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Scott Sumner

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Scott Sumner
Born1955 (age 68–69)
Academic career
FieldMonetary economics
Institutions
School or
tradition		Market monetarism
Alma materUniversity of Wisconsin (B.A.)
University of Chicago (Ph.D.)
InfluencesMilton Friedman
Information at IDEAS / RePEc

Scott B. Sumner (born 1955) is an American economist. He is the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University, a Research Fellow at the Independent Institute, and professor who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Federal Reserve and other central banks should target nominal GDP, real GDP growth plus the rate of inflation, to better "induce the correct level of business investment".[1]

In May 2012, Chicago Fed President Charles L. Evans became the first sitting member of the Federal Open Market Committee (FOMC) to endorse the idea.[2]

After Ben Bernanke's announcement on September 13, 2012, of a new round of quantitative easing, which open-endedly committed the FOMC to purchase $40 billion agency mortgage-backed securities per month until the "labor market improves substantially", some media outlets began hailing him as the "blogger who saved the economy", for popularizing the concept of nominal income targeting.[3]

Academic career

Sumner received a PhD in economics from the University of Chicago in 1985. His published research focuses on prediction markets and monetary policy.[4]

In the wake of the 2008 financial crisis, Sumner began authoring a blog where he vocally criticized the view that the United States economy was stuck in a liquidity trap.[5] Sumner advocates that central banks such as the Federal Reserve create a futures market for the level of nominal gross domestic product (NGDP, also known as nominal income), and adjust monetary policy to achieve a nominal income target on the basis of information from the market. Monetary authorities generally choose to target other metrics, such as inflation, unemployment, the money supply or hybrids of these and rely on information from the financial markets, indices of unemployment or inflation, etc. to make monetary policy.[6]

In 2015, Sumner published The Midas Paradox: A New Look at the Great Depression and Economic Instability. The book argued that the Depression was greatly extended by repeated gold market shocks and New Deal wage policies.

Market monetarism

Main article: Market monetarism

A school of economics known as market monetarism has coalesced around Sumner's views; The Daily Telegraph international business editor Ambrose Evans-Pritchard has referred to Sumner as the "eminence grise" of market monetarism.[7] In 2012, the Chronicle of Higher Education referred to Sumner as "among the most influential" economist bloggers, along with Greg Mankiw of Harvard University and Paul Krugman of Princeton.[8] In 2012, Foreign Policy ranked Sumner jointly with Federal Reserve chair Ben Bernanke 15th on its list of 100 top global thinkers.[9]

Nominal GDP targeting

Main article: Nominal income target

Sumner contends that inflation is "measured inaccurately and does not discriminate between demand versus supply shocks" and that "Inflation often changes with a lag...but nominal GDP growth falls very, very quickly, so it'll give you a more timely signal stimulus is needed".[10] He argued that monetary policy can offset fiscal austerity policies such as those pursued by the British government in the wake of the 2007 economic crisis.[10]

In April 2011, the Reserve Bank of New Zealand responded to Sumner's critique of inflation targeting, arguing that a nominal GDP target would be too technically complicated, and make monetary policy difficult to communicate.[11] By November 2011, however, economists from Goldman Sachs were advocating that the Federal Reserve adopt a nominal income target. Nathan Sheets, a former top official at the Federal Reserve and the head of international economics at Citigroup, proposed that the Federal Reserve adopt a nominal consumption target instead.[12]

Sumner has argued that one cannot account for the impact of fiscal policy without first considering how monetary policy may affect the outcome; fiscal stimulus may not succeed if monetary policy is tightened in response. Economic journalists have referred to this as the Sumner Critique, akin to the Lucas critique.[13] Summarizing this thinking, The Economist suggested that

the economy will almost certainly not grow at a 5.3% rate no matter what Congress does. Arguments to the contrary are subject to what econ bloggers have come to call the Sumner Critique, after economist and blogger Scott Sumner. It is reasonable to assume, by this critique, that the Federal Reserve has a general path for unemployment and inflation in mind and it will react to correct any meaningful deviation from that path. A 5.3% growth rate is well outside the range of current Fed projections. Growth that rapid would almost certainly bring down unemployment quite quickly, triggering Fed nervousness over future inflation and prompting steps to tighten monetary policy.[14]

