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It's a myth that spending money causes inflation. Printing money causes inflation. If the government can run a basic income program without increasing the monet
by paxys 2y ago
It's a myth that spending money causes inflation. Printing money causes inflation. If the government can run a basic income program without increasing the monetary supply then no, there will be no impact on inflation. In fact it will be the best economic stimulus in history.
- fmbb 2y agoIt’s a myth that printing money causes inflation. Raising prices causes inflation.
- brightball 2y agoAnd supply and demand will naturally raise prices when money is printed.
- Droobfest 2y agoDepends how the printed money is distributed
- brightball 2y agoThe supply and demand for something with change regardless of how it’s distributed. If you’re spending the money on food and housing, demand for better food and better housing will increase. If it’s all going to a bunch of really wealthy people then the it will be focused on the types of assets that they would spend money on (businesses, yachts, whatever). No matter the supply of money, there’s a limited supply of everything else.
- robotcapital 2y agoMy understanding of marginal propensity to consume is that it decreases as wealth and income increase. The wealthier you are, the less you tend to spend as a function of the next dollar. So the inverse would imply that there would be more spending overall with UBI. We sort of saw this experiment play out with the COVID relief checks. Given that increase in demand, I'm curious how UBI would affect the supply side. My first thought is that it would negatively impact supply since there would be less efficient allocation of people to supply-related jobs. Unless I'm off here, I struggle to see how increased demand and decreased supply wouldn't impact inflation.
- bitshiftfaced 2y agoIt's not like all of the extra wealth is frozen in some account. People hold the wealth in assets and investments.
- legacynl 2y ago> Unless I'm off here, I struggle to see how increased demand and decreased supply wouldn't impact inflation. We're rapidly approaching the situation where 10 factory workers can be replaced by a single worker supervising some robots. At some point the decrease in employment will not significantly impact productivity for a large sector of the market. A properly implemented UBI scheme will be significant enough to allow a large part of the population to seriously reduce their income, either by working way less, or not working at all. Only that way can the amount of dollars in the economy stay relatively the same. I think therefore the assumption that supply would diminish while demand increases is wrong.
- robotcapital 2y agoGiven that, would you argue that the main condition needed for UBI, or wealth transfer in general, is increased productivity?
- brightball 2y agoAgreed. Running it without increasing the monetary supply is critical or the whole thing will collapse under its own weight.