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Regarding inflation... if everyone instantly has $X now, doesn't $X become worthless? For instance, why would landlords not raise rents knowing that everyone n

Regarding inflation... if everyone instantly has $X now, doesn't $X become worthless? For instance, why would landlords not raise rents knowing that everyone now has this cash?

ww520 10y ago
The problem is not inflation. It happens already. The problem is the new money created causing the inflation is given to the asset holders and banks, not to everyone. Rent increases now, due to inflation. The general public have to give more despite not getting the created money. Landlords got the benefit of rising rent due to inflation and rising housing price due to lower interest rate to create more money. Basic income just shifts the inflated money to everyone instead of just the asset holders.
- MicroBerto 10y ago
  OK, so then when you give more to the lower class, and landlords increase rent.... guess who gets the majority of that newly printed income? The asset holders once again!! I don't see how basic income doesn't create more unforeseen problems than it solves unless there are some serious strings attached to that money.
  - ww520 10y ago
    At least the money has gone to encourage economic activities, i.e. housing service. Increased rent leads to more housing development as more people piled in to take advantage of the increased return, which can lower the rent as more housing capacity comes online.
- Cshelton 10y ago
  "new money" is not, or ever, given to anyone. Banks included. The U.S. gov basically sells promissory notes (treasuries) to an independent, non governmental organization (The Federal reserve...which is not "federal" in the least bit..) on behalf of the American people. Although the fed is more or less offering a note at x price and the U.S. Treasury just buys it... Anybody is allowed to buy bonds from the U.S. Treasury. In exchange, you get the "new money" as you call it. At no one point is anything given to the banks or asset holders. The interest rate is determined by the rate the fed sets and buys these notes from the US T. This is the key and primary tool at which a PRIVATE, non-governmental organization, determines interest rates. However..you can also buy these notes directly from the Fed. China does all the time along with many other countries. Yes...other countries hold the "debt" of the American people... If that's not crazy enough...it gets better. This organization..the Fed...gets to tell banks how much to hold in required reserves. Another primary tool they use to control inflation.
  - ww520 10y ago
    The Fed obviously creates inflation by injecting new money into the system. Who get the extra new money?
deleted 10y ago
[deleted]
drabiega 10y ago
Because that's not how markets work. The ones that try would loose all their business to those that didn't.
- MicroBerto 10y ago
  The amount of wishful thinking in this thread makes me question how many of you have actually functioned in the real world. Have you ever met a group of landlords? Ever talk to any who deal with low income housing? You honestly think they care about "losing business" in a market that they absolutely control and have extremely high demand?
  - undersuit 10y ago
    But they won't have control. Not only does basic income allow you to tell your shitty boss to shove it while you live off the dole(I really don't care how lazy you are) but you also get to tell your landlord to shove it now that you have enough free cash to afford a security deposit on a different place.
    - MicroBerto 10y ago
      > now that you have enough free cash to afford a security deposit on a different place This leads me back to my original question - EVERYONE now has "enough free cash to afford a security deposit on a different place", so if EVERYONE goes and does that, we're right back to where we came from within 1 year -- the lowest class still has the lowest quality apartments with the lowest class slumlord landlords!! Nothing changes except less people think they have to work (which causes society to further cave in on itself)!! If anything, this damages the supply side, because now you have higher demand in the form of 20-somethings attempting to escape their parents/grandparents homes, as well as anyone who thinks they no longer have to live with roommates. Nothing but distorted perceptions. And now, we also have the side effect of fewer people working and being economically productive in society, thanks to you telling your shitty boss to shove it. Meanwhile, anyone who was making something equivalent (or a bit more) than the new base salary can just say screw working altogether. I don't see how any other outcome prevails. The cons continue to outweigh the pros, and you have no clue what other unforeseen side effects will unfold.
arebop 10y ago
I expect we would see a general price level increase if we used inflation to fund a basic income. But because it destroys household wealth in proportion to the wealth of the household and creates household wealth uniformly throughout the population, the net effect is not just higher numbers on the currency but also flatter distributions of wealth and income. As for landlords specifically: the renters already have $x they are not using for rent, so why don't the landlords get that? If there is no good or service that absorbs all the money right now, there's no reason to think there would be one for the marginal money of a basic income scheme.
deleted 10y ago
[deleted]
belorn 10y ago
Because the world doesn't work like that? if it did, we would be paying the same proportional amount of income to rent today in 2016 as we did during 1970. We don't. Just because there is more money doesn't mean that you get proportional increase in construction, maintained demand for housing, or demand for land for which houses are built on. It doesn't change how government rezones in order to control rents in cities. Rent is not some basic formula derived from the average income.
azernik 10y ago
Because all money is the same; basic income dollars are indistinguishable from the rest of the dollars out there. What would happen (if you funded this by printing money rather than taxation) is that the value of the dollar would fall by (monetary value of basic income payment) / (total number of circulating dollars), creating a redistribution effect similar to that of a taxation scheme, but less planned out.
logfromblammo 10y ago
In the short term, inflation does happen. This is because the economic allocations were done according to the old distribution of incomes, which is to say disproportionately benefiting the desires of the rich. Demand changes while supply remains the same. So lower-income housing landlords do raise their rents. Grocery stores raise prices on their beef. Low-end used cars get more expensive. More dollars chase the same quantity of goods and services. But basic income continues into the long run. It becomes a business opportunity to undercut those inflated prices, to capture more of the basic income flow for yourself. An entrepreneur builds lower-income housing and charges lower than the prevailing rents, immediately poaching business from the opportunist landlords, who now have to compete with one another to keep tenants. As additional competitors enter the market, the economic allocations change to match the newer distribution of incomes. More businesses that serve lower-income people become viable, so more economic activity occurs to cater to that sector. Fewer businesses that serve higher-income people remain viable, because they are taxed more. It slowly becomes more expensive to be rich, and less expensive to be poor. In the long run, wealth distribution flattens and is less self-reinforcing. More than a few people would be willing to walk a higher wire if they were given a stronger safety net, choosing risky entrepreneurship rather than safer employment. Prices only remain high if existing businesses are protected from competition.
- MicroBerto 10y ago
  This is easily the best response I've seen to all of my questions, but it is all extremely optimistic and untested. There are always unforseen side effects whenever you steer the market in new ways. I would strongly urge that we carry out smaller scale experiments / split tests before anyone commits nationwide. I envision a deepening of the social divide, as the uneducated and unskilled further separate from the educated. Within very few generations you would be left with an unrecognizable society. Everyone here is looking at it from the lens of the intelligent hopeful tech entrepreneur. That's lovely, but we are the extreme minority.
  - logfromblammo 10y ago
    I'd say it's overly optimistic. If all you do is drop cash from helicopters, it is entirely possible that there is never enough of a sense of economic security to encourage the increased small business starts needed to reach a new equilibrium. That's why I don't think that UBI would work unless some of the benefit were supplied as basic goods and services rather than cash. At minimum, the UBI provider would have to supply food, water, housing, sanitation, electricity, and network, along with the cash. Otherwise, between those necessities, incumbent suppliers could capture all the excess cash and send it right back to the owners.
some-guy 10y ago
If I understand correctly, the money isn't printed -- it's redistributed. The money supply isn't increasing, but it could be that money is more likely to be spent in the short term than sitting in a bank somewhere.