Other views

Sumner's views have been described as libertarian, and he has also used the label as a self-description.[15][16][17]

China

Sumner has lamented what he sees as "anti-China" sentiment in the United States and Europe.[18][19] In one post titled "cHiNa iS tHe reAL thReAt", using alternating caps, Sumner implies that Russia's military support of Alexander Lukashenko represents a bigger threat to the United States.[20] Sumner has also juxtaposed the actions of China and Russia in another blog, where he said "I notice that Russia (which has far more nukes than China), actually does invade other countries. We worry that China might invade other countries".[21] Sumner, frustrated by people he calls "morons", has attempted to prevent people from associating his views with support of the Chinese Communist Party (CCP), has contrasted China, which he calls "a very good country of 1.4 billion people", with the CCP, which he describes as "a very evil government".[22]

Chinese economy

Sumner is bullish on the Chinese economy, and has mocked various predictions made throughout the 2010s suggesting that the Chinese real estate market would collapse.[23] Sumner has attributed the growth of the Chinese economy to economic growth in Europe.[22] He also subscribes to a win-win philosophy regarding US-Chinese trade relations, describing one trade deal between the two countries as "a big win for China. And that’s means it’s a win for Americans".[24]

Sumner does not believe that China is manipulating its currency.[24]

Sumner has praised China's high-speed rail network.[25]

Covid-19 pandemic

Sumner has criticized U.S. intelligence's findings in the origins of Covid-19,[26] and opined that the virus could have originated in Thailand or Laos,[27][28] citing a Wall Street Journal article and a Bloomberg article, respectively.[27][28][29][30]

Sumner has praised China's handling of the Covid-19 pandemic, and has been critical of the handling of the pandemic in the United States and Europe, saying in one blog that "China succeeded against a crisis that was objectively far greater than the crisis faced by Europe and America".[18] While the strict measures taken by the Chinese government, such as officials locking residents in their home to enforce quarantines, and assigning residents color codes to evaluate whether they should quarantine, have been criticized by journalists,[31][32] Sumner praised the country's ability "to control the epidemic under difficult circumstances".[18]

Sumner has criticized the slow development of the COVID-19 vaccines, blaming medical ethicists, and said that "thousands died" as a result of delays to the vaccines' development.[33]

Donald Trump

Sumner is a vocal critic of Donald Trump, calling him "Putin's puppy",[20] and opining that he has a "contempt for democracy".[34] Sumner believes that Trump has a "longstanding infatuation" with Putin, citing a comment Trump made in which he called Putin "a leader far more than our president", referring to Barack Obama.[34][35] Trump is a frequent target for criticism on his blog, as is Tucker Carlson,[21][36][37] and Vladimir Putin;[20][36] this has resulted in a number of ad hominem insults being directed at him in his blog's comment section.[36][38] Sumner has taken to banning comments from people he calls "Russian trolls".[36] Some of the deleted messages were links to articles published in the medical journal The Lancet.[citation needed] These articles were contrary to the views of the prevailing orthodoxy.[citation needed][clarification needed] Sumner has repeatedly used the term "Trump derangement syndrome" to describe support of Donald Trump, and has described support for Trump as "a personality cult".[37] Sumner also believes that Trump encouraged China "to put Uighurs into concentration camps", citing a disputed claim made by former National Security Advisor John Bolton.[21][39]

Sumner viewed the Trump administration's stance towards China as detrimental to the economies of both countries.[24] Sumner views the two countries' 2019 trade agreement, negotiated in part by the Trump administration, as "a loss for the Trump administration", and added "I expected the Trump administration to lose, but not this badly".[24] Sumner describes Trump's policy as "brazenly trying to steal money from the Chinese, and is igniting a cold war with China".[21] Sumner has been critical of Trump's efforts to ban TikTok and WeChat in the United States,[40] despite privacy concerns about TikTok.[41]

Sumner has lambasted Trump for his handling of the Covid-19 pandemic, saying that Trump "would gladly kill enormous numbers of Americans to get re-elected" and that it was responsible for large amounts of American deaths.[42] In one blog post, Sumner pondered whether Trump's policy had killed Americans, and stated that this was designed to make Trump "look good".[42]

Sumner has been critical of the American media's response to the Trump presidency, saying that "the press has gone easy on Trump", and said that media outlets have a "shameful double standard" when it comes to covering Trump.[43]

