4 ms·

Free money for everyone = more money is circulating = prices are raising. This is the first lesson of economics. In the areas where people are poor, prices wil

by rvnx 6y ago

Free money for everyone = more money is circulating = prices are raising. This is the first lesson of economics. In the areas where people are poor, prices will raise. In turn, people will need more money, and those who were not poor, will start to become poor.

swiley 6y ago
We're already doing this, just not with individuals. Ever wonder why housing keeps getting more expensive while sitting empty? The Federal reserve keeps buying the debt the buildings are bought with to prevent the market from crashing. You're half right, we shouldn't do that. We already are though and the question is: should we do it in a way that makes poor people homeless or not.
wry_discontent 6y ago
This isn’t necessarily true. There’s been a lot of money injected into the economy in the last 10 years and it hasn’t caused mass price increases.
- steve76 6y ago
  Take the printed money and: keep it in the bank to shore up fractional reserved deposits buy bonds that no one wants because you are paying to lend pay interest on debt, often within the same entity pay fees to hold deposits or buy bonds All that takes dollars out of the world. The few dollars that get through stay at the top, paying the people who messed up in the first place. They keep on making things no one wants, so you have a glut of that. Few dollars chasing an abundance means price really should be zero or "just take it" or even "I'll pay you to salvage junk." Add in the people who mess up take that free money and do things like stock buybacks. The price of their stuff skyrockets. Or lowering cost which means not hiring anyone. The barrier to access increases. You have to be a computer programmer to land a secretary job, or unify physics to be in sales. Why is this done? Generational: A lot of teenagers. A lot of seniors. Few people in their prime earning years. If you let the Fortune 500 collapse, you get all that above. Also the people who have access go back on the soup line with you. They share knowledge. They collaborate. Doing it now will kill the young and old. Diplomacy: Money will go somewhere else. Mercantile dictatorships. Piracy. Not too big of an ask if what we really are buying is not another world war.
sandworm101 6y ago
>> This is the first lesson of economics. Ya. Lesson #1, not the final lesson but the ABC lesson taught to people who are just starting to learn. Later lessons will cover price concepts that make lesson #1 less relevant, such as that in realworld economics people are not all treated identically. Application of identical rules to all earners generally does not end well. That's why progressive taxation is a thing. A simple extension of progressive taxation is progressive handout/benefit schemes, money for the poor but not also to the rich. But that is probably lesson #10 or #12 and we are still on #1.
- lukevi 6y ago
  It misinterprets Lesson #1 even. A city is not printing money, and has no ability to increase the money supply. There's no chance a local program like this leads to inflation.
  - colinmhayes 6y ago
    It conceivably raises velocity which would lead to inflation.
- rvnx 6y ago
  What if everybody gets basic income to cover basic needs (housing / food) and then can do work, to unlock extra-money ? Whether they work or not, they benefit from the situation. I'm still concerned though, that landlords, seeing that everybody has 1000 USD / month in the pocket, that they raise prices by 1000 USD :|
xphos 6y ago
Yeah you are assuming so many things there. Supply and demand definitely works but when you simplify out every detail you come to some bad conclusions. Giving people money will cause only specific things to raise in price. Things like houses where the supply is inelastic. Prices will rise because more people can buy by them but there are virtually only X amount. Things like food however will stay pretty steady because if there are more people competition will cause merchants to bring more food and undersell the competition. In this examples test phase they also aren't sending everyone money. They are randomly seeding money to several households in the community, which will also influence its spending. Because this is surprise money it probably has a higher change of going into deferred payment. I am not convinced this test a good way to test something like a UBI but its not simple as lesson one. I think its a huge mistake to think you've learned everything and can holistically judge broad scale policy from just lesson one but thats just me.
- subroutine 6y ago
  I agree this surprise money is not a good test of UBI. An actual wide-scale implementation of UBI seems like a great way to provide landlords with a bunch of extra cash.
nwah1 6y ago
