I find Sumner so baffling sometimes. A lot of his criticisms of non-market monetarists are based on strange diagnoses of their claims. Until this morning reading this post I would have thought it obvious that most Keynesians see Japan in the 90s and the Bernanke Fed as running into exactly the same problems. And yet Sumner's critique here is largely that Keynesians view them differently (and that's a problem). Sumner claims that in the 1930s they would have laughed at Friedman and Schwartz, but monetary tightening was a major part of the diagnosis of the Depression for Keynes. Where I think the real disagreement lies is in the claim that the Fed could have saved us. Keynesians then and now think that is a harder case to make - not that monetary policy is useless or impossible (another thing Keynesians don't claim but Sumner has a nasty habit of suggesting they do), but that it's a difficult tool to use in deep depressions. Once a monetary collapse happens, long-term expectations can be hard to dislodge (market monetarists tend to think they're easy to change, and therefore if they are not changed the monetary authority must be engaging in tight policy).
1 hour ago