My list of questions and/or criticisms that I don't think have been properly addressed for/of Market Monetarists has increased to such a degree that I think the best way to deal with everything is just to write one blog post and send it to a Market Monetarist (probably Nick Rowe, who seems to be the most reasonable one, from my experience, and probably the only one who will bother to respond).
Natural Rate Hysteresis:
The Wicksellian natural rate is completely forward looking in sticky price NK models (with either Calvo or Rotemberg pricing). Does switching to something like Taylor Contracts for the price level or nominal wage result in a backward looking natural rate? If not, why do you think that there is natural rate hysteresis (theoretical explanation, please. I don't care if you think you see it in the data, because the natural rate is unobservable).
What, if anything, would you have to observe in the data to determine that liquidity traps genuinely exist? Apparently low inflation despite high monetary base growth (i.e., money demand at unprecedented levels) since 2009 doesn't convince you, so what would?
Since central banks don't commit to monetary policy in the very long run (or, if they do, the commitment doesn't suggest anything quantitative), is it not reasonable to conclude that deliberately communicated actions by a central bank (forward guidance can be included here) are necessary for actual changes in monetary policy?
In sticky price models, NGDPLT does not prevent the zero lower bound from binding when there are large persistent negative shocks to the real natural rate. Does wage stickiness remove this problem? If so, what evidence is there for wage stickiness (I mean, there has to be a reason why the profession switched to sticky prices and I'm fairly certain that reason is usually stated as 'there's no evidence for a high degree of wage stickiness').
Imagine we're in a multi-period version of Krugman (1998) in which the CIA constraint is not binding and will not bind for the next five periods. Do you agree that any current OMO will be completely useless? Of course, the central bank can simply increase the money supply five periods in the future (when it once again has control over the price level) and recursively set the nominal interest rate to be greater than zero, so there is a way out when the liquidity trap is finite. But, in the real world, the length of the liquidity trap is not set in stone. What if this is the case, so the central bank has no idea how far in the future it must induce expectations of the money supply to be higher in order to escape the liquidity trap. In this case, would you agree that the only reliable way to escape the liquidity trap is to decrease the current money supply until the CIA constraint binds?
I'm assuming you would agree that, ceterus paribus, fiscal stimulus raises the real natural rate. Given this, what reason do you have to oppose fiscal stimulus at the zero lower bound -- I know you don't think monetary policy is impotent in this case, but, given the possibility that us Keynesian's are right, what's wrong with a higher natural rate (and, correspondingly, a higher nominal interest rate), especially since we all agree that monetary policy is effective off of the zero lower bound. Similarly, why support austerity if it lowers the natural real rate; what's wrong with making the job of a central bank easier?
Does your preferred money demand function more closely resemble MIUF (in which the nominal interest rate can never actually hit zero, lest money demand be infinite) or CIA (in which a zero nominal interest rate implies indeterminate money demand, which means that OMO's are completely useless as long at the nominal interest rate equals zero)?