Inflation has two definitions. There's monetary inflation and price inflation. The former refers to an expansion in the money supply. If you fund any social program purely out of tax revenue, then there is no monetary expansion. But monetary inflation itself doesn't necessarily lead to price inflation. If you have a quickly growing population, but a money supply that is growing slowly, then you would need faster monetary expansion simply to maintain price stability. Price inflation is what people really care about. But it is also not just one uniform thing. We know that healthcare, land rent, and education are what have been rising in the US over many decades, while things like food, clothing, electronics, energy, and raw materials have been pretty flat or even decreasing in price. The distinguishing factor is that the former tend to have both inelastic supply and inelastic demand, while the latter category has elasticity in both. What this means is that the former category is characterized by economic rents more than supply costs. Easy monetary policies may inflate bubbles in these targeted areas, but the fact that it is so localized gives a clue as to the real cause: economic rent-seeking and landlordism. Pre-capitalistic and parasitical sorts of business models, often relying on the government to create artificial scarcity. If this stuff happens in essential industries then it also means the demand is inelastic, and we're forced to eat the higher prices, which are whatever they think the consumers can afford. All of this means that without tackling the economic rents, such as by raising tax revenues that target them, then we cannot solve this problem. And if people can afford more, the economic rents will increase. For instance, via a basic income that is not funded out of economic rent. But if it were funded out of rent, then it would be fine. Taxes that are placed upon economic rents have a curious property where they cannot be passed onto anyone else. Zero deadweight loss.
- steve76 6y ago
  Here are some dirty secrets: Healthcare is a giant game of lawsuit musical chairs. A nurse reads a disclaimer to a doctor. A doctor looks at you for a second or two and shrugs "yeah. he'll live." When you're weak, you're still the same, but volatile and sensitive. Eventually you lower your blood pressure for good. Some nun or ex con on work release administers the drug or does the critical procedure. Go ahead and sue the people with a vow of poverty. See how that works out. Education, the cost is all research. That's medicine too. See above. A small part is military research. The research they do is frightening and really needs to be kept under wraps with decades of vetting and security clearance. For example, the Manhattan Project, almost a hundred years old. Imagine what they are doing today. The land ownership that matters, the people who own thousands of homes and large city districts, will need a war to take away their wealth. In fact, I bet wars are started, hundreds of thousands of people churned, because of one minor dispute between very powerful people, and if you trace minor land ownership to the top it involves foreign affairs. People in the world seek poverty. A ton. Very wealthy cultures in Asia and Africa think it's good to be poor, that you're stupid to avoid getting sick or dirty or beaten to death, like junking a car with brand new tires for dirty rubies and diamonds that not long ago were just dirt. I would say there are more ascetics than the developed + seeking development. Capitalism is not parasitic. It's brutal and violent. Instead of digging trenches and shooting cannons at each other, we'll settle our differences over poker or keno or baccarat. If that's not enough, we'll bet on baseball or horses. Still have a problem? Let's fist fight in the street, then we'll go to knives, then guns, and if that's not enough, we always have our tried and true time tested civil wars. Sounds crazy but it's exactly how a lot of fortunes were made. Competitive free markets admit reality and provide an alternative which caps the violence. If you live where 9' of snow falls in one hour, nothing will bring demand there. It's not inelastic, it's immovable. It's also a mistake to conflate low standard of living to poverty. Do you really want to make gasoline $10 a gallon around the Great Lakes, you know, the people who invented the modern industry, because it works in San Fran? People there are highly intelligent. You would be waking up a sleeping monster because someone you feel sorry for can't stop shooting elephant tranquilizer. Good god. I wouldn't want to think what they would do. Lawsuits, wars, security clearances, social trends, all that is government to me. If nature provides it, but you have to involve yourself with centuries of warfare among a billion people, it's scarce. I don't want other people's problems. In a hundred years $30 trillion will be nothing. If there's something to go broke on, it's curing disease, not burning cities or settling frontiers or telling everyone how great you are. Survive. Just don't loose or mess up. Probably the best way to create wealth is to find a way to monetize dying in your 90s. Medical research and a data platform, and incentive people doing medical procedure on themselves, like the emerging specialized genetic communities.
carapace 6y ago
The whole point of UBI is that production has become so easy that the average person can't find work. Think about it: the whole point of technology is to do less with more, and technology works and it get better over time. It's "works as intended" for machines to do the work that machines can do. And the realm of "work that machines can do" is continually growing. Eventually you have infinite supply of everything and everyone is unemployed and unemployable, so they have no money so there is no demand. Infinite supply and no demand. One solution is just to print money and give it to people. It's basically a quota on the output of the magic replicator machine from Star Trek. I don't know if it will work, but it sounds better to me than just letting people live in tents downtown like they're doing now. (I'm in SF and it's gotten pretty gnarly here. There are "for rent" signs and people living in tents all over the place. Think about how nuts that is...)

