Sumner Hat Tips Me Again

     This time was not quite as sweet as he didn't identify me as his HT but I told you about it earlier:

     "I have shown the quote to Sumner himself."

      http://www.themoneyillusion.com/?p=29949&cpage=1#comment-395154

     "We'll see if he has a response. I note that Bernanke also throws cold, freezing water on Morgan Warstler's 'structural reforms' hobby horse. Speaking to him on Twitter he seems to think that structural reforms are the real problem Greece faces and that the problem could go away tomorrow if Greece just does all the structural reforms demanded of them."

     

      http://diaryofarepublicanhater.blogspot.com/2015/07/do-weak-currencies-cause-trade.html

     So he responds without attributing it to me. Ok, this is Bernanke's blog and Sumner was aware of it prior to me-but we don't know that he read that post in which case he would owe me a HT-it would be the class thing to do. 

    My guess is he can''t bear to HT me again so soon after doing it recently. 

    http://diaryofarepublicanhater.blogspot.com/2015/07/on-euro-and-greece-sumner-and-i-for.html

    Still, Sumner and I have seen our relationship thaw a little so I figure I won''t point this out on his blog-just here. I had already been careful with my HT. I had quoted Bernanke but left none of my own comments-so he couldn't try to deflect the point by making me the issue. 

    Just a few weeks ago it seemed that Sumner was banning me. 

    http://diaryofarepublicanhater.blogspot.com/2015/07/banned-by-scott-sumner.html

    Turns out I'm not banned-just a little while later he HTed me and we've been able to sort of kind of not totally be at each other's throats. 

   As for the substance of what he says here-in answer to my initial quote of Bernanke he had said this:

  "Mike, I agree that ECB policy has been too tight, not the rest of it. Don’t know enough about European stress tests to comment. My recent Econlog post demolishes his argument about the weak euro helping Germany"

    http://www.themoneyillusion.com/?p=29949

    There's the headline: Sumner demolishes Bernanke. 

   Ok, so let's see his actual answer to Bernanke:

   "The past week it’s been open season on Germany. Even I have occasionally bashed them for their views on monetary policy. In a way this is odd, because in many respects Germany has been (since 1945) almost like a model country. Other countries should try to be more like Germany. It’s also odd because Germany’s views are completely typical of the eurozone–so why single out that one country? Yes, France and Italy are a bit more moderate, but the other 15 are just as upset with Greece as is Germany."

    http://www.themoneyillusion.com/?p=29967#comments

   I have to say that Sumner is very unusual in not seeing why people are more upset with the Germans. First of all, most of these other countries are just folowing Germany's lead. You have to be realistic. In theory Germany is just 1 of 28 but this is kind of saying that the US is just 1 of 7 on the Security Council or just another country on the IMF.

   Germany is the predominant euro country and what it says goes. And this last weekend it's harsh stance compared with how magnaimous they were treated after WWII grated on people a lot.

   http://diaryofarepublicanhater.blogspot.com/2015/07/in-discussing-germany-you-can-be-polite.html

  http://diaryofarepublicanhater.blogspot.com/2015/07/the-return-of-anti-german-sentiment.html

  But let me quote from Sumner's fellow MMer, David Glasner, as Sumner probably wouldn't take my word for it:

 "Mike, Thanks. Unfortunately, Germany has not been able to bring itself to see that as the strongest country in Europe it has a responsibility to make the euro work for everybody not just itself."

  http://uneasymoney.com/2015/07/12/le-boche-payera-tout/#comments

  You have to understand that rational economics is not what the EU is about but advancing geopolitical agendas-especially that of Germany and France.

 So this part of Sumner's argument has an obvious answer: it seems not to realize the responsibility that Glasner points out.

  On the more technical, economic, aspect:

  "I see this argument a lot, but it makes no sense on either theoretical or empirical grounds. Over at Econlog I have a post showing that northern European countries not in the euro have just as big current account surpluses as Germany. And by the way, even on theoretical grounds joining the euro should not matter at all, if Europe had previously had a fixed exchange rate system. So I’ll give Bernanke the benefit of the doubt and assume that it’s the fixed exchange rate regime that he thinks actually benefits Germany, not the euro itself. Let’s also put aside the question of why Bernanke thinks a current account surplus “benefits” a country—that’s not standard economics. Indeed by that logic Australia would be suffering from its large chronic CA deficits. The CA surplus is simply domestic saving minus domestic investment; it’s not clear why we should care about it."

 "There is one way to test Bernanke’s claim. A country with an undervalued currency will see its real exchange rate appreciate through inflation. Recall that in the long run monetary policy only affects the nominal exchange rate, the real exchange rate is determined by the fundamentals driving saving and investment."

  http://www.themoneyillusion.com/?p=29967#comments

  So the proof is high inflation? I don't know about that. It seems to me that the benefit is that the euro is weaker than the DM would be.

 We;ll see if Marcus Nunes who clearly also has this view has the guts to say anything to Sumner-I would guess not.

  http://diaryofarepublicanhater.blogspot.com/2015/07/germany-and-greece-cowhos-parasite.html
"