That was constrained, and to dampen private sector demand, the USG clawed back some of the war-wages (taxes) and encouraged voluntary deferred spending (bonds).
Biden touts his $2.2t proposal as "fiscally responsible" because of its "payfors" - tax increases to match new spending with new taxing. Taxing is anti-inflationary (because it reduces private-sector spending power, leaving more goods on the market for the public sector).
We should tax the rich...but not to fight inflation. As multiple tax giveaways to the wealthy had demonstrated, giving rich people more money doesn't translate into the hoped-for stimulus that would come from new private-sector spending.
By definition, the rich have their material needs met. Even if they rush out and buy show-horses, ostrich-leather jackets, or super-yachts, these only absorb a minute fraction of their windfalls - the rest get pumped into assets, creating asset bubbles.
Trump's 2017 tax cuts and 2020 covid stimulus pumped trillions into the economy, but almost all of it went to the rich, who used it to play the financial casino, not to buy the labor of un- and underemployed people, nor the things they could make with that labor.
These trillions didn't create *general* inflation, but in certain asset classes (some socially useless ones like NFTs, stonks and exotic derivatives) we saw runaway inflation.
Unfortunately, some of these asset bubbles intersected with basic human needs, like housing.
All that to say that stimulus "payfors" that only hit those making more than $400k will only be weakly anti-inflationary. Those people don't buy real goods with their money, so taking it away won't do much to reduce demand for real goods.
Which is not to say that we shouldn't tax the rich. We totally should
. Wealth concentration is hugely corrosive, an endless perverter of public policy, a cancer within democracy that subordinates the public good to the endless pampering of a minuscule elite. Tax 'em!
That's why we should all be *very* excited about Janet Yellen's announcement that America is getting out of the corporate tax-break game. If she pulls this off, it's the beginning of the end for financialization itself.
That might mean more tax, but it could also take other forms - such as the Library Socialism vision of circulating abundance, whereby you are freed from the idiocy of owning a terrible drill that you use once a year, and instead get an absolutely *amazing* drill, on demand, that your neighbors also get to use.
There are many ways to reduce private sector demand while making things *better* for everyday people. A future where we pay off our (real, non-financial) debts is a future where we are safer, healthier, happier, and wealthier in real, material terms.
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