by rvnx 6y ago

swiley 6y ago

We're already doing this, just not with individuals. Ever wonder why housing keeps getting more expensive while sitting empty? The Federal reserve keeps buying the debt the buildings are bought with to prevent the market from crashing. You're half right, we shouldn't do that. We already are though and the question is: should we do it in a way that makes poor people homeless or not.

wry_discontent 6y ago

This isn’t necessarily true. There’s been a lot of money injected into the economy in the last 10 years and it hasn’t caused mass price increases.

steve76 6y ago
Take the printed money and: keep it in the bank to shore up fractional reserved deposits buy bonds that no one wants because you are paying to lend pay interest on debt, often within the same entity pay fees to hold deposits or buy bonds All that takes dollars out of the world. The few dollars that get through stay at the top, paying the people who messed up in the first place. They keep on making things no one wants, so you have a glut of that. Few dollars chasing an abundance means price really should be zero or "just take it" or even "I'll pay you to salvage junk." Add in the people who mess up take that free money and do things like stock buybacks. The price of their stuff skyrockets. Or lowering cost which means not hiring anyone. The barrier to access increases. You have to be a computer programmer to land a secretary job, or unify physics to be in sales. Why is this done? Generational: A lot of teenagers. A lot of seniors. Few people in their prime earning years. If you let the Fortune 500 collapse, you get all that above. Also the people who have access go back on the soup line with you. They share knowledge. They collaborate. Doing it now will kill the young and old. Diplomacy: Money will go somewhere else. Mercantile dictatorships. Piracy. Not too big of an ask if what we really are buying is not another world war.

sandworm101 6y ago

>> This is the first lesson of economics. Ya. Lesson #1, not the final lesson but the ABC lesson taught to people who are just starting to learn. Later lessons will cover price concepts that make lesson #1 less relevant, such as that in realworld economics people are not all treated identically. Application of identical rules to all earners generally does not end well. That's why progressive taxation is a thing. A simple extension of progressive taxation is progressive handout/benefit schemes, money for the poor but not also to the rich. But that is probably lesson #10 or #12 and we are still on #1.

lukevi 6y ago
It misinterprets Lesson #1 even. A city is not printing money, and has no ability to increase the money supply. There's no chance a local program like this leads to inflation.
- colinmhayes 6y ago
  It conceivably raises velocity which would lead to inflation.
rvnx 6y ago
What if everybody gets basic income to cover basic needs (housing / food) and then can do work, to unlock extra-money ? Whether they work or not, they benefit from the situation. I'm still concerned though, that landlords, seeing that everybody has 1000 USD / month in the pocket, that they raise prices by 1000 USD :|

xphos 6y ago

Yeah you are assuming so many things there. Supply and demand definitely works but when you simplify out every detail you come to some bad conclusions. Giving people money will cause only specific things to raise in price. Things like houses where the supply is inelastic. Prices will rise because more people can buy by them but there are virtually only X amount. Things like food however will stay pretty steady because if there are more people competition will cause merchants to bring more food and undersell the competition. In this examples test phase they also aren't sending everyone money. They are randomly seeding money to several households in the community, which will also influence its spending. Because this is surprise money it probably has a higher change of going into deferred payment. I am not convinced this test a good way to test something like a UBI but its not simple as lesson one. I think its a huge mistake to think you've learned everything and can holistically judge broad scale policy from just lesson one but thats just me.

subroutine 6y ago
I agree this surprise money is not a good test of UBI. An actual wide-scale implementation of UBI seems like a great way to provide landlords with a bunch of extra cash.

