4 ms·

Serious question: How will UBI allow this? Over time I would imagine that due to inflation and the increased cashflow that everyone will have the prices of bas

Serious question: How will UBI allow this? Over time I would imagine that due to inflation and the increased cashflow that everyone will have the prices of basic necessities will increase to the point that UBI just covers them, or worse that simply living will require UBI + a job? I don't mean that in a snarky tone, it's something I'm trying to wrap my head around as far as UBI discussion goes.

stormbrew 6y ago
The same way all government spending doesn't lead to rampant inflation: by scraping money out of circulation largely with taxes. Money is created by central banks, circulated by the government (including with 'entitlement programs' like UBI would count as, but also through things like spending billions on fancy jet fighters) and other banks (and there multiplied by fractional reserve banking). It's then 'destroyed' by taxes and encouraging people to buy into government bonds and other things that slow down the flow of money. These are all policy instruments that control how much money is flowing through the economy, and inflation is a product of that flow. So the answer is, because they would raise taxes on it. A large portion of the money given out would just go straight into taxes from high income earners also getting UBI. But also they could do things like lower the reserve ratio banks are required to hold to reduce the flow of money into the economy, instead choosing to create money through people instead of banks.
Shoreleave 6y ago
I can absolutely see how it would enable a certain type of very creative, very hard working person to peruse something they couldn't originally due to hard circumstances. But that seems like a minority case. I'm curious what the other 95% are going to do.
- spyckie2 6y ago
  Drugs and alcohol. They'd probably do it regardless of UBI, but without UBI they do it and are slightly more angry or frustrated at their own situation.
jnwatson 6y ago
There’s no difference in the money supply here. There’s no inflationary pressure.
- baconandeggs 6y ago
  Inflation is not flat. When the money currently chasing luxury items like exotic cars or fine art switches to rent, produce and other basic goods their price will rise, it just will. Real inflation does not require an expansion in money supply because inflation is not flat across all areas of the economy.
  - jnwatson 6y ago
    The upper end of the housing market frees up, causing everyone, except the rich, to move upmarket. You can see the same effect when luxury housing goes up in a town. Rents go down for everyone.
    - baconandeggs 6y ago
      That is not the case. If under UBI, which is reallocation of capital, luxury housing frees up it will not mean the uber rich move away and now the rest of us enjoy more selection without any other repercussions (though that will happen at first to an extent), it will mean they'll relocate to less expensive properties, thus chocking the market from both sides.

stormbrew 6y ago

The same way all government spending doesn't lead to rampant inflation: by scraping money out of circulation largely with taxes. Money is created by central banks, circulated by the government (including with 'entitlement programs' like UBI would count as, but also through things like spending billions on fancy jet fighters) and other banks (and there multiplied by fractional reserve banking). It's then 'destroyed' by taxes and encouraging people to buy into government bonds and other things that slow down the flow of money. These are all policy instruments that control how much money is flowing through the economy, and inflation is a product of that flow. So the answer is, because they would raise taxes on it. A large portion of the money given out would just go straight into taxes from high income earners also getting UBI. But also they could do things like lower the reserve ratio banks are required to hold to reduce the flow of money into the economy, instead choosing to create money through people instead of banks.

Shoreleave 6y ago

I can absolutely see how it would enable a certain type of very creative, very hard working person to peruse something they couldn't originally due to hard circumstances. But that seems like a minority case. I'm curious what the other 95% are going to do.

spyckie2 6y ago
Drugs and alcohol. They'd probably do it regardless of UBI, but without UBI they do it and are slightly more angry or frustrated at their own situation.

jnwatson 6y ago

There’s no difference in the money supply here. There’s no inflationary pressure.

baconandeggs 6y ago
Inflation is not flat. When the money currently chasing luxury items like exotic cars or fine art switches to rent, produce and other basic goods their price will rise, it just will. Real inflation does not require an expansion in money supply because inflation is not flat across all areas of the economy.
- jnwatson 6y ago
  The upper end of the housing market frees up, causing everyone, except the rich, to move upmarket. You can see the same effect when luxury housing goes up in a town. Rents go down for everyone.
  - baconandeggs 6y ago
    That is not the case. If under UBI, which is reallocation of capital, luxury housing frees up it will not mean the uber rich move away and now the rest of us enjoy more selection without any other repercussions (though that will happen at first to an extent), it will mean they'll relocate to less expensive properties, thus chocking the market from both sides.