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> In difficult times people stop spending money, even with UBI. This means less income to spread around, the solution, print more money = inflation. This is...

> In difficult times people stop spending money, even with UBI. This means less income to spread around, the solution, print more money = inflation. This is... not really correct. It's true that expansionary monetary policy is often practiced in times of economic recession, but that's not really because there's 'less income to spread around'. And the reason expansionary monetary policy is practiced isn't to give people more income. (Printing money doesn't give individuals more income - if you want to do that, you need expansionary fiscal policy - that's the goal behind tax cuts). So what does printing money do? Expansionary monetary policy reduces the costs of loans and investments. The goal is to spur long-term investment projects by making capital cheaper, which serves to jump-start the economy. But that has no direct connection to people's personal income. They're interconnected, sure - everything in the economy is, at some level. But the connection to inflation (and the connection to printing money) are completely different things.

brador 10y ago
Under UBI the payment and coverage of UBI would be one of, if not the, largest expenditures of government. Vital to getting votes will be keeping the amount received steady and high. And that might mean printing money if necessary. With land tax the system is self correcting and balanced. With the taxes you mentioned you'd eventually get the inflationary spiral as a market correction.
- chimeracoder 10y ago
  > Vital to getting votes will be keeping the amount received steady and high. And that might mean printing money if necessary. Maybe, but that's very different from what you said, which is that '[difficult times] means less income to spread around, the solution, print more money = inflation'. > With land tax the system is self correcting and balanced. Er, no - if anything, a property tax would reinforce inflation. > With the taxes you mentioned you'd eventually get the inflationary spiral as a market correction. Maybe you meant to respond to someone else? I didn't talk about any taxes. I only mentioned tax cuts as an actual example of expansionary fiscal policy to address the 'less income to spread around' problem, not as a proposal for funding income redistribution.
mac01021 10y ago
> Expansionary monetary policy reduces the costs of loans and investments How does it do that? Suppose I want to borrow $1M to build a factory, but nobody (banks, venture capitalists, whatever) can afford to invest in my endeavor. So the fed prints a bunch of money, causing 5% inflation. Now the bank can more easily afford to loan me $1M, because that $1M is worth less. But now I need a $1.05M loan to build my factory.
- mac01021 10y ago
  Why was I downvoted? I was just asking a question about monetary policy, hoping the GP (who clearly knows more than I) would come back and answer it.
- gnaritas 10y ago
  > How does it do that? By lowering interest rates which encourages borrowing and thus spending and thus economic activity. > So the fed prints a bunch of money, causing 5% inflation. Printing money causes monetary inflation, but does not directly cause price inflation so you don't need 1.05M to build your factory. Printing money can eventually lead to price inflation if too much money is printed for too long, but that doesn't mean all money printing causes price inflation as that lever can be turned both ways. Lower interest rates to spur spending and get the economy moving again and then once out of danger raise them again.

brador 10y ago

Under UBI the payment and coverage of UBI would be one of, if not the, largest expenditures of government. Vital to getting votes will be keeping the amount received steady and high. And that might mean printing money if necessary. With land tax the system is self correcting and balanced. With the taxes you mentioned you'd eventually get the inflationary spiral as a market correction.

chimeracoder 10y ago
> Vital to getting votes will be keeping the amount received steady and high. And that might mean printing money if necessary. Maybe, but that's very different from what you said, which is that '[difficult times] means less income to spread around, the solution, print more money = inflation'. > With land tax the system is self correcting and balanced. Er, no - if anything, a property tax would reinforce inflation. > With the taxes you mentioned you'd eventually get the inflationary spiral as a market correction. Maybe you meant to respond to someone else? I didn't talk about any taxes. I only mentioned tax cuts as an actual example of expansionary fiscal policy to address the 'less income to spread around' problem, not as a proposal for funding income redistribution.

mac01021 10y ago

> Expansionary monetary policy reduces the costs of loans and investments How does it do that? Suppose I want to borrow $1M to build a factory, but nobody (banks, venture capitalists, whatever) can afford to invest in my endeavor. So the fed prints a bunch of money, causing 5% inflation. Now the bank can more easily afford to loan me $1M, because that $1M is worth less. But now I need a $1.05M loan to build my factory.

mac01021 10y ago
Why was I downvoted? I was just asking a question about monetary policy, hoping the GP (who clearly knows more than I) would come back and answer it.
gnaritas 10y ago
> How does it do that? By lowering interest rates which encourages borrowing and thus spending and thus economic activity. > So the fed prints a bunch of money, causing 5% inflation. Printing money causes monetary inflation, but does not directly cause price inflation so you don't need 1.05M to build your factory. Printing money can eventually lead to price inflation if too much money is printed for too long, but that doesn't mean all money printing causes price inflation as that lever can be turned both ways. Lower interest rates to spur spending and get the economy moving again and then once out of danger raise them again.