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Will a UBI be indexed to inflation? Wouldn't that lead to a vicious cycle of hyperinflation?

by j_m_b 7y ago

viklove 7y ago
UBI is just a concept, you'll have to look at some person/organizations specific implementation to figure this out. Try googling "Andrew Yang" if you want an answer to see how a current presidential candidate is tackling this.
Talyen42 7y ago
UBI is not necessarily inflationary in the first place.
qqqwerty 7y ago
Inflation would be very welcome right now. Zero interest-rate policy (ZIRP) seems to be the new normal, and I believe its largely due to increasing wealth inequality which is creating deflationary pressures in our economy (the wealthy can only consume so much, most of their money goes into savings). Also hyperinflation seems very unlikely with the amounts being discussed. Under an ideal UBI. Existing welfare programs would get replaced with the UBI, so that would have a neutral impact on the economy (and if UBI eliminates the welfare trap it could actually be a positive for the economy). The UBI would be a net benefit for those that are currently severely under-employed or unemployed but don't qualify for any welfare programs. But the UBI amounts proposed are fairly small, so would likely only result in a very small increase in demand for food and housing. And we have more than enough food surplus, and plenty of housing surplus in poorer areas of the country that this seems like a non-issue. [1] https://en.wikipedia.org/wiki/Zero_interest-rate_policy https://en.wikipedia.org/wiki/Zero_interest-rate_policy
dllthomas 7y ago
Too high a UBI might lead to inflation. In that case, if we've indexed UBI to observed or predicted inflation we could indeed wind up with a positive feedback loop and hyperinflation. So don't do that. Index to targeted inflation. If it's too high and we see more inflation than targeted, the UBI will fall in real terms. If inflation falls short of target, the real UBI will increase. Negative feedback loop - probably stability or oscillation.

Will a UBI be indexed to inflation? Wouldn't that lead to a vicious cycle of hyperinflation?

by j_m_b 7y ago

Will a UBI be indexed to inflation? Wouldn't that lead to a vicious cycle of hyperinflation?

UBI is just a concept, you'll have to look at some person/organizations specific implementation to figure this out. Try googling "Andrew Yang" if you want an answer to see how a current presidential candidate is tackling this.

Talyen42 7y ago

UBI is not necessarily inflationary in the first place.

qqqwerty 7y ago

Inflation would be very welcome right now. Zero interest-rate policy (ZIRP) seems to be the new normal, and I believe its largely due to increasing wealth inequality which is creating deflationary pressures in our economy (the wealthy can only consume so much, most of their money goes into savings). Also hyperinflation seems very unlikely with the amounts being discussed. Under an ideal UBI. Existing welfare programs would get replaced with the UBI, so that would have a neutral impact on the economy (and if UBI eliminates the welfare trap it could actually be a positive for the economy). The UBI would be a net benefit for those that are currently severely under-employed or unemployed but don't qualify for any welfare programs. But the UBI amounts proposed are fairly small, so would likely only result in a very small increase in demand for food and housing. And we have more than enough food surplus, and plenty of housing surplus in poorer areas of the country that this seems like a non-issue. [1] https://en.wikipedia.org/wiki/Zero_interest-rate_policy https://en.wikipedia.org/wiki/Zero_interest-rate_policy

dllthomas 7y ago

Too high a UBI might lead to inflation. In that case, if we've indexed UBI to observed or predicted inflation we could indeed wind up with a positive feedback loop and hyperinflation. So don't do that. Index to targeted inflation. If it's too high and we see more inflation than targeted, the UBI will fall in real terms. If inflation falls short of target, the real UBI will increase. Negative feedback loop - probably stability or oscillation.