Basic Income

Discussion in 'Economics' started by dealmaker, Feb 8, 2019.

  1. That is the thing tho, if we don't automate we wont need UBI, once UBI is in effect in Western Countries, it pretty much guarantees the start of the nightmare. Once the inflation hits hard and every day markets adjust to the new purchasing power, you can't ever go back, it would be too big of a shock to the system... Like QE and QT, QT has a way bigger effect then QE, but in principle are the same thing, add 1T into the system for 1 year, then the next try to remove it, you won't even get halfway before a system collapse yet the whole thing wasn't even there 2 years ago... What changed ? Market pricing of food,rent, every life stuff. I am a thinker and maybe a Tin Foil type sometimes, but why are the shot callers in Western worlds pushing us into absolute automation when it's not even beneficial economically in the first place! The companies save a buck, yes, but reducing purchasing power by reducing employment count does more damage to an economy then slower output by human labour... So why push it if it's bad for the society ? Only sectors benefiting from Automation everything push, are multinationals and governments.

    Governments want more control, and multinationals want less competition... With automation and eventual AI advancements, along with UBI it's exactly what is going to happen. Make your millions now, take big risk, we only have 10-15 years or so of Capitalism left. Once the social wave is completely enacted and in full blown progress, it'll be a different society then we know today
    #21     Feb 9, 2019
  2. sle


    If anything, modern central banks are pretty good at getting rid of inflation. It's painful but totally doable and it has been successfully done in the US and multiple other developed countries. Deflation is much harder to control and

    You can't stop progress. You can either adapt to it or get obsolete. If the Western society fails to adopt to automation, it will get rolled over by China and the likes.

    Most of the time, dude :) Maybe you should read a good intro to macroeconomics before wading into the muddy internet waters?
    #22     Feb 9, 2019
  3. You don't even understand what your typing, even less on inflation. You would have to know nothing about the economy, or humans in general to claim UBI won't alter money supply, or even worst won't change value of anything... LOL oh man

    It's a pretty simple concept, IF creation of money exceeds production output in a society, it creates inflation... That is why in every single society in the world there is inflation, cost of things go up depending how much you can produce and sell, compared to what the country's Central Bank prints... Hence why in non productive countries, when Central Banks start to print like crazy, inflation sky rockets and why in Countries like Japan or China, there Central Banks can print a lot without out of control Inflation

    I don't quite understand your view on how the US government printing hundreds of Billions for UBI in 2022, on top of usual printing and production cycle in effect, would not distort markets ? QE goes towards production and it's purpose is to Inflate Assets, so how would helicopter money NOT inflate assets ? Please explain your though process
    #23     Feb 9, 2019
    carrer likes this.
  4. I quote :

    If the Money Supply increases faster than real output then, all other things remaining equal, inflation will occur.

    If you print more money, the amount of goods doesn’t change. However, if you print money, households will have more cash and more money to spend on goods. If there is more money chasing the same amount of goods, firms will just put up prices.

    The Quantity theory of money seeks to establish this connection with the formula MV=PY. Where

    • M= Money supply,
    • V= Velocity of circulation (how many times money changes hands)
    • P= Price level
    • Y= National Income (T = number of transactions)
    If we assume V and Y are constant in short-term, then increasing money supply will lead to increase in price level.

    Simple example to explain why printing money causes inflation

    • Suppose the economy produces 1,000 units of output.
    • Suppose the money supply (number of notes and coins) = $10,000
    • This means that the average price of the output produced will be $10 (10,000/1000)
    Suppose then that the government print an extra $5,000 notes creating a total money supply of $15,000; but, the output of the economy stays at 1,000 units. Effectively, people have more cash, but, the number of goods is the same. Because people have more cash, they are willing to spend more to buy the goods in the economy.

    Ceteris paribus ( all other things remaining equal ), the price of the 1,000 units will increase to $15 (15,000/1000). The price has increased, but, the quantity of output stays the same. People are not better off, and the value of money has decreased; e.g. A $10 note buys fewer goods than previously.


    Therefore, if the money supply is increased, but, the output stays the same, everything will just become more expensive. The increase in national income will be purely monetary (nominal)

    If output increased by 5%. and the money supply increases by 7%. Then inflation will be roughly 2%
    #24     Feb 9, 2019
  5. sle


    Of course, I can't compete with you in terms of basic economic knowledge. After all, you are "a thinker" and I am just some guy :)

    What makes you think that UBI is going to be "printed"? The idea is to reallocate the money spent on the current safety nets (and, hopefully, various subsidies) to a new model. It's a social pacifier, not unlike most others we have introduced. For the record, I am neither for it or against it. In any case, it's a long way from happening in the US.

    In terms of inflationary expectations from something like UBI, there are a lot of nuances. E.g. if you assume a Keynsian model, you can imagine that UBI can drive the aggregate demand, however, since it's a subsistence level income that's not going to be a large effect. From a monetarist perspective, as long as this is neutral with respect to the monetary mass, it's going to be a non-event unless it somehow stimulates the velocity of money. I'd say that in the US, there are plenty of government actions that are far more inflationary (e.g. spending a meaningful percent of GDP on the military).

    PS. I am glad you googled the textbook definition of inflation. The point, however is that once you get beyond the very basics, inflation and inflationary/deflationary activities are very tricky to nail down. For example, QE was technically non-inflationary since it was sterilized, but it was intended to boost spending indirectly. Even measuring inflation is hard. On one hand, we have relatively high inflation on the things we need such as food. On the other hand, we are recipients of the technological deflation on the things we want. Plus, there are things we need now that we did not need before etc. That makes forming a consistent basket almost impossible.
    #25     Feb 9, 2019
  6. vanzandt


    Its not the governments that are (currently) pushing it really, its Wall Street. Its a GIANT industry man. The next evolution of tech... and that's where the money is. Throw billions of VC $'s at it. Chase that growth. Ram it down our throats, just like smart phones, social media, and the whole world of mobile everything.

    It will be ironic if what you are predicting does in fact come to pass.... because capitalism will be solely responsible for destroying itself.
    #26     Feb 9, 2019
  7. ET180


    People were making the same claims about the automobile destroying the horse and buggy industry. I'll believe it when I see it. Sure, self-driving cars are coming, but I think many under-estimate just how hard of a problem AI is to solve. Also, underlying your argument is the premise that many people are only able to do their current job and are too stupid or unmotivated to do anything else. I disagree with that.
    #27     Feb 10, 2019
  8. ironchef


    This would be the understatement of the year on ET. :D
    #28     Feb 11, 2019
  9. The War on Normal People by Andrew Yang. He's actually a presidential candidate and a big UBI supporter. The question might be, like Trump being elected for the promise of change, are there enough financially strapped and unhappy voters for UBI to gain traction.
    #29     Feb 17, 2019