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Originally Posted by Mathgod
What I don't get is this argument that UBI would cause inflation, yet increasing the minimum wage to $15/hr somehow wouldn't.
If your goal is to get more money into the hands into people currently at the bottom of the pay scale, it seems that no matter how you do so, it's going to result in inflation. More money in the hands of consumers means higher demand for goods, which consequently means inflation...
Then you have the problem of small businesses not being able to afford the higher minimum wage for workers, meaning some of them go out of business. This means less competition in the market which in turn would puts upward pressure on prices...
The way I see it, inflation is an inevitable consequence of any measure taken to decrease inequality in society and improve the financial situation of the poor and lower-middle class.
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Actually inflation isn't totally inevitable. The crux of the issue being credit.
Most people living in low income survive by supplementing their income with credit in order to afford their lifestyles. This isn't a flaw in our current system, its a benefit which positively affects the rich and negatively affects the poor, leading to the increased wealth gap. The increase in disparity and the increase in available and used personal credit have very similar growth you can trace back to the 80s.
This huge increase in revolving debt has allowed the average consumer to purchase items they never could before without saving (or something like lay-a-way). The cost of interest has drained the poor and inflated the rich while allowing the poor to live to a higher standard in the short term. People already have extra money in their hands for spending, they just don't realize it isn't theirs.
Increasing UBI or the minimum wage must also come with credit reform. Caps on interest rates, increased regulation to limit how much exposure we allow people to have. This allows wages to closer match the spending that is already happening. Joe can still buy his 50" TV, but instead is using the 24% Best Buy credit card, he now has an income to support it.
A higher minimum wage/UBI should not increase inflation very much because most of that spending is already happening. What it does is decreases profits from interest, which is something the wealthy would not like and thus you get a lot of push back.
Of course, generally, people will spend to what they have available so a UBI or increased minimum wage without credit reforms will totally result in inflation and only help in the short term.