The Obvious Solution
In the Poetic Edda – which is one of the main collections/sources of Norse mythology- there’s a story called the Lokasenna, which means “Loki’s Quarrel” and consists largely, which is to say, solely, of Loki crashing a party the other gods are having and then systematically making fun of all of them. Basically, he starts sassing one of the other gods, at which point another god will come to their defence and/or tell Loki to sit down and shut up, and which point Loki will move onto sassing that god.
Even accounting for the differences in styles of humour, it’s actually pretty funny, and pretty filthy. Most of the jokes and insults are sex things. My favourite part is when Loki insults Odin by pointing out that Odin practices witchcraft (which had connotations of womanliness, effeminacy and deviance in Old Norse society), which leads to him calling Odin a pervert. Odin’s response is to counter that Loki is, in fact, the real pervert, as Loki was the one who once turned into a female horse and got himself impregnated by a male horse and then proceeded to have that horse’s baby (it’s a long story).
The whole story kinda plays out like one big filthy, filthy joke. The punchline happens when Thor comes to the party and threatens to knock Loki’s head off with his hammer if he doesn’t get his sorry ass gone. So, yeah, you can’t really out-smartass the god of smartassery, but you can threaten him with physical violence.
Threats of physical violence and/or actual physical violence tend to be Thor’s modus operandi in Norse mythology. Which is probably to be expected given that Thor is not a particularly smart god and also because he has a hammer. And magic goats.