Mark Sadowski: MMTers Invented the Money Multiplier for 'Something to Beat Up in Socially Binding Fits of Rage'

     A good case can be made that Market Monetarism-Monetarism in general-is postmodernist. A perfect example is how Sadowski-the Great Wonk-somehow shows that the MMTers are all wet for attacking the money multiplier as false as no such thing exists anyway but is none the less very useful. 

    "Every Econ 102 textbook I’ve ever seen teaches the money multiplier is a function of three variables. The currency ratio is always portrayed as the depositors’ choice, the reserve ratio (above required, if any) is always the lenders’ choice, and the total amount of currency and reserves (the monetary base) is the central bank’s choice (even if supplied through the discount window), and all are dependent on the conduct of monetary policy by the central bank."

    "Every textbook that presents the simple model of multiple deposit creation follows this with a critique clearly stating its “serious deficiencies”. In Mishkin’s intermediate level textbook (I have the 7th edition), not only is there such a section, the chapter in which it is taught is followed by a whole other chapter that makes it abundantly clear that the currency and reserve ratios are variables."

    "All models are wrong, some are useful. The simple model of multiple deposit creation is useful. And there isn’t a single textbook I have seen that doesn’t point out its serious deficiencies. If students pass a course unaware of the simple model of multiple deposit creation’s serious deficiencies, that is the fault of the instructor, not the textbook."

    "So, in short, there is no such thing as “exogenous money” theory. The believers in endogenous money have carefully constructed an exogenous money strawman, complete with a series of erroneous beliefs and nonexistent defective textbooks, so that they could have something to verbally abuse and physically beat up in socially binding demonstrations of rage."

     http://www.themoneyillusion.com/?p=24551&cpage=1#comment-290613

     So it's got serious deficiencies but the MMTers are the ones that are all wet for pointing them out? Reading this almost poetical flourish of Mr. Sadowski, I couldn't help but remember when he accused me of having a style that was little too 'histrionic:

     " Often I think you’ve gone off the deep end, because many of the things that you say, such as this, are histrionic and completely irrational.""

     http://diaryofarepublicanhater.blogspot.com/2013/10/mark-sadowski-may-be-great-wonk-but-he.html

     http://diaryofarepublicanhater.blogspot.com/2013/10/mark-sadowski-and-my-apparent-war-with.html

       Nothing histrionic about claiming that MMTers invented the concepts of endogenous money and the money multiplier for the purpose of having something they can "verbally abuse, physically beat up in socially binding demonstrations of rage."

     This argument is very like Sumner's argument for Rational Expectations (RE). You can't say RE isn't true because presumably it's adherents know much better than you do how untrue it is but find it useful and hear you are ignorantly arguing it's not true! It's funny that he thinks I'm irrational yet he seems to think that we live in a world where all models are false it's just about finding the one that we think is more useful. You can't show that RE, the MM or endogenous money are false because they are and their model builders find them useful.