quote:Originally posted by scifibum: I think cost of living variations could be problematic. How do you control for feedback loops between COL adjustments and people trying to game them in ways that might continue to drive up COL?
That's why it's better to set a fixed baseline. Even, to be honest, automatic inflation adjustments are a bit questionable, because they risk a feedback loop. It's better to try to find about the right lace, observe the results and then adjust it until it's clear that we're at the point of diminishing returns and only tweak it in response to surges in productivity that might put it out of whack with the availability of work.
The only thing I'll say about this, Pyr, is that it will fail if the elite class is simultaneously devaluing the dollar either to exploit the poor or else to exploit another nation (like China does to win the export war). Alongside a stable basic income needs to be a relatively stable dollar, which in turn means, in my opinion, rethinking how the Fed is used. If it's used entirely to offer interest free loans to provide a money supply to its own citizens that's one thing, but right now it a) charges interest, and b) offers "loans" to foreign banks and governments at will.
If the Fed was a legit instrument of the U.S. market then it could be made to work. Or rephrased, Wall Street needs to be reigned in if a stable dollar and therefore a stable basic income is to be achieved. This, to me, is the largest obstacle to real implementation, but since I think achieving this goal should be a top priority anyhow it aligns nicely with the timing of discussing a basic income. If either or both could be achieved in the next 20 years it would be quite the accomplishment.
quote:If it's used entirely to offer interest free loans to provide a money supply to its own citizens that's one thing, but right now it a) charges interest, and b) offers "loans" to foreign banks and governments at will.
Honestly, the Fed needs to bump up interest rates, both to give people a better baseline return on savings and to discourage the use of loans over income to fund things. But as long as the Federal Government isn't spending enough, it has to keep rates low to try to encourage as much lending as possible to fill the gap. More spending and higher incomes would mean that most people would no longer need loans to finance anything but projects taht required significant amount of resources, such that there should be a price on the risk that they'll end up going to waste.
As for lending to foreign entities, that's a simple requirement, so long as the have a business presence in the US and want to transact with us financially. Not being able to access the Fed would mean that foreign owned banks could not properly make loans in US dollars or easily convert currency on an as needed basis and what transactions they were able to do would not fall under the baseline regulatory scope that protects people when dealing with a regular commercial institution; which would particularly make having branches in the US problematic for them.
There are arguments that could be made in favor of simply nationalizing the entire financial industry and regulating it as a public utility, but the path to that is messy and would mean a significant amount of asset seizure.
As it stands righ now, the Fed is pretty ineffective becuase Congress is underspending and there simply aren't enough credit worthy people looking for a large enough volume of loans to make up the difference. We're edinging back into the conditions that set up the last financial crisis as banks loosen lending standards to try to find enough borrowers to fill the gap and make up for the fact that they can barely make anything on treasury bonds, since there aren't enough to go around, since the Fed is absorbing them and keeping rates low. We pretty much know where that ends, though, especially since we still have a huge private debt hole already in place that hasn't yet been filled.
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