Neutrality Of Money

Something unique and interesting can be observed of the edifice of monetary economics: some monetary theories are anchored on the neutrality of money, or in other words, neutrality of money is the foundation of these theories; while others are founded on the non-neutrality of money. Arguments have yet ceased to exist, since both sides can align their theories with reality given that their required conditions are met. However, the kind of confrontations in the monetary theories have led to many a difference in understandings about how important money is to economy and in what ways money works in economy; meanwhile it may not be possible for the theoretical framework of monetary economics to accommodate the coexistence of two conceptually-opposite models for long and answers to the above-mentioned questions are crucial to sound macro economic policymaking based on a good mastery of rules of economy.With a historical review and an in-depth analysis, the paper attempts to point out that neutrality of money is not a "right or wrong" or "true or false" issue, but about how monetary economists have applied different semantics, pragmatics and contextual analysis methods to the problem. It is essentially a philosophical issue where varied world views and methodologies in the research of the monetary economists come into play.