[pton_xd]

The US handed out $1.8 trillion to individuals and families and $1.7 trillion to businesses during COVID. And then a few years later began experiencing the highest inflation rate in 40 years.

And that wasn't even enough money for anyone to live on.

I think this needs to be solved before UBI has any chance of working.

[lenerdenator]

Strangely, there were also massive supply chain disruptions, hoarding, and a program that basically handed out free money to business owners for any sort of purchase they wanted, all around the same time.

You don't make double-digit inflation by giving people barely enough money to cover rent in most low-cost American cities.

EDIT:

Also, let us consider why these payments were necessary and why they had to be funded the way they were. They had to be funded by printing money because the US government is deep in debt and there hasn't been a real tax increase since George HW Bush killed his political career with one in 1992. There is no rainy-day fund for the American people, so the FRS had to make one, and quick, lest you have people in the streets in general revolt, which given that the George Floyd protests were around the same time, was a real risk.

The payments were necessary because the American economy is not only leveraged from top-to-bottom, but in fact requires a good chunk of the population be in a good amount of debt with no savings in order to maintain growth of the credit products that many financial institutions rely on for the production of value for their shareholders. If you had over a hundred million people suddenly not making money, it's like the 2008 financial crisis, except instead of mortgage-backed securities, this time, it's every kind of securitized debt.

[aurareturn]

It's mainly wealth distribution. The top percent owns too much while the bottom 80% owns too little.

There won't be inflation if you take money from the top and give it to the bottom. The total amount of money stays the same.

[dagw]

The 'bottom' spend a much large proportion of the income on 'stuff' that counts towards inflation than the the 'top'. If you take money out of rich peoples art and private jet budget and add it to poor peoples food and heating budget, then that can drive up inflation since food and heating make up a bigger part of the inflation calculation than art and private jets.

[lenerdenator]

Because we've allocated more resources towards the production of art and private jets than towards essentials production.

[aaomidi]

And allocation follows where money is, as well.

So yeah, allocation will lag a bit behind where the money is.

[bko]

When you say the wealthy own too much, you mean they own productive assets. They run companies. Sure there are some that just have a pile of cash sitting in a vault but that's rare.

So if you take away their wealth you're transferring ownership and control from one group of people (who have managed and grown that productive asset) to another (randomly chosen). Naturally you would expect the productive assets to stop being so productive over time, kind of like what happens when a state expropriates businesses as if there is some magic in the walls of the building that generate value

[tivert]

> When you say the wealthy own too much, you mean they own productive assets. They run companies. Sure there are some that just have a pile of cash sitting in a vault but that's rare.

> So if you take away their wealth you're transferring ownership and control from one group of people (who have managed and grown that productive asset) to another (randomly chosen). Naturally you would expect the productive assets to stop being so productive...

No. People who run companies very, very frequently do not own them outright or even have a controlling stake.

So even in an extremist toy model, where you "take away their wealth," you can still leave the existing manager in place or make the former owner a manager-employee.

You could even be very capitalist about it, and motivate the former owner to do a to do a good job as a manager, by making it clear that he will starve if he doesn't (that's how capitalism works for most people).

[bko]

You might have this idea that people just fall into great wealth through random happenstance and then just buy ETFs passively but that's not true. There are a lot fewer bill Gates types holding ETFs than there are 8 figure net worth guy that owns half a dozen car dealerships. Or doctors/lawyers that own their own practice. A lot of ceos also get paid huge amounts in stock. That's much more the norm

> Family businesses account for 64 percent of U.S. gross domestic product, generate 62 percent of the country's employment, and account for 78 percent of all new job creation.

https://www.familybusinesscenter.com/resources/family-busine...

[gameman144]

The total amount of money being the same doesn't imply that there would be no inflation. The total demand being the same (for a given supply) would be what you'd need there.

If you give the rich more money, they're not likely to spend it on restaurants and merchandise and services: they can already afford as much of those as they want.

If you give money to people who couldn't afford them without the extra cash, though, you're artificially boosting demand, which would impact inflation.

[FirmwareBurner]

>It's mainly wealth distribution

No it isn't. The problem is that all these programs never actually end up redistributing wealth, but they always end up redistributing income, usually taken via higher taxes from the already shrinking middle class, leading to further deepening of wealth inequality.

As the super wealthy don't just have a public bank account with billions of $ under their own name, like your grandma, but have their wealth under various assets, entangled corporations, trust funds and non-profits, spread across various tax jurisdictions both on- and off-shore, making their wealth very difficult to track and tax correctly, plus gaming the financial system so that their companies are always billing each other for services till they're running at a loss, never seemingly generate any meaningful profits in their home "high-tax" jurisdictions.

