RE: Doug Casey and I Destroying Commies On Universal Income

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Doug Casey and I Destroying Commies On Universal Income

in money •  7 years ago 

I think observers are missing the main point about Basic Income. It is that - when you give millions of people free money (basic income), prices increase to match the new spending power of said people.
So Basic Income is inflationary.

After a period of time, the people in need are back to where they started, and nobody is wealthier. There are just more zeros on the end of the prices.

The premise offered is that we can remove the administration of welfare to save money, and just pay everyone these minimum amounts, including those who don't need it. This is laudable in that it solves the age-old argument thus: why do those who work lose benefits, while those who do not are rewarded?

However, when the inevitable inflation occurs, who is left out? Which party loses? The answer is the poor, the retired and those on fixed incomes.

So Basic Incomes sets out to help people and ultimately causes the poor the most difficulties. And then you have civil unrest.

In fact the authorities would try to fix this problem with more easy choices: they would increase the amount of Basic Income. Perfect. Inflation would increase in a commensurate fashion. The value of currency erodes and is ultimately destroyed by this folly.

The bigger picture in the world right now is one of global deflation - an ageing demographic lending and spending less. One way to encourage consumers to spend is to give them money to buy stuff. Wow, problem solved, eh?
Should keep everyone in jobs and we all live happily ever after. The Germans tried that after WWI and the economy collapsed.

Anyhow, currency WILL be destroyed steadily by artificial measures like money printing (QE) and Basic Income (helicopter money), but the authorities' priority is getting the consumer engine going by any means. That is bad news for cash, pensions etc.

Basic Income forms one tenet of the fight against deflation. Other elements include negative interest rates (NIRP) (charge people to keep money in the bank) and removing large denomination notes (so storing your cash physically is costly and cumbersome). They want you to spend it.

Basic Income is being "trialled" in Finland, a small country where it may have limited success. In a larger country like the UK or US, the inflationary pressures could explode.

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