about macro. They might not worry that the arguments are obvious and inconsistent with the views of Keynes and Keynesians, because they have the sense that it has been proven that Keynes etc were obviously wrong. Now their claims are obviously false as has been proven many times. Since there claims are about what must be, they are claims in mathematics and can be proven false.

Now you are suprised that Fama and Cochrane insist that they were right. I ask you, has either Fama or Cochrane ever admitted that they weren’t right ? Ever ? I ask for information. I can’t think of any occasion.
I also admit that, off the top of my head, I can’t think of any conclusion they have ever reached which didn’t seem to be obviously wrong to me or any case in which further thought and evidence has caused me to change my evaluation.

Cochrane’s tone is not an escalation. He–and others–have been at this pitch for quite a while.

For example: John Cochrane: “[That spending can spur the economy] is not part of what anybody has taught graduate students since the 1960s. They are fairy tales that have been proved false. It is very comforting in times of stress to go back to the fairy tales we heard as children but it doesn’t make them less false…” Robert Lucas: “Christina Romer–here’s what I think happened. It’s her first day on the job and somebody says, you’ve got to come up with a solution to this–in defense of this fiscal stimulus, which no one told her what it was going to be…. [I]t’s a very naked rationalization for policies that were already, you know, decided on for other reasons…” Edward Prescott: “I don’t know why Obama said all economists agree on [the need for a stimulus bill]. They don’t. If you go down to the third-tier schools, yes, but they’re not the people advancing the science…” Eugene Fama of the University of Chicago: “Sorry, but I’m not familiar with [Hyman] Minsky’s work…” Luigi Zingales: “Keynesianism has conquered the hearts and minds of politicians and ordinary people alike because it provides a theoretical justification for irresponsible behaviour…. They tell politicians, who are addicted to spending our money, that government expenditures are good…. In medicine, such behaviour would get you expelled from the medical profession; in economics, it gives you a job in Washington…” Michele Boldrin: “It is a fantasy that the economic profession at large finds the “stimulus” and the “bank bailout” plans sensible and adequate…. Outside the administration, the convinced supporters of the plans are a small minority among academic economists working in those fields. Both plans contradict four decades of research and are designed to please special interest groups…”

It’s the combination of extraordinary venom with… what by now I can only regard as extraordinary ignorance that truly frightens me.

And, yes, I think you do understand macro issues at a deeper level than Cochrane and Fama. It really does look like they think we are in an economy with a rigid cash-in-advance constraint and a technologically-determined velocity. That’s the only way I can find to make any sense at all of Fama’s manipulations of the savings-investment identity, and of Cochrane’s claim that it is logically inconsistent for a model to have people on aggregate trying to run down their real money balances.

And, yes, these issues were settled by the time of Irving Fisher.

Now venom I could understand–these are important issues that affect lots of people’s lives, and worth caring deeply about. Ignorance I could understand–the quantity theory of money is not an obvious and transparent beast. It’s the combination that is scary.