While an interesting read, there were a few problems I had with it.
Specifically, it appears they didn't really do any research into what caused the Penn Railroad collapse, which was not caused by high interest rates but instead by a combination of actions which would be considered fraud today (due to conflicts of interest that would never be allowed and exceptions to financial reporting in the rail legislation).
They basically couldn't raise prices due to regulation, and no bank would loan to them. The one bank that would loan to them required they have seats on the board of directors. They loaned money at high interest rates, bought up the senior bonds with the interest payments, took control of the board, loaned money to themselves (effectively), paying dividends out of debt, and then forced bankruptcy and let it all collapse in the hope of a government bailout (which they got because rail is critical to food security and energy).
It also neglects stagflation but does mention Volcker, drawing the wrong conclusions of what really happened, doesn't mention the S&L debacle aside from a brief mention (which was huge as well), neglected the whipsaw effect.
The biggest problem I have with it, is it neglects a lot of important factors and only focuses on policy which doesn't match up with reality and largely only what fits their narrative if you didn't know better. There was also no mention of taking the currency off the gold standard in 1971. Most importantly, they don't use any of the M2 or velocity of money data. Its available from the Fed website but it doesn't support much of what they said, and shows how expansion of the money supply drives inflation in cost push or demand pull inflation.
MMT suffers from major problems. The people that subscribe to it largely only see these large sums in a very narrow context which leads to poor conclusions, and an idea that you can print money continuously into the future with no consequence. It largely was what led to quantitative easing (or money printing).
Graeber has a great book on Debt, which goes into the historical examples of what happens when you debase currency like this (no matter what you call it), and there's some very interesting research in how the Economic Calculation Problem related effects can be seen as rational pricing and price discovery fail in markets denominated in unbacked fiat. The latter being most commonly known for its historic roots as an intractable problem with non-market socialist systems where the means of production are held by a single entity. The debate/problem still isn't solved 100 years later.
Additionally, the people making policy can't control what people choose to buy and sell goods at. Inevitably you get shortages when they try, business sectors concentrate, points of failures are introduced, and people leave the business when its not profitable. Then you get things like the baby formula crisis where the only factory remaining is shut down for safety reasons (as a result of cost cutting) and no one can get baby food in Florida. Once sector concentration reaches a certain point, its a short step away from nationalization in furtherance of solving the shortages through greater regulation.
Needless to say it doesn't work, and I'd expect at least some of that to be addressed, but it wasn't. What's covered seems misleading, and very much divorced from the reality.
When I say three contradicting meanings of "money printing" I mean it.
MMT predicts that if you print money you don't necessarily end up printing money but if you print money you definitely end up printing money.
People don't understand the difference between printed money and printed money that was printed.
It should be pretty obvious. If the central bank prints money but the government doesn't print money then no money was printed except when people withdraw their printed money into printed money. If however the government does print money it will definitely cause inflation (classical economists and MMTists agree). It is especially likely if the government prints money into the form of printed money.
Also MMTists think "MMT" shouldn't be done as it is too much like printing money because MMT is a theory of money and accounting and not a theory of printing money unlike "MMT".
I don't know why I wrote this. I believe in accounting identities which are sort of MMTish so I knee jerk when people violate accounting identities by building straw men and reusing the same words to use completely different meanings for the same of political framing.
For god's sake you can't even use money printing in its original meaning anymore. Aka governments physically creating money to increase the money supply without supplying goods in return which as I mentioned above is a bad idea.
You know the difference between the various types of "money printing" that distinguishes them from the political framing is that the ones done the most have a sort ratcheting mechanism that forces the money to come back eventually. In other words, if there was no threat of deflation, via negative interest or whatever mechanism of your choosing, then the mechanism of money creation would unwind and the money would disappear on its own without causing inflation.
Alas we don't live in that world. Deflation is scary and must be avoided so we are stuck on this inflation treadmill until people wake up and accept mitigations to the dangers of deflation which then gives central banks, governments , businesses and private citizens more leeway to steer the economy towards their preferences and away from permanent inflation and money supply increases. So the inflation treadmill it is...
I agree the corruption of language is an ongoing problem, and its often done to mislead and is easy to come to incorrect conclusions, which makes communicating about these things tangibly all the more difficult.
As for the ratcheting mechanism you speak of, that is simply tax revenue, but it only ratchets when taxes are collected, and if you have tax loopholes where you don't pay taxes it doesn't necessarily ratchet (i.e. inheritance, income, etc). In terms of math, a percentage of a percentage never actually gets to 0, it approaches a limit over time, so there is always a certain degree of expansion, and that expansion is often offset by population growth. Hitting the limits of growth (for the planet) adds additional complications.
From what you've said, I think you don't really understand how deflation occurs aside from the theory which there's a lot of crap out there, so that's understandable.
