Sumner says he doesn't bother with MMT anymore and that doing so is a waste of time. He did though end a recent post by sideswiping them.
http://www.themoneyillusion.com/?p=13294#comments
In this post he finishes with, "I dedicate this post to MMTers everywhere."
This intrigued me so I left his comment to Sumner:
So this post in some way refutes MMT? Trying to scale that mountain again, huh? I hope someone tips them off-the feeding frenzy when they get into it is always fun.
I’m not sure how you think you have refuted them here, maybe because you think they don’t believe in the Quanitty Theory of Money. Yet Scott Fullwiler actually says they do believe in QTM.
For the details see
http://diaryofarepublicanhater.blogspot.com/2012/01/its-on-tiime-for-market-monetarist-mmt.html
http://diaryofarepublicanhater.blogspot.com/2012/01/market-monetarist-mmt-smackdown-20.html
Of course the one thing I’m sure they don’t believe in is the money multiplier-and indeed they question money neutrality itself.
Write a post debating money neutrality with them-that will give us a battle royale. Scott answers me thus:
“So this post in some way refutes MMT?”
Does it really? I hadn’t noticed.
I’m done debating MMTers. The debates go this way: I say “so you believe A” and they say, “no, we don’t believe A, we believe B” And I say “so you believe B” and they say “no, we don’t believe B, we believe C”, and so on and so on. It’s like playing whack a mole. I’ve seen them say the QTM is wrong, so I’m not at all surprised to hear you say they believe in it.
Well Scott what I noticed is that you dedicated it to the MMTers, so thinking you thought you were disproving them in some way was the natural assumption. Note his peevishness. He thinks that they are just perverse and capricious. If you say they believe A they deny it, then they deny they believe B, then they deny C....
Still I've always thought there is more to this than that. So answered him this way:
"Scott, understand I’m not saying they believe it, I’m going by what Scott Fullwiler says they believe-Fullwiler in the MMT world is sort of like you in the MM world.
"Maybe you think debating them is like whack a mole though I suspect that problem is that since MMT and MM come from such a different vantage point it’s really hard to have any kind of meeting of the minds.
Like I said I think the real difference is money neutrality itself. If you say they deny it they won’t come back and say you’re wrong on that one."
"Essentially they are Chartalists which is the opposite of Monetarism. Essentially Monetarism is the modern day version of Metallism which is the historic opponent of Chartalism."
To this he come back with,
"They don’t even understand the money multiplier, so how can they “deny it” The money multiplier is the ratio of a monetary aggregate to the base. To deny the money multiplier is to say that there is no such things as the base or M2. They’d respond they are just denying the stability of the multiplier, and falsely claim that the textbooks assume the multiplier is constant. That’s silly. I teach out of Mishkin’s text and he shows graphs with big changes in the multiplier in the 1930s. They don’t seem to even understand the standard model, so they are in no position to criticize it.
"But saying the multiplier doesn’t exist is just silly. It’s like saying V doesn’t exist, or the MPC doesn’t exist. The real question is whether those parameters are stable."
"Joe Gagnon expressed exactly my views on MMT in the WaPo."
See, slowly and surely we're getting somewhere. Notice how while he claims the MMTers always deny any view you ascribe to them he does the same thing. So he claims now that nobody every said the money multiplier is stable.
I do remember the 80s where prior to the Monetarist disaster it was believed possible to control the money supply.
So we can go a lot further with a smackdown of MMT and MM. SeeBilly Mitchel''s piece on the money multiplier.
http://bilbo.economicoutlook.net/blog/?p=10733
If Sumner's done talking to the MMTers why dedicated his post to them? Why take a sideswipe? Here is what Mitchel says about mainstream economics-we can compare this to the Sumner quotes above.
"The mainstream theory alleges that the money multiplier m transmits changes in the so-called monetary base (MB) (the sum of bank reserves and currency at issue) into changes in the money supply (M). Students then labour through algebra of varying complexity depending on their level of study (they get bombarded with this nonsense several times throughout a typical economics degree) to derive the m, which is most simply expressed as the inverse of the required reserve ratio. So if the central bank told private banks that they had to keep 10 per cent of total deposits as reserves then the required reserve ratio (RRR) would be 0.10 and m would equal 1/0.10 = 10. More complicated formulae are derived when you consider that people also will want to hold some of their deposits as cash. But these complications do not add anything to the story."
"The formula for the determination of the money supply is: M = m x MB. So if a $1 is newly deposited in a bank, the money supply will rise (be multiplied) by $10 (if the RRR = 0.10).."
Clearly the smackdown is not over. If Sumner wants it over he shouldn't mention the MMTers. MMTers, by the way I encourage you to leave lots of comments over at Money Illusion. Again, that link is
http://www.themoneyillusion.com/?p=13294#comments
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