Isn't the channel he cites right in the New Keynesian IS-curve? Isn't it pretty easy in Old Keynesianism by just noting that when we're moving to the right and out of the liquidity trap (hand-waving on the reasons in the Old Keynesian case), rates will rise? Isn't all this back in the Old Old Keynesianism of Keynes all over the place? Hasn't Krugman been pointing this out since the beginning of the crisis?
Once again I don't understand why Scott Sumner tries to make conflict where there is none. People who read the blog get a very distorted picture of exactly where everybody stands - much more so than some of the other market monetarists who are better about this, recognize the common ground, and advocate market monetarism on the basis of parsimony or some other advantage.
What About Trade Deficits, Anyway?: DeLong FAQ
8 hours ago