Regarding inflation... if everyone instantly has $X now, doesn't $X become worthless? For instance, why would landlords not raise rents knowing that everyone now has this cash?

ww520 10y ago

The problem is not inflation. It happens already. The problem is the new money created causing the inflation is given to the asset holders and banks, not to everyone. Rent increases now, due to inflation. The general public have to give more despite not getting the created money. Landlords got the benefit of rising rent due to inflation and rising housing price due to lower interest rate to create more money. Basic income just shifts the inflated money to everyone instead of just the asset holders.

MicroBerto 10y ago
OK, so then when you give more to the lower class, and landlords increase rent.... guess who gets the majority of that newly printed income? The asset holders once again!! I don't see how basic income doesn't create more unforeseen problems than it solves unless there are some serious strings attached to that money.
- ww520 10y ago
  At least the money has gone to encourage economic activities, i.e. housing service. Increased rent leads to more housing development as more people piled in to take advantage of the increased return, which can lower the rent as more housing capacity comes online.
Cshelton 10y ago
"new money" is not, or ever, given to anyone. Banks included. The U.S. gov basically sells promissory notes (treasuries) to an independent, non governmental organization (The Federal reserve...which is not "federal" in the least bit..) on behalf of the American people. Although the fed is more or less offering a note at x price and the U.S. Treasury just buys it... Anybody is allowed to buy bonds from the U.S. Treasury. In exchange, you get the "new money" as you call it. At no one point is anything given to the banks or asset holders. The interest rate is determined by the rate the fed sets and buys these notes from the US T. This is the key and primary tool at which a PRIVATE, non-governmental organization, determines interest rates. However..you can also buy these notes directly from the Fed. China does all the time along with many other countries. Yes...other countries hold the "debt" of the American people... If that's not crazy enough...it gets better. This organization..the Fed...gets to tell banks how much to hold in required reserves. Another primary tool they use to control inflation.
- ww520 10y ago
  The Fed obviously creates inflation by injecting new money into the system. Who get the extra new money?

deleted 10y ago

[deleted]

drabiega 10y ago

Because that's not how markets work. The ones that try would loose all their business to those that didn't.