FFS they have entire teams of well paid experts dedicated to these "tax optimization schemes", something the middle class and small business owners can never afford. THIS IS WHY WE HAVE WEALTH INEQUALITY, not because some middle class people earn higher wages after busting their asses in school and university. Just look at IKEA's elaborate tax dodging scheme. [1] Why can't he pay Swedish taxes like all Swedish businesses?

[1] https://www.greens-efa.eu/legacy/fileadmin/dam/Documents/Stu...

[toomuchtodo]

> As the super wealthy don't have a public bank account with billions of $ under their own name, but have their wealth under various entangled corporations, trust funds and non-profits, spread across various tax jurisdictions on and off shore, making very difficult to tax.

Report it and have it taxed. A private company can land a rover on the moon but we can't perform ETL operations on asset reporting?

[toomuchtodo]

Relevant: https://www.theguardian.com/news/2024/feb/29/taxation-worlds... ("‘A historic step’: G20 discusses plans for global minimum tax on billionaires ")

[pton_xd]

> There won't be inflation if you take money from the top and give it to the bottom. The total amount of money stays the same.

Our system is far from perfect but I believe history shows that communism is even worse.

[FirmwareBurner]

Communism is indeed worse, but that doesn't automatically make our current system 'good'. Yes it's the best we tried so far, but it's not like we tried soo many others and this one ended up being the best out of all the ones tested.

I'm sure if we took all the top math, quant, economy and finance grads in the world and book them for a few months in that fancy Swiss Alps resort at Davos where world leaders meet up every year to discuss how to screw us, they could come up with a better system than the one we currently have.

The problem is most likely the new system would not end up favoring the same winners of the current system, hence there's no desire to ever change the status quo, so we have the communist system as a perpetual boogieman to discourage any other systems being trialed as if that's the only other option.

[andrewjl]

> I'm sure if we took all the top math, quant, economy and finance grads in the world and book them for a few months in that fancy Swiss Alps resort at Davos where world leaders meet up every year to discuss how to screw us, they could come up with a better system than the one we currently have.

That isn't an obvious conclusion. To the extent the current system is one, improving it with such an approach doesn't account for:

- It having too many parts to understand without resorting to highly lossy models.

- Its non-features being far more impactful than its features.

[paulmd]

Dismissing entire categories of systems and approaches under a multitude of different situations and circumstances speaks more to how effective you personally have been propagandized.

Even the US has had outright state-sponsored corporations at times (Springfield Armory etc) and it’s fine. The Manhattan Project literally won the war, alongside collectivization of the economy for war production.

Collective worker ownership of the means of production is extraordinarily normalized in Germany (and a frequent source of conflict with US politicians who solicit automaker facilities in anti-labor locales) as well as other european countries (Husqvarna Vapensfabrik, Royal Dutch Shell Company, etc). There is no particular slippery slope here, some companies operate for centuries like this.

The communistic nature of kibbutzim in israel were/are also extraordinarily successful.

These things generally are good for workers and bring equality and stability to their countries. You just have to get past the trite third-grade "communism is actually bad" soundbyte (and the tendency to funnel anything that's mildly pro-worker into the "communism" bucket of course).

And remember, there's plenty of Pinochets and Suhartos and Malaysian juntas to go around for all political systems. Just like there are also plenty of inefficient capitalist organizations too - capitalism is not a magic wand for efficiency either.

In fact when you get down to it... corporations are really their own small little centrally-planned economies and dictatorships. And if they become too large to fail you get exactly the same failure modes as state corporations etc. Boeing might as well be a soviet OKB for all it matters. What, precisely, is the value or merit in quibbling over such a distinction?

Human societies surviving the next century is going to require a great deal of collectivism and cooperation, let alone the obvious internal problems with social equity. But people still think “but communism is bad” (by which they of course mean anything from German cooperatives to Stalinism) is the height of political discourse like they’re in a Fox News primetime special lol. Like, they got you real good didn’t they?

I think it's also something of an X-Y problem... people identify with "capitalism = rugged individualism" and don't realize that Boeing siphoning taxpayer dollars for airplanes the doors fall off of, or pinochet giving citizens "helicopter rides" or suharto burning citizens alive in barrels or the world's most repressive prison system is just as much a feature of capitalism as OKBs or the gulag archipelago or stalin's purges were a features of communism. Because those are orthogonal problems, those are the problems with authoritarianism not the unit of economic organization.

But "communism bad" - thank you so much for that contribution to the discourse! Nobody's ever said that before! /s

[pton_xd]

> Dismissing entire categories of systems and approaches under a multitude of different situations and circumstances speaks more to how effective you personally have been propagandized.

> those are the problems with authoritarianism not the unit of economic organization

Communism requires authoritarianism. It's inherent to operating system. When you take resources from some and distribute to others, who, exactly, does the taking and giving?

Monoculture micro-communities like kibbutz don't show anything. Nation-states are diverse groups of hundreds of millions with competing beliefs, values, and goals. Communism cannot serve these diverse interests. It requires a group of authoritarians that choose from whom to take and whom to give and the abject suffering of many is the result, every time. There is no freedom or liberty, that's by design. It's a failure with disastrous consequences.

