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Arbitrarily raising wages for everyone is the same as increasing the money supply without increasing the underlying value it represents (which causes inflation)

Arbitrarily raising wages for everyone is the same as increasing the money supply without increasing the underlying value it represents (which causes inflation). UBI does not do this. It doesn't "increase" the amount of money floating around, it simply redistributes a portion of the created wealth from one population (the rich) to the total population. UBI money isn't pulled out of thin air, it's taken from one group (via taxation) and distributed. Of course prices for certain goods and services will change as a result of this wealth distribution, but to suggest global inflation will occur (ie the value that money represents decreasing within the complete system) is incorrect. Furthermore, while I obviously can't say for certain, I imagine prices for fundamental goods will not change drastically simply because UBI doesn't provide enough money for real discretionary spending. The goods/services you consume under a UBI program you already would be consuming at the same rate under the current system.

Helmet 9y ago
Sure, what you're describing is the quantity theory of money, but there are other reasons why you could see inflation given a universal income, depending on the circumstances. If you consider the velocity of money, you will almost certainly see inflation on consumer goods if the money to be redistributed would have otherwise just sat in some rich guys's savings account. There are also inflation expectation to consider, liquidity traps, the actual demand for money, etc.
- billmalarky 9y ago
  I expect prices to change in order to reflect the new system, but I think people's "sky is falling" concerns about the price of consumer goods shooting up is way off base and sensationalist. UBI alone simply won't provide enough discretionary income to cause sharp increases in demand of goods. Not to mention, the type of goods that a basic income affords are those that are already scaled out and are easily scaled out - ramping up supply would happen relatively quickly in the unlikely scenario that demand for these goods does go up drastically. As I've repeatedly said in other comments, I believe demand for these simple goods will stay relatively flat since they are such fundamental necessities people are already consuming them and won't necessarily increase demand significantly (UBI won't cause demand for toilet paper to go up significantly).
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Helmet 9y ago

Sure, what you're describing is the quantity theory of money, but there are other reasons why you could see inflation given a universal income, depending on the circumstances. If you consider the velocity of money, you will almost certainly see inflation on consumer goods if the money to be redistributed would have otherwise just sat in some rich guys's savings account. There are also inflation expectation to consider, liquidity traps, the actual demand for money, etc.

billmalarky 9y ago
I expect prices to change in order to reflect the new system, but I think people's "sky is falling" concerns about the price of consumer goods shooting up is way off base and sensationalist. UBI alone simply won't provide enough discretionary income to cause sharp increases in demand of goods. Not to mention, the type of goods that a basic income affords are those that are already scaled out and are easily scaled out - ramping up supply would happen relatively quickly in the unlikely scenario that demand for these goods does go up drastically. As I've repeatedly said in other comments, I believe demand for these simple goods will stay relatively flat since they are such fundamental necessities people are already consuming them and won't necessarily increase demand significantly (UBI won't cause demand for toilet paper to go up significantly).
- deleted 9y ago
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