I am not sure of that. If all that money ended up in rich people's pocket, never to see the light of day again we won't be having the inflation crisis. The money through various investments is now out in the open, driving up inflation. It is still unequally distributed and that is causing issues. If there was a magical way to distribute that money equally between everyone inflation won't be an issue. Unfortunately magic isn't real.
Could we create a system where inflation would hit harder on the one that had the most money? That way, rich people would be enticed to move their money, and invest in risky plays. Some of them would grow very rich, others would lose a lot of money, but, on the end, they would end up reducing their income...
The rich people will be less rich in that situation. They are in a similar situation now with the current inflation, but growth of money has to be tied to economic growth or otherwise the rich will feel screwed.
I'm not saying it's good, but you cannot screw the rich. The current situation is a compromise and a very sensible at that I might add, despite all the noise from tin-foil hatters.
There are also other, practical consideration which will make what you are proposing impossible to put in practice for a prolong period of time.
Most richer people diversify their wealth. You may be hard pressed to find a billionaire who actually has $1 billion in cash.
Cash would most likely be the minority of their wealth. As inflation occurs, they do take a hit on their cash holdings. But their land, stocks, apartment complexes, etc may increase in value.
> It should devalue the money that they already have, benefitting the poor
Even if all people both rich and poor held all their wealth in the form of cash, that would certainly hurt the poor too. Say a poor person works 8 hours a day. His 8 hours of work grant him buying power of 3 meals. After inflation his 8 hours of work grant him buying power for only 2 meals. This is not just a theoretical, look at McDonalds meal prices, you can't get a sandwich for a $1 anymore.
There are some benefits to inflation. It's cheaper to employ poor people willing to work the now cheaper paper. So it may create some new jobs that otherwise may never have been created.
Undeniably, in the beginning, yes. Eventually it would be distributed more evenly as those people spend or die. We already have billionaires and the difference is that, with the current system, their money will not become distributed. They fail and then the government prints more to rescue them or they just print it and give it to them directly to "prime the economy". i.e. The Cantillion effect.
The people should control the money and that's only possible with Bitcoin.
Step 1) Take away all money from everyone make big pile 'o cash.
Step 2) Give everyone an equal distribution of the big pile 'o cash.
Step 3) Wait one year.
Step 4) Scratch head over how some are now poor and other are super wealthy even after the great leveling.
Hmm no, maybe not such a great idea.
There is a finite amount of tangible goods that can be produced, money chases goods, markets react, prices rise. If everyone has a million dollars do you think someone will sell you his Ferrari for $200k ? No, because the value of the Ferrari does not reside within the dollar, it's only a medium of exchange used for easily trading goods and services.
Are you really saying that some wealthy people specifically choose to hold extra cash at a loss to themselves to prevent inflation from occuring? It seems like this would easily fall into a tragedy of the commons situation - do you have any citations to back up the enormous claim?
There are many ways to re-engineer the system to lead to better outcomes. Say you gave everyone twice what we are giving them now. But that extra 50%, you don't give them that as income, but instead as money that can be spent on certain kinds of investment. Not commodities, food, finance, or real-estate. What sort of outcomes would that cause in the system? The standard argument for giving people any sort of wealth is, well that causes inflation. That only causes inflation only because of the way the money is used. If it is used different it can cause innovation and better distribution of wealth.
New money doesn’t go to “the rich” per se it’s the product of loan origination. Whoever borrows money. In America that’s a national pass time for everyone. I wager the lower income borrow more as a fraction of net worth than anyone else.
I’m curious how an inflation free money might stop people starving in a country unable to provide even the most basic services?
Decoupled from government maybe - though to a degree all the major central banks are. But it’s the passive management by an unelected group who made completely arbitrary decisions accountable to nobody with no consideration for what makes a good currency.
Money is already worthless. It's paper. It only has value that we as a society set on it. If the shit really hit the fan, governments of the world could decide to scrap all currencies give everyone an 'equivalency' of their old lifestyle in a 'new currency' and reboot the virtual monopoly game.
Why do you think billionaires horde money? It's the same reason debears hordes diamonds, if all the diamonds that exist actually were available on the markets they wouldn't be worth shit. By hording all the diamonds mined, they get to set the prices.
Sure if you spread more money out to more people, some prices may adjust up a bit, but you're not going to get runaway price gouging across everything like many who are against UBI claim.
The point I believe you are missing is that this will not meet basic needs of others.
If you distribute the excess wealth, you will create a lot of inflation because if people have twice the money they will be prone to pay a twice bigger rent or a twice bigger restaurant check, or twice the money for the same land plot.
If you decide to somehow destroy the excess wealth (for example, burning cash or the houses they don't need), you will shrink a bit the economy by creating some job losses for those today working on superfluous activities of the rich such as yatch cleaning.
That seems a little far-fetched. You ask someone about distributing cash between them and their neighbor and of course the participant will assume that what you're talking about is their wealth relative to the sum total wealth of the entire world or the effects of large-scale inflation?
And if they evenly distributed them to everybody in some borderline mythical manner (because wealth isn't actually that portable), it would still roughly double or triple your personal wealth, tops. Again, I think most people could figure out what to do with that and would still after a year or two resume wanting something or other they can't afford.
Rich people aren't spending all their money on stuff, they're investing it. If wealthy people were to take all that wealth and start buying stuff (themselves or via redistribution through taxes to UBI), there isn't magically more stuff, so the price of stuff goes way up => inflation.
That's only true if the monetary supply remains tightly constrained. As long as we are willing to tolerate inflation the 1% can become richer and the 99% can also still have access to money. Otherwise, in order for the rich to accumulate more wealth, it has to come from somewhere.
When you dramatically expand the money supply you make the rich richer. It doesn't matter how the money is distributed, it tends to inflate asset prices, and the people who own the most assets (the rich) reap the rewards in the end.
If you wanted to stop that, you'd have to actually pay for your spending, perhaps by implement some sort of wealth tax or dramatically increasing income taxes. Of course, nobody wants to increase taxes, so we just keep printing money to try and fix every problem.
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