Household saving just slows down the inflation if you’re lucky; it gets spent eventually and reduces the immediate effectiveness at the fed in moderating things

Household saving just slows down the inflation if you’re lucky; it gets spent eventually and reduces the immediate effectiveness at the fed in moderating things. But that assumes people will save, and that isn’t as likely in a situation where people have the opportunity to spend (e.g. restaurants and gyms and theaters are an option) I think 2020-era inflation is largely a story of stimulus going directly to households, which used that to either spend (chasing too few goods because people were out of work, constraining supply) or save, allowing them to stop working for longer. You will see lots of stories about people _choosing_ not to work because of COVID or health or whatever - that is a story of savings allowing people to stay out of the labor market. In an economy where supply-demand imbalance is driving up prices, savings may not be all that helpful. But realistically so much of this inflation happened because the money went to people who didn’t save - they turned around and spent it. This is the argument people used for student loan relief as economic stimulus: these people are poor, so they will turn around and spend what they would have used on their student loans. This is consistent with my personal experience, except now it is happening in an overheated economy. Giving more money to people living paycheck to paycheck and expecting saving to be the result is an example of missing all the major lessons of the last three years.