When FK was young (sehr wonkish)

He raised his hand when I taught him Sargent and Wallace´s result about the indeterminacy of equilibria under an interest rate target arrangement and hastily added: "but professor X, coupled with a fiscal theory of the price level, that doesn´t hold anymore. So why the fuss?".

I praised FK for the wise comment and said: "That´s correct, FK, but somewhat irrelevant". And I went on to say "True, too much fuss, but for another reason. What S-Wallace show is that a fixed nominal rate will generate multiple equilibria, but an interest rate rule that is either a simple Taylor based on endogenous variables, or a forward-looking rule based also on endogenous variables, will not lead to multiple equilibria. And that´s what CBs do; they dont fix the prime rate based on exogenous sunspots"

I realized FK, still young and willing to learn, liked this response back then. He became wiser, and humbler, studied hard and finally became the most important economist in his building.