TikTok

Sumner hails the success of TikTok as "a truly heartwarming story of entrepreneurial success",[33] and has criticized the Trump administration's efforts to ban it,[40] despite concerns over potential privacy violations.[41][44][45]

Personal life

Well known in Bentley's economics department as a "technophobe," Sumner, who purchased his first cell phone in 2011, apparently "triggered expressions of surprise and amusement when he informed his colleagues that he was starting a blog."[1]

Bibliography

Books

  • Sumner, Scott B. (2021). The Money Illusion: Market Monetarism, the Great Recession, and the Future of Monetary Policy. Chicago: University of Chicago Press. ISBN 978-0226773681.
  • Sumner, Scott B. (2015). The Midas Paradox: A New Look at the Great Depression and Economic Instability. Independent Institute. ISBN 978-1-59813-150-5.
  • Sumner, Scott B. (2015). "What Would Milton Friedman Have Thought of Market Monetarism?". In Cord, Robert A.; Hammond, J. Daniel (eds.). Milton Friedman: Contributions to Economics and Public Policy. Oxford University Press. pp. 246–264. ISBN 9780198704324.
  • Sumner, Scott B. (2012). "5. How Nominal GDP Targeting Could Have Prevented the Crash of 2008". In Beckworth, David (ed.). Boom and Bust Banking: The Causes and Cures of the Great Recession. Independent Institute. pp. 129–165. ISBN 978-1-59813-076-8.

Articles

The Hill

U.S. News & World Report

  • Sumner, Scott (December 26, 2017). "Low Inflation Nation". U.S. News & World Report. Retrieved April 18, 2021.
  • Sumner, Scott (July 10, 2017). "Demystify the Fed". U.S. News & World Report. Retrieved April 18, 2021.
  • Sumner, Scott; Horan, Patrick (May 30, 2017). "Fed Up With Congress". U.S. News & World Report. Retrieved April 18, 2021.

