Will UBI be adjusted for inflation?


In other words, does the UBI proposition have an adjustment for inflation clause? If not, inflation will eat up purchasing power over time.

The first thing you need to understand is that inflation is a monetary phenomenon. Please read this Economist’s View on Money and Inflation.

So the UBI won’t spur much inflation. But…

Over time, inflation will reduce all of our purchasing power, due to the government’s creation of new money, which they already do. The UBI will be adjusted to compensate for this. With a long-term inflation rate of 2.5%, which is very close to what the Federal Reserve is targeting, then we will see prices double in about 28 years, or approximately one generation. So the Freedom Dividend in 2050 will likely be about $2,000/month. (But it will have approximately the same purchasing power as $1,000/mo today.)

If automation/AI are able to bring greater efficiency gains than expected, then we can consider increasing the real value of the Dividend to share more of the wealth with all Americans. $1,000/mo is the right level for now. When the self-driving trucks are successfully driving all the roads, an increase may be possible. We will see!

Want to learn about why the UBI won’t cause inflation? See “Will UBI cause prices on everything to increase?

[1] Randolph Jenks

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