nwah1 6y ago

Inflation has two definitions. There's monetary inflation and price inflation. The former refers to an expansion in the money supply. If you fund any social program purely out of tax revenue, then there is no monetary expansion. But monetary inflation itself doesn't necessarily lead to price inflation. If you have a quickly growing population, but a money supply that is growing slowly, then you would need faster monetary expansion simply to maintain price stability. Price inflation is what people really care about. But it is also not just one uniform thing. We know that healthcare, land rent, and education are what have been rising in the US over many decades, while things like food, clothing, electronics, energy, and raw materials have been pretty flat or even decreasing in price. The distinguishing factor is that the former tend to have both inelastic supply and inelastic demand, while the latter category has elasticity in both. What this means is that the former category is characterized by economic rents more than supply costs. Easy monetary policies may inflate bubbles in these targeted areas, but the fact that it is so localized gives a clue as to the real cause: economic rent-seeking and landlordism. Pre-capitalistic and parasitical sorts of business models, often relying on the government to create artificial scarcity. If this stuff happens in essential industries then it also means the demand is inelastic, and we're forced to eat the higher prices, which are whatever they think the consumers can afford. All of this means that without tackling the economic rents, such as by raising tax revenues that target them, then we cannot solve this problem. And if people can afford more, the economic rents will increase. For instance, via a basic income that is not funded out of economic rent. But if it were funded out of rent, then it would be fine. Taxes that are placed upon economic rents have a curious property where they cannot be passed onto anyone else. Zero deadweight loss.

steve76 6y ago
Here are some dirty secrets: Healthcare is a giant game of lawsuit musical chairs. A nurse reads a disclaimer to a doctor. A doctor looks at you for a second or two and shrugs "yeah. he'll live." When you're weak, you're still the same, but volatile and sensitive. Eventually you lower your blood pressure for good. Some nun or ex con on work release administers the drug or does the critical procedure. Go ahead and sue the people with a vow of poverty. See how that works out. Education, the cost is all research. That's medicine too. See above. A small part is military research. The research they do is frightening and really needs to be kept under wraps with decades of vetting and security clearance. For example, the Manhattan Project, almost a hundred years old. Imagine what they are doing today. The land ownership that matters, the people who own thousands of homes and large city districts, will need a war to take away their wealth. In fact, I bet wars are started, hundreds of thousands of people churned, because of one minor dispute between very powerful people, and if you trace minor land ownership to the top it involves foreign affairs. People in the world seek poverty. A ton. Very wealthy cultures in Asia and Africa think it's good to be poor, that you're stupid to avoid getting sick or dirty or beaten to death, like junking a car with brand new tires for dirty rubies and diamonds that not long ago were just dirt. I would say there are more ascetics than the developed + seeking development. Capitalism is not parasitic. It's brutal and violent. Instead of digging trenches and shooting cannons at each other, we'll settle our differences over poker or keno or baccarat. If that's not enough, we'll bet on baseball or horses. Still have a problem? Let's fist fight in the street, then we'll go to knives, then guns, and if that's not enough, we always have our tried and true time tested civil wars. Sounds crazy but it's exactly how a lot of fortunes were made. Competitive free markets admit reality and provide an alternative which caps the violence. If you live where 9' of snow falls in one hour, nothing will bring demand there. It's not inelastic, it's immovable. It's also a mistake to conflate low standard of living to poverty. Do you really want to make gasoline $10 a gallon around the Great Lakes, you know, the people who invented the modern industry, because it works in San Fran? People there are highly intelligent. You would be waking up a sleeping monster because someone you feel sorry for can't stop shooting elephant tranquilizer. Good god. I wouldn't want to think what they would do. Lawsuits, wars, security clearances, social trends, all that is government to me. If nature provides it, but you have to involve yourself with centuries of warfare among a billion people, it's scarce. I don't want other people's problems. In a hundred years $30 trillion will be nothing. If there's something to go broke on, it's curing disease, not burning cities or settling frontiers or telling everyone how great you are. Survive. Just don't loose or mess up. Probably the best way to create wealth is to find a way to monetize dying in your 90s. Medical research and a data platform, and incentive people doing medical procedure on themselves, like the emerging specialized genetic communities.

carapace 6y ago

The whole point of UBI is that production has become so easy that the average person can't find work. Think about it: the whole point of technology is to do less with more, and technology works and it get better over time. It's "works as intended" for machines to do the work that machines can do. And the realm of "work that machines can do" is continually growing. Eventually you have infinite supply of everything and everyone is unemployed and unemployable, so they have no money so there is no demand. Infinite supply and no demand. One solution is just to print money and give it to people. It's basically a quota on the output of the magic replicator machine from Star Trek. I don't know if it will work, but it sounds better to me than just letting people live in tents downtown like they're doing now. (I'm in SF and it's gotten pretty gnarly here. There are "for rent" signs and people living in tents all over the place. Think about how nuts that is...)