My Friendly Fire: Apologies to Warren Mosler

       Scott Fullwiler just pointed out to me that Mosler's jibe was likely at the Monetarsits for not getting that money is a government monopoly. That makes sense and I want to express my apologies to Mosler for shooting first and asking questions later.

       http://diaryofarepublicanhater.blogspot.com/2012/02/warren-mosler-mr-mmt-drops-by.html

       I want to stress again that I think MMT may be the way out for us on the level of macroceconomics. I am more and more convinced that Monetarism is a straitjacket we must get out of.

       As for Scott Sumner, while I at least initially found his NGDP idea very interesting and it still for all I know could work, he likely as a Monetarist overestimates the impact it would have.

       I agree with Warren this is a very simple idea but it is also very radical as it is a huge contradiction with how people have been taught to understand economics and monetary policy.

       When I read MMT stuff they often put out an example that shows that the Fed or the IMF, etc, does on some level understand and admit MMT principles-like that the money multiplier is a flawed concept. Yet I think what you have to keep in mind is that it is only "on some level."

       For example, Bernanke, on a conscious level is a Monetarist. Maybe on some level he understands that the money multiplier is a flawed concept but on the conscious level that he formulates his policy, obviously not. Otherwise there would have been no QE2 or at least it would have been done differently.

       Indeed an interesting claim I saw at-I think it was Cullen Roche-that Bernanke only did QE2 to facilitate Obama's stimulus. If so that would also mean that Sumner is wrong in thinking that Fed policy will always try to neutralize fiscal policy-to the contrary Bernanke-according to this claim-tried to facilitate it.

      Let me also recommend this book by Stephanie Bell and Edward Nell "The State, the Market, and the Euro: Chartalism vs. Metallism in the Theory of Money." I happened to come across yesterday which clearly is a great read.

      True progress on the monetary system is in this direction I'm convinced.