> it's a huge danger once a populace learns it can vote itself money. Charles Munger [1]
(This follows him saying that "inflation is how democracies die" and is followed by several historical examples)
I know several committed voters of the previous administration and an almost universal complaint of the current administration is how their _personal_ wealth is being affected. We don't [yet] have a positive sum economy: in order for someone to win, someone has to lose. In the case of the previous administration, it's future generations.
First of all, the entire stimulus was $4.5 trillion, and most of it was allocated to handouts. A lot of the handouts were necessary, like expanded unemployment, but others were complete wastes of money, e.g. giving checks to families making 6 figures or forgiving loans for billion dollar "small businesses."
Second of all, QE isn't money given to the banks. When we have a deficit, the government sells bonds to banks. "Naturally" this would drive up interest rates for businesses because unlike the government, they can't issue an infinite number of IOUs and have to compete for a limited amount of liquidity. If interest rates rise too much, businesses will be forced to shut down, especially when people spend less money during a pandemic. Quantitative easing is a tool that allows the Fed to lower interest rates purchasing by these bonds back from the banks. The more debt the government issues, the more debt the Federal Reserve needs to purchase in order to lower interest rates. Basically, the root of the problem is that Congress is incapable of balancing a budget.
> but others were complete wastes of money, e.g. giving checks to families making 6 figures
Remember that the cutoff for stimulus was from prior year's taxes. This means you could have been making 6 figures in 2019, and then be making significantly less due to covid job loss or reduction when stimulus was handed out. As a matter of fact, stimulus helped my family greatly even though we made 6 figures in 2019. So following through on your claim would have meant my family suffering. YMMV.
Should is the operative word there. One could be in school for a while deeply in debt for a decade, get a 6 figure job in a high COL area right after graduating, then lose that job due to covid within a year. How would they have a decent sized emergency fund saved up? Why would such a family not be deserving of relief?
Shrinking the money supply is an awful idea. If money supply shrinks is decreases investment, increasing unemployment. Commerce stops (because people assume there money will be worth more in the future so they reduce spending) which increases unemployment more.
There's a reasonable debate to be bad about tax rates for wealthy people. I don't think any economist on either side of politics thinks decreasing money supply is a good idea.
Taxing the wealthy does not shrink the money supply unless you destroy the taxed money (which as we all know, the government will never do). In fact, it's probably inflationary, since most wealthy people have their money invested into assets and therefore that money is not being actively spent, but the government is going to immediately spend it.
