Chapter 4 presents evidence that, in contrast to monetarist theory, many people are at least partially under the money illusion, the tendency for people to ignore the effects of inflation.
Market monetarists are skeptical of traditional monetarists' use of monetary aggregates as tools for policy instruments and prefer to use forward-looking markets as a tool to evaluate current monetary policy.
Market monetarists are skeptical that interest rates or monetary aggregates are good indicators for monetary policy and hence look to markets to indicate demand for money.
With the rise of monetarist ideas, the focus in fighting deflation was put on expanding demand by lowering interest rates (i.e., reducing the cost of money).
In recovery from a recession, market monetarists believe excessive worry about inflation is unjustified and policy should instead focus on returning the economy to a normal growth path.
Supporters of nominal income targeting often self-identify as market monetarists, although market monetarism could also be construed as a broader term.