this post was submitted on 10 Oct 2023
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They just print it. There's nothing tying the value of the currency to what it's worth in terms of purchase power except how much is circulated.
My issue with UBI, at large-scale, is that it will cause inflation that will 100% go to the wealthiest people on the planet. For example, it's not that the cost of a burger would need to go from $10->$15 because companies now need to compete in wages in an environment where their employees have an extra $12k, it's that the cost of a burger will go from $10->$15 because the rich want the extra $5, leaving people receiving UBI with the same (or less) purchasing power.
EDIT: To be clear, I'm excited about the possibilities that these studies show, and I'm not against UBI. I just am getting older and coming to the conclusion that the non-wealthy get fucked every time anything that is meant to help us is implemented.
Yeah the effects on inflation need to be looked at pretty closely. Extra cash to people who need it is great for them. Extra cash for everyone, especially if it is just printed, surely will cause problems. Just the increase in money supply will result in inflation but yeah greedy assholes will find ways to suck up the free money from everyone else.
The problem with the wealthy fucking over us peons is what's truly Universal when we have so much corruption.
If I didn't fear it falling into squalor, along with NIMBY problems, some kind of public free housing would effectively be like a portion of UBI but harder for greedy pricks to suck up the money legally. And at least that way the people who would otherwise be able to work (e.g. those who became homeless due to medical emergencies) wouldn't be at a disadvantage from being unhomed.
Of course the real answer there is universal healthcare and elimination of for profit healthcare and elimination of health insurance. So that medical emergencies are just covered.
It will only cause inflation if you print the money. If the supply of money goes up then value of money goes down.
I hear you there. We have a corrupt political class to blame for that. Which is why I advocate for the Forward party, which aims to break up the duopoly of the political system. It's main policy goals are Nonpartisan primaries and Ranked Choice Voting.
Yes, regardless of if the money gets printed or just ends up in people's bank accounts, as the amount of money in circulation increases, inflation will follow. The only other way to get money in people's accounts is to take it from other accounts, like taxing the crap out of the wealthiest people, purchases over a certain threshold, etc. Then it wouldn't lead to inflation, just redistribution of wealth. I'm not an expert on economies, and I'm sure the semantics of what I'm saying isn't quite right, but I think you know what I mean.
Yeah you have a good grasp of the ideas involved.
If you don't print money to fund a UBI, money in circulation stays the same so there is no inflation.
In fact in the few widescale UBI experiments that have taken place, inflation decreased. Alaska has had a form of a basic income, funded by oil revenues on from state land, since 1982. Ever since, Alaska has had LOWER inflation than the entire U.S. Their term it is the Permanent Fund dividend and it managed by a state owned corporation.
As an aside Economics is a social science, and is imperfect because it cant be replicated. The term for this is Replication crisis. Interesting wikipedia article on that.
I'm not understanding the need for printed money to increase inflation. Wouldn't direct deposit to people's checking accounts have the same effect as printed currency?
No, direct deposit is just the method of moving around currency from the government to people. Inflation is based upon the economic theory of supply and demand. The price of a good is determined by the intersection of supply and demand. If both supply and demand go up equally the price stays the same. If supply goes up without demand changing the price goes down. If demand goes down without supply changing the price goes up.
Supply in this case is how much money is in circulation. When money is moved around from a group of people to another, then the amount of money is still the same. Demand in this case is how much it costs to borrow money. Demand is otherwise known as the interest rate when applied to money.
If both the amount of money in circulation and the interest rate stay steady, than no change will occur in the value of money. This is the case of a UBI funded by cutting spending or increasing taxes.
However if only supply increases and demand stays the same, then the value of money will decrease. Likewise if only demand increases and supply stays the same, then the value of money will decrease.
Inflation is the devaluing of currency caused by either of the above listed changes to the supply-demand equation.
Think about the amount of printed currency like housing supply in LA. The price for housing is ever increasing because the demand for housing is increasing while the supply is barely inching upwards. That is an example of the value of houses in LA inflating. The same concept applies to government backed money. The only difference is the government decides the supply and demand of the currency market.
Thanks. I appreciate the time and effort put into your response.
yeah i've never understood why they can't just print the money. how does that actually force the dude at costco to print new price tags. ohh oh no this amount seems like less now, it's not as though we have abundance beyond our wildest dreams, better increase prices because of the graphs!!
Because money is made up until the point when it isn't and someone wants a debt repaid.