Anytime the debt % of GDP exceeds a certain point, a bubble is created, and when rates tighten coupled with the bubble pressures you get deflation. There is often a period of reflation afterwards, if the issues that sustained the downward pressure are corrected but sometimes they aren't. Japan for example has been in a self-sustaining deflationary cycle for decades, and has only kept it under control through foreign investment and debasing their currency via yield control (effectively negative rates against their future).
There's a book series of case studies called Big Debt Crises by Bridgewater, it thoroughly covers inflationary, deflationary, and hyper-inflationary debt crises, it covers the specific mechanics and has accurate charts for the periods of these crises, where they actually happened. I think you'd cut through a lot of the misunderstanding from reading it.
The lever to print money to buy stressed assets only works up to a point (debt as a percentage of GDP), then it typically breaks down as the store of value loses credibility and value in the eyes of those holding it (usually sometime after reaching a 3:1 ratio which is where effects start to become noticeable to the average person).
The Great Depression was a deflationary depression, and it was caused by a bubble that was created, where debt reached 125% of GDP at its peak. A minor 250bp rate tightening (because leverage ratios were smaller back then), triggered the deflation. Initially it was bad, but they managed (in the reflation stage) largely by unpegging the currency from gold, buying stressed assets with domestic debt, and negative interest rates over many years. The banks loaning assets were also tightly controlled at that time.
Currently banks are not very controlled, the depository requirements have been removed (see FDIC website, its at 0%), technically its no longer fractional reserve, and the reporting indicates they are loaning more debt into existence than they have assets (for the past several years).
When they fail (when the bubble pops), the government makes the survivors whole and divvies up the assets to the survivors. Assuming of course there are survivor banks. They are too big to fail, and while the Fed is supposed to be the only money printer, the large banking institutions are so centralized that they've effectively usurped this indirectly.
The shortfall in returns and production is always paid in inflation. There's a part of that curve where this is manageable, once you exceed that part (as a % of GDP), you get into those self-sustaining cycles similar to Weimar or Argentina, or deflation, or a little of both from a whipsaw.
Actions are taken based on lagging indicators; so effectively this becomes just another form of the economic calculation problem (which remains unsolved), where the knifes edge gets closer and closer until you miscalculate (because futuresight doesn't exist).
I thought it was an interesting observation that a problem normally only found non-market socialism systems can be seen in unbacked fiat based monetary systems.
Specifically, it appears they didn't really do any research into what caused the Penn Railroad collapse, which was not caused by high interest rates but instead by a combination of actions which would be considered fraud today (due to conflicts of interest that would never be allowed and exceptions to financial reporting in the rail legislation).
They basically couldn't raise prices due to regulation, and no bank would loan to them. The one bank that would loan to them required they have seats on the board of directors. They loaned money at high interest rates, bought up the senior bonds with the interest payments, took control of the board, loaned money to themselves (effectively), paying dividends out of debt, and then forced bankruptcy and let it all collapse in the hope of a government bailout (which they got because rail is critical to food security and energy).
It also neglects stagflation but does mention Volcker, drawing the wrong conclusions of what really happened, doesn't mention the S&L debacle aside from a brief mention (which was huge as well), neglected the whipsaw effect.
The biggest problem I have with it, is it neglects a lot of important factors and only focuses on policy which doesn't match up with reality and largely only what fits their narrative if you didn't know better. There was also no mention of taking the currency off the gold standard in 1971. Most importantly, they don't use any of the M2 or velocity of money data. Its available from the Fed website but it doesn't support much of what they said, and shows how expansion of the money supply drives inflation in cost push or demand pull inflation.
MMT suffers from major problems. The people that subscribe to it largely only see these large sums in a very narrow context which leads to poor conclusions, and an idea that you can print money continuously into the future with no consequence. It largely was what led to quantitative easing (or money printing).
Graeber has a great book on Debt, which goes into the historical examples of what happens when you debase currency like this (no matter what you call it), and there's some very interesting research in how the Economic Calculation Problem related effects can be seen as rational pricing and price discovery fail in markets denominated in unbacked fiat. The latter being most commonly known for its historic roots as an intractable problem with non-market socialist systems where the means of production are held by a single entity. The debate/problem still isn't solved 100 years later.
Additionally, the people making policy can't control what people choose to buy and sell goods at. Inevitably you get shortages when they try, business sectors concentrate, points of failures are introduced, and people leave the business when its not profitable. Then you get things like the baby formula crisis where the only factory remaining is shut down for safety reasons (as a result of cost cutting) and no one can get baby food in Florida. Once sector concentration reaches a certain point, its a short step away from nationalization in furtherance of solving the shortages through greater regulation.
Needless to say it doesn't work, and I'd expect at least some of that to be addressed, but it wasn't. What's covered seems misleading, and very much divorced from the reality.