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I mean is it determined by money creation, or just influenced by/one of the factors? If business perceive people generally having more spending money, won't the

I mean is it determined by money creation, or just influenced by/one of the factors? If business perceive people generally having more spending money, won't they raise prices accordingly?

johnecheck 1y ago
Shouldn't they lose to a competitor who's happy to keep the lower margin and dominate the market? If not, I'd call that a failure of anti-trust law, not UBI.
- amilios 1y ago
  What if everyone raises prices simultaneously proportional to the UBI?
  - quesera 1y ago
    In the absence of collusion, if a business can produce a product or service less expensively, giving them the ability to outcompete competitors, they will do so.
    - amilios 1y ago
      Even if UBI is funded by taxation, rather than deficit spending, isn't it possible that demand will increase for some products (e.g. basic necessities that UBI recipients will suddenly be able to spend more on), causing inflationary pressure on the prices of those products?
      - johnecheck 1y ago
        By that argument, UBI causes both inflation (for essential goods and services) and deflation (for luxury items and assets). That's the economy reorienting itself around the new demand landscape. Those price spikes are the signal to producers to ramp up supply, which should push the price back down over time. Inflation is highly problematic when it spirals. Events like collapse of trust in a currency or government can result in runaway inflation, which is a disaster by all accounts. A one-time price spike caused by a one-time abrupt shift in demand is a very different scenario. Assuming the UBI is higher than the prices increases on necessities, we've successfully redistributed wealth and made those people better able to afford necessities, despite the fact that they cost x% more.
AnimalMuppet 1y ago
It's (mostly) determined by the delta between money creation and creation of "stuff" (by which I mean services as well as goods). If there's more stuff, then creating the same amount more money isn't inflationary. I said "mostly" because there can be things like supply shocks... but I guess that means less stuff, so maybe even that isn't an exception.

I mean is it determined by money creation, or just influenced by/one of the factors? If business perceive people generally having more spending money, won't they raise prices accordingly?

johnecheck 1y ago

Shouldn't they lose to a competitor who's happy to keep the lower margin and dominate the market? If not, I'd call that a failure of anti-trust law, not UBI.

amilios 1y ago
What if everyone raises prices simultaneously proportional to the UBI?
- quesera 1y ago
  In the absence of collusion, if a business can produce a product or service less expensively, giving them the ability to outcompete competitors, they will do so.
  - amilios 1y ago
    Even if UBI is funded by taxation, rather than deficit spending, isn't it possible that demand will increase for some products (e.g. basic necessities that UBI recipients will suddenly be able to spend more on), causing inflationary pressure on the prices of those products?
    - johnecheck 1y ago
      By that argument, UBI causes both inflation (for essential goods and services) and deflation (for luxury items and assets). That's the economy reorienting itself around the new demand landscape. Those price spikes are the signal to producers to ramp up supply, which should push the price back down over time. Inflation is highly problematic when it spirals. Events like collapse of trust in a currency or government can result in runaway inflation, which is a disaster by all accounts. A one-time price spike caused by a one-time abrupt shift in demand is a very different scenario. Assuming the UBI is higher than the prices increases on necessities, we've successfully redistributed wealth and made those people better able to afford necessities, despite the fact that they cost x% more.

AnimalMuppet 1y ago

It's (mostly) determined by the delta between money creation and creation of "stuff" (by which I mean services as well as goods). If there's more stuff, then creating the same amount more money isn't inflationary. I said "mostly" because there can be things like supply shocks... but I guess that means less stuff, so maybe even that isn't an exception.