The last 25+ years of American history prove this wrong.. and it’s not like the last administration was concerned with massive deficits, adding $7T during strong economic times. It seems a bit odd to blame progressives for this one…
It's the opposite, our deficit is the way we run our worldwide financial empire that easily absorbs inflation. Your econ101 household analogies are for other little baby economies.
Instead, inflation comes from energy shocks (70s) or supply chain shocks (now). And the current one is mostly because everyone started online shopping due to being stuck at home.
This isn't my personal theory here, it's the standard explanation.
It basically only happened once. One reason is that preventing deflation is the Fed's job and they've been doing it. Another is that for a wage-price spiral you need both things to increase; in the 70s we had wage spirals because we had a lot more union workers with automatic cost of living increase contracts. Losing those means inflation doesn't happen as fast, and workers don't exactly expect wage decreases the same way, so it's assymetric. (Japan does have wage decreases, and has been stuck in deflation for decades.)
It’s “stable prices and maximum employment” ie preventing both. They mostly fail to cause inflation, which is why we undershoot the 2% target more often than not.
Compare to Argentina for a country that really fails at it.
> You can't have trillions in deficits without massive inflation
You empirically can, because the US has at times done so, but progressives (particularly MMT practitioners) not only recognize the relation between government spending balance, they hold up monetary effects like inflation as the only valid constraints on government spending balance, rejecting the idea that spending balance ought to be governed by the pretense of a fix purse that must be filled by tax or borrowing (the “fiscal” approach), while monetary concerns are controlled exclusively elsewhere on the system.
That assumes all the other variables remained the same. The 2008 banking collapse may have resulted in deflation without the big spending program, which just countered the deflation.
If the Progressives get their way with the budget, it will be inevitable.
You can't have trillions in deficits without massive inflation.