The demographics driving up inflation are probably not the same ones investing into I-Bonds. Take a look at this loan delinquency rate over the course of the pandemic [1] - it's pretty clear that the American Rescue Plan (last round of stimulus passed by reconciliation) had a marked impact on subprime auto and credit card loans. That gives you a hint for where all that stimulus money ended up going instead of being spent on useful things like food or invested. Coincidentally one of the biggest drivers of CPI was used cars.
Also, I saw an assumption about financial investment being a moral positive slip in there. I've become less convinced of this recently.
At the bottom of an industrial, technological, geographic, or demographic S-curve, opportunities are plentiful to forego consumption today in order to create wealth tomorrow. Investment is useful. Rates of return are positive, incentivizing it. Cool. What happens at the top of the S-curve, though? Those opportunities dry up, relative to available capital. There's nothing inherently bad about this. Quite the opposite, it's a good thing! "Our work here is done." It's a big problem if you make your money by investing, though, and everyone at the top of the social pyramid does, so they exercise their immense political power (they're the top of the pyramid, remember) to ensure that the "growth" continues at all costs. It doesn't matter if it's artificial growth, it doesn't matter if it comes at greater expense to someone else, it doesn't matter if it causes social problems -- they keep pumping all the same because it is in their interest to do so, and they keep pumping until something bursts.
In this framing, encouraging financial investment is not an unqualified moral positive. If financial rates of return are low, I'd expect quite the opposite, with investment in financial instruments as a moral negative while investment in, say, better food or used cars would be net positives.
Morality aside, I'd also expect this dynamic to be reflected in rates of return: if rich people can satisfy all of the market demand for financial investment, the best rates of return will be in non-financialized investments, like buying a new used car to replace an increasingly expensive clunker.
This is one of the reasons certain economists recommend cash payments over benefits like SNAP for poor people. People generally have a good idea of how they could invest in themselves for an immediate improvement in their situation. Be that getting the money for a down payment on a car, house, or apartment; getting tools they need to start side business; taking time off to take a class at a community college; etc.
(a) most people in the USA live in a region without adequate mass transit and thus needs cars to do useful things like keeping a job or shopping at the grocery store.
(B) did the Wall Street journal article also talk about the effects of the chip shortage and the subsequent new car shortage that hit last summer? If not, it is willfully misleading.
(C) another hint on where all that money went is the increase in fuel costs, rent costs, and food costs. The increased demand is exacerbated by the supply chain troubles including the decrease in US oil wells provoked by Biden's war on American-sourced fossil fuels.