Mercatus Center

Cato Institute

Others

See also

References

  1. ^ a b Greeley, Brendan (November 1, 2012). "The Blog That Got Bernanke to Go Big". Bloomberg Businessweek.
  2. ^ O'Brien, Matthew (May 2, 2012). "A Rebellion at the Federal Reserve?". The Atlantic.
  3. ^ Thompson, Derek (September 14, 2012). "The Blogger Who Saved the Economy". The Atlantic.
  4. ^ "Scott B. Sumner". Bentley University. Retrieved January 18, 2011.
  5. ^ Krugman, Paul (March 2, 2009). "A Quick Response to Scott Sumner". New York Times. Retrieved January 18, 2011.
  6. ^ Sumner, Scott (December 14, 2010). "Money Rules". The National Review. Retrieved January 18, 2011.
  7. ^ Evans-Pritchard, Ambrose (November 27, 2011). "Should the Fed save Europe from disaster?". The Telegraph. Retrieved December 1, 2011.
  8. ^ Berrett, Dan (January 8, 2012). "'Dim Sum for the Mind': Economics Blogs Engage Policy Wonks and Students". Chronicle of Higher Education.
  9. ^ Wittmeyer, Alicia P. Q. (November 26, 2012). "The FP Top 100 Global Thinkers". Foreign Policy. The Slate Group. Retrieved November 26, 2012.
  10. ^ a b Hamilton, Scott (April 10, 2011). "Bank of England Should Replace Inflation Targeting, Sumner Says". Bloomberg. Retrieved April 13, 2011.
  11. ^ "Reserve Bank rejects report on system flaws". NZPA. April 13, 2011. Retrieved April 15, 2011.
  12. ^ Sumner, Scott. "Monetary regimes in your review mirror may be closer than they appear". Retrieved December 1, 2011.
  13. ^ Yglesias, Matthew (May 18, 2012). "Don't Believe The "Taxmageddon" Hype". Slate. Retrieved May 29, 2012.
  14. ^ "Fiscal cliffs, multipliers, and the myth of central bank independence". The Economist. May 23, 2012. Retrieved May 29, 2012.
  15. ^ Yglesias, Matt (October 8, 2015). "The most important paragraph in Ben Bernanke's new book". Vox. Retrieved April 25, 2022.
  16. ^ Chait, Jonathan (February 28, 2011). "Should Liberals Be More Grateful To Grover Norquist?". The New Republic. Retrieved April 25, 2022.
  17. ^ Worstall, Tim (February 26, 2016). "Robert Shiller's Answer To Scott Sumner: Bubbles Exist Because Markets Aren't Necessarily Complete". Forbes. Retrieved April 25, 2022.
  18. ^ a b c "The West's embarrassing response to Covid". TheMoneyIllusion. Retrieved February 16, 2022.
  19. ^ "Don't believe what you read about China". TheMoneyIllusion. Retrieved February 16, 2022.
  20. ^ a b c "cHiNa iS tHe reAL thReAt". TheMoneyIllusion. Retrieved February 25, 2022.
  21. ^ a b c d "Taking Trump seriously and literally". TheMoneyIllusion. Retrieved February 25, 2022.
  22. ^ a b "Once again, China to the rescue!". TheMoneyIllusion. Retrieved February 16, 2022.
  23. ^ "How are those China crash predictions working out for you?". TheMoneyIllusion. Retrieved February 16, 2022.
  24. ^ a b c d "Good news: It looks like a big win for China". TheMoneyIllusion. Retrieved February 16, 2022.
  25. ^ "Don't believe what you read about China". TheMoneyIllusion. Retrieved February 25, 2022.
  26. ^ "Should we believe our intelligence services on China?". TheMoneyIllusion. Retrieved February 16, 2022.
  27. ^ a b "Did the Covid virus originate in Thailand?". TheMoneyIllusion. Retrieved February 16, 2022.
  28. ^ a b "Did Covid originate in Laos?". TheMoneyIllusion. Retrieved February 16, 2022.
  29. ^ McKay, Betsy (March 1, 2021). "Covid-19 Virus Studies Yield New Clues on Pandemic's Origin". Wall Street Journal. ISSN 0099-9660. Retrieved February 25, 2022.
  30. ^ "Bats in Laos Caves Harbor Closest Relatives to Covid-19 Virus". www.bloomberg.com. Retrieved February 25, 2022.
  31. ^ News, Taiwan (August 10, 2021). "Videos show Chinese authorities locking people inside their homes as Delta surges | Taiwan News | August 10, 2021 13:06:00". Taiwan News. Retrieved February 26, 2022. {{cite web}}: |last= has generic name (help)
  32. ^ Mozur, Paul; Zhong, Raymond; Krolik, Aaron (March 2, 2020). "In Coronavirus Fight, China Gives Citizens a Color Code, With Red Flags". The New York Times. ISSN 0362-4331. Retrieved February 26, 2022.
  33. ^ a b "Random thoughts". TheMoneyIllusion. Retrieved February 16, 2022.
  34. ^ a b "Trump loves Putin". TheMoneyIllusion. Retrieved February 25, 2022.
  35. ^ "Trump says Putin 'a leader far more than our president'". BBC News. September 8, 2016. Retrieved February 25, 2022.
  36. ^ a b c d "Cancel culture comes to Money Illusion?". TheMoneyIllusion. Retrieved February 28, 2022.
  37. ^ a b "Trump Derangement Syndrome is very real". TheMoneyIllusion. Retrieved February 25, 2022.
  38. ^ "Recent articles 7". TheMoneyIllusion. Retrieved February 28, 2022.
  39. ^ Rummler, Orion (June 18, 2020). "Bolton alleges Trump encouraged Xi to continue with Uighur detainment camps". Axios. Retrieved February 25, 2022.
  40. ^ a b "More Trump China lies". TheMoneyIllusion. Retrieved February 16, 2022.
  41. ^ a b "India permanently bans TikTok and 58 other Chinese apps". Nikkei Asia. Retrieved February 26, 2022.
  42. ^ a b "Trump kills Americans to look good? No kidding!". TheMoneyIllusion. Retrieved February 20, 2022.
  43. ^ "Why is the press so easy on Trump?". TheMoneyIllusion. Retrieved February 25, 2022.
  44. ^ "India permanently bans TikTok and 58 other Chinese apps". Nikkei Asia. Retrieved February 16, 2022.
  45. ^ Huddleston Jr., Tom (February 8, 2022). "TikTok shares your data more than any other social media app — and it's unclear where it goes, study says". CNBC. Retrieved February 28, 2022.{{cite web}}: CS1 maint: url-status (link)
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