MicroBerto 10y ago
The amount of wishful thinking in this thread makes me question how many of you have actually functioned in the real world. Have you ever met a group of landlords? Ever talk to any who deal with low income housing? You honestly think they care about "losing business" in a market that they absolutely control and have extremely high demand?
- undersuit 10y ago
  But they won't have control. Not only does basic income allow you to tell your shitty boss to shove it while you live off the dole(I really don't care how lazy you are) but you also get to tell your landlord to shove it now that you have enough free cash to afford a security deposit on a different place.
  - MicroBerto 10y ago
    > now that you have enough free cash to afford a security deposit on a different place This leads me back to my original question - EVERYONE now has "enough free cash to afford a security deposit on a different place", so if EVERYONE goes and does that, we're right back to where we came from within 1 year -- the lowest class still has the lowest quality apartments with the lowest class slumlord landlords!! Nothing changes except less people think they have to work (which causes society to further cave in on itself)!! If anything, this damages the supply side, because now you have higher demand in the form of 20-somethings attempting to escape their parents/grandparents homes, as well as anyone who thinks they no longer have to live with roommates. Nothing but distorted perceptions. And now, we also have the side effect of fewer people working and being economically productive in society, thanks to you telling your shitty boss to shove it. Meanwhile, anyone who was making something equivalent (or a bit more) than the new base salary can just say screw working altogether. I don't see how any other outcome prevails. The cons continue to outweigh the pros, and you have no clue what other unforeseen side effects will unfold.

arebop 10y ago

I expect we would see a general price level increase if we used inflation to fund a basic income. But because it destroys household wealth in proportion to the wealth of the household and creates household wealth uniformly throughout the population, the net effect is not just higher numbers on the currency but also flatter distributions of wealth and income. As for landlords specifically: the renters already have $x they are not using for rent, so why don't the landlords get that? If there is no good or service that absorbs all the money right now, there's no reason to think there would be one for the marginal money of a basic income scheme.

deleted 10y ago

[deleted]

belorn 10y ago

Because the world doesn't work like that? if it did, we would be paying the same proportional amount of income to rent today in 2016 as we did during 1970. We don't. Just because there is more money doesn't mean that you get proportional increase in construction, maintained demand for housing, or demand for land for which houses are built on. It doesn't change how government rezones in order to control rents in cities. Rent is not some basic formula derived from the average income.

azernik 10y ago

Because all money is the same; basic income dollars are indistinguishable from the rest of the dollars out there. What would happen (if you funded this by printing money rather than taxation) is that the value of the dollar would fall by (monetary value of basic income payment) / (total number of circulating dollars), creating a redistribution effect similar to that of a taxation scheme, but less planned out.

logfromblammo 10y ago

In the short term, inflation does happen. This is because the economic allocations were done according to the old distribution of incomes, which is to say disproportionately benefiting the desires of the rich. Demand changes while supply remains the same. So lower-income housing landlords do raise their rents. Grocery stores raise prices on their beef. Low-end used cars get more expensive. More dollars chase the same quantity of goods and services. But basic income continues into the long run. It becomes a business opportunity to undercut those inflated prices, to capture more of the basic income flow for yourself. An entrepreneur builds lower-income housing and charges lower than the prevailing rents, immediately poaching business from the opportunist landlords, who now have to compete with one another to keep tenants. As additional competitors enter the market, the economic allocations change to match the newer distribution of incomes. More businesses that serve lower-income people become viable, so more economic activity occurs to cater to that sector. Fewer businesses that serve higher-income people remain viable, because they are taxed more. It slowly becomes more expensive to be rich, and less expensive to be poor. In the long run, wealth distribution flattens and is less self-reinforcing. More than a few people would be willing to walk a higher wire if they were given a stronger safety net, choosing risky entrepreneurship rather than safer employment. Prices only remain high if existing businesses are protected from competition.

MicroBerto 10y ago
This is easily the best response I've seen to all of my questions, but it is all extremely optimistic and untested. There are always unforseen side effects whenever you steer the market in new ways. I would strongly urge that we carry out smaller scale experiments / split tests before anyone commits nationwide. I envision a deepening of the social divide, as the uneducated and unskilled further separate from the educated. Within very few generations you would be left with an unrecognizable society. Everyone here is looking at it from the lens of the intelligent hopeful tech entrepreneur. That's lovely, but we are the extreme minority.
- logfromblammo 10y ago
  I'd say it's overly optimistic. If all you do is drop cash from helicopters, it is entirely possible that there is never enough of a sense of economic security to encourage the increased small business starts needed to reach a new equilibrium. That's why I don't think that UBI would work unless some of the benefit were supplied as basic goods and services rather than cash. At minimum, the UBI provider would have to supply food, water, housing, sanitation, electricity, and network, along with the cash. Otherwise, between those necessities, incumbent suppliers could capture all the excess cash and send it right back to the owners.

some-guy 10y ago

If I understand correctly, the money isn't printed -- it's redistributed. The money supply isn't increasing, but it could be that money is more likely to be spent in the short term than sitting in a bank somewhere.