Nick Rowe Says it: I Have Sumner Derangement Syndrome?

      I love it. Still, like I told Nick, Sumner had Mike Derangement Syndrome before I had Sumner Derangement Syndrome. Nick argues that there is no affinity between Sumner and RBC.

      Mike: "...but Sumner has wagered his whole economic life on the victory of RBC."

      "Rubbish."

      "Short Sumner: "Business cycles are caused by fluctuations in AD caused by bad monetary policy."

      "Short RBC: "Business cycles are not caused by fluctuations in AD caused by bad monetary policy."

       It's like saying "someone who believes that disease is caused by bad plumbing, and who has spent his whole life trying to make the plumbing good, so that it no longer causes disease, is on the same side as those who believe that disease has nothing to do with bad plumbing."

     "Mike: you really are suffering from Sumner Derangement Syndrome."

     http://diaryofarepublicanhater.blogspot.com/2014/02/mark-sadowski-tom-brown-and-ed-prescott.html

    Here's what my point was though. In the following link, Sumner said that New Keynesians win when only the RBC model is left. 

      http://www.themoneyillusion.com/?p=14433

      What Nick is arguing is that RBC isn't true today but assuming MM wins it will be. Essentially his argument is that RBC thinks there is no business cycle-at least in the sense that anyone but them would understand it-but MM will eventually solve the business cycle in which case RBC will then be true. 

      I see that Tom Brown didn't reply-yet at least. My disagreement I guess is that I read Sumner with more skepticism. Tom said in a recent comment that he has to take Sumner at his word. I disagree there. Why should I give him 100% trust? There are just a number of things he's said over the 2 plus years I've read him that increases my skepticism. More than anything is his religious opposition to fiscal stimulus. 

    David Glasner at least said that while monetary policy is preferable he wouldn't have a problem with fiscal policy right now. Scott makes is sound like the sky will fall with any kind of fiscal stimulus. He is just as opposed to FS as the RBCers are. 

    He doesn't just fight FS he draws swords with anyone who criticizes fiscal austerity and makes the implausible argument that FA has had no ill effects thanks to QE. My argument which he never answers is that if this is true then we must have had an optimal recovery yet we've seen this recovery drag on into its sixth year. He's even gone as far to try to argue that the was a negative multiplier for the 2009 stimulus-on the premise that without it we'd have had more QE. 

    Again-I want to see who will contradict me here: if Scott and Prescott sat down and gave you their positions on fiscal policy-taxes, govt spending, regulations, the budget would there be any meaningful difference at all? I say no. 

    Greg said this regarding Sumner vs. RBC. 

    "Seems to me that much of the disagreement between RBCers and Sumner is the definition of AD. They both agree that bad monetary policy is the culprit but Austrians view the CB as evil and their actions as currency manipulation which only hurts savers. Sumner views CB actions as stimulatory and the only thing that can work. They both want higher interest rates and they both want NO fiscal actions whatsoever. "

      He's right in the essentials-there's no difference on fiscal actions at all. I would say that their debates over AD are only debates over means not ends.   Monetary policy is just the way to make us lose sight of fiscal policy and allow the GOP to continue to try to drown govt. in the bath tub. 

     Again, looking at things in the broader sense, and taking a longer view, if you're a conservative who wants to shrink the size of govt then you're happy to have MM, RBC, and the Austrians out there. More horses in the race increases your odds of winning.