Balancing the Scale: Unraveling the UBI-Inflation Conundrum

Daniel Michael Hurt
3 min readJun 14, 2023

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In the realm of economic discourse, few topics ignite fiery debates as fervent as the relationship between Universal Basic Income (UBI) and inflation. Like the fabled yin and yang, these two concepts dance a delicate tango, leaving economists and policymakers pondering the consequences of a cash-laden society. In this whimsical exploration, we embark on a journey through the enigmatic landscapes of UBI and inflation, unearthing the multifaceted arguments that lie beneath the surface.

The pendulum swings

On one end of the spectrum, skeptics don their inflationary armor, wielding theories like sharpened swords. They contend that injecting copious amounts of currency into the economic bloodstream through UBI would unleash the demon of inflation. As the Quantity Theory of Money whispers in their ears, they foresee an increase in the money supply spiraling into a price surge. With more dollars chasing the same limited goods and services, the price tags are destined to soar, they warn.

Echoing this cautionary tale, proponents of the inflation argument raise another concern. UBI, they assert, would slyly coax the populace into a consumerist frenzy. As wallets fatten and pockets brim with newfound abundance, the clamor for goods and services will intensify. Businesses, like cunning chameleons, would seize the opportunity to hike prices, especially for those essential commodities that tug at our heartstrings. And so, a self-fulfilling prophecy of inflation takes hold.

The Dance of Riddles

Yet, within the labyrinth of economic theories, alternate voices emerge, challenging the conventional wisdom with a twinkle in their eyes. They argue that the relationship between UBI and inflation may not be as straightforward as it seems. The economic stage on which this drama unfolds holds a myriad of variables, like a cosmic kaleidoscope that morphs with every turn.

Firstly, they whisper, “Consider the canvas upon which this tale unfolds. In stagnant or deflationary economies, where idle capacity and soaring unemployment prevail, the injection of money through UBI may rejuvenate demand and production. The dormant wheels of economic progress awaken, revitalizing the nation’s heartbeat, all without the specter of significant inflationary pressures.

Furthermore, these audacious advocates propose that the funding mechanisms for UBI hold the key to taming the inflationary beast. A careful choreography of taxation reforms, targeted spending cuts, or even wealth redistribution can ensure that the influx of cash finds a delicate equilibrium with the broader economic ecosystem. By redistributing the wealth and sharing the bountiful spoils, the inflationary winds may be gently tamed.

A Whirlwind of Possibilities

In this whimsical dance between UBI and inflation, tangible examples offer glimpses into the enigmatic future that awaits. Take, for instance, Alaska’s captivating tale of the Permanent Fund Dividend (PFD). This pioneering initiative has graced its residents with an annual cash payment since 1982, fueled by the state’s oil revenues. Remarkably, the Alaskan wilderness has remained blissfully untouched by the inflationary flames, casting a glimmer of hope on the feasibility of UBI without economic combustion.

Across the seas, in the lands of Nordic intrigue, Finland’s experimental pilot program beckons us closer. The virtuoso stroke of granting a basic income to a select group of unemployed individuals reveals fascinating results. As the curtains rise on the preliminary findings, they fail to uncover any significant signs of inflationary mischief. Though these pilots serve as beacons of possibility, we must tread cautiously, recognizing the variance in scale and funding mechanisms from full-fledged UBI implementations.

In the grand tapestry of economic discourse, the interplay between UBI and inflation remains a mesmerizing riddle. As the spotlight shines on this duo, a harmonious balance must be struck between addressing income inequality and mitigating the risks of inflation. In this intricate choreography, policymakers must navigate the treacherous seas, armed with a comprehensive understanding of economic contexts and a masterful symphony of policies.

So, dear reader, as we bid adieu to this captivating journey through the realms of UBI and inflation, we are reminded that the answers lie not in black and white but in the kaleidoscope of possibilities. It is in the delicate interplay, the shimmering tango of theories, and the imaginative design of policy that we may uncover a future where UBI and inflation harmoniously coexist, nurturing a society where all may thrive.

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Daniel Michael Hurt

Daniel Michael Hurt has been fascinated by computers since he was a child.