1. Do we think λ=∞, even if we accept a simple IS-LM set up regarding m?
2. Do we agree m is endogenous and a simple IS-LM set up regarding m probably isn't right?
3. So do we still think λ=∞?
I see no sign that for the Fed, λ=∞. Bernanke-Evans doesn't make λ=∞, although it inches closer. But I still don't think that the FOMC sets λ at ∞. Neither do the markets, I imagine. And since money is endogenous that matters.
There is an important role for fiscal policy. For God's sake, can we at least get it on trend? If you think sectoral balance and patterns of sustainable trade are important you should at least be able to endorse keeping government spending on trend.
And please don't tell me that because I'm endorsing fiscal policy I am somehow arguing against monetary policy. It is not Scott Sumner Day, and neither was Thursday.