[NickC25]

Don't forget that that 1.7 trillion was largely forgiven, especially in the case of some of the largest recipients. The president at the time made sure that there was absolutely zero oversight of the corporations that got money, and of course that's going to cause problems.

Yes, printing money wildly leads to inflation. Nobody is arguing that it doesn't. Giving the poorest members of society means the velocity of that money (or the M1 number) doesn't actually cause rampant inflation, as it stays in circulation because it is used quickly.

Giving 1.7 trillion largely to corporations who don't NEED it causes inflation. A corporation who sits on that cash (and then doesn't actually have to pay taxes on that cash, nor actually distribute it to employees) does cause inflation, because that's a whole lot of money just sitting around instead of flowing through an economy.

[toomuchtodo]

You are attributing to federal fiscal policy what was caused by supply chain dysfunction, housing inventory shortages, and corporate profits.

https://www.frbsf.org/research-and-insights/publications/eco...

> Global supply chain disruptions following the onset of the COVID-19 pandemic contributed to the rapid rise in U.S. inflation over the past two years. Evidence suggests that supply chain pressures pushed up the cost of inputs for goods production and the public’s expectations of higher future prices. These factors accounted for about 60% of the surge in U.S. inflation beginning in early 2021. Supply chain pressures began easing substantially in mid-2022, contributing to the slowdown in inflation.

https://www.fanniemae.com/research-and-insights/perspectives...

> The causes of the housing supply crisis are widely understood. After the Great Recession, new home construction dropped like a stone. Fewer new homes were built in the 10 years ended 2018 than in any decade since the 1960s. By 2019, a good estimate of the shortage of housing units for sale or rent was 3.8 million. The pandemic-induced materials and labor shortage exacerbated the trend, however, as evidenced by the surge in rents and home prices in 2021.

https://www.kansascityfed.org/research/economic-bulletin/cor...

> Corporate profits rose quickly in 2021 along with inflation, raising concerns about corporations driving up prices to increase profits. Although corporate profits indeed contributed to inflation in 2021, their contribution fell in 2022. This pattern is not unusual: in previous economic recoveries, corporate profits were the main contributor to inflation in the first year and displaced by costs in the second year.

https://www.cnbc.com/2023/12/08/excess-profits-of-big-firms-...

> “We argue that market power by some corporations and in some sectors – including temporary market power emerging in the aftermath of the pandemic – amplified inflation,” the report said.

> The author’s analysis of financial reports from 1,350 companies listed in the U.K., U.S., Germany, Brazil and South Africa found nominal profits were on average 30% higher at the end of 2022 than at the end of 2019.

[itsoktocry]

>You are attributing to federal fiscal policy what was caused by supply chain dysfunction, housing inventory shortages, and corporate profits.

Would you be shocked to learn the inflation had a number of causes, including the vast COVID stimulus? I mean, your quote above attributes 60%, and that supply chain issues resolving "contributed" to inflation easing.

I'm for UBI if we can figure out how to implement it. We've experimented with it here in Canada. But handing people money has inflationary consequences, it's not rocket science. Otherwise, generic extreme argument: give everyone a billion and we all win.

[toomuchtodo]

Not shocked if its true, asking you to validate the assertion with data. I brought citations, I will wait for yours.

> Otherwise, generic extreme argument: give everyone a billion and we all win.

No reasonable person takes this argument seriously. The discussion is "will providing for everyone's basic needs through UBI cause inflation?"

[itsoktocry]

>asking you to validate the assertion with data. I brought citations, I will wait for yours.

Try any economics textbook, and common sense. I couldn't care less what you believe. This stuff has been written about for 100 years, currency is susceptible to the laws of supply and demand like any other commodity; over supply affects prices.

>No reasonable person takes this argument seriously.

Oh, really? What's the right amount we should give to people then? Please bring data.

You sound like the MMT folks, who endlessly told us printing money didn't matter. Until it did. Then "real MMT has never been tried!"

[Workaccount2]

The whole "corporate profiteering drove inflation" narrative is/was entirely driven by click farming economically distressed people. It never was the case and even mild understanding of economics/finance quickly unravels the narrative.

Inflation was driven primarily by low interest rates, very generous financial support/relief(rent moratorium, student loan pause, bolstered and extended unemployment), and the ability for most white collar workers to keep on working from home.

Supply chain issues didn't help, but it's not even clear if 2019 supply chains would have been able to keep up with the insane consumer demand of 2021.

[toomuchtodo]

> The whole "corporate profiteering drove inflation" narrative is/was entirely driven by click farming economically distressed people. It never was the case and even mild understanding of economics/finance quickly unravels the narrative.

My citation is the Kansas City Fed in case you missed it.

[Workaccount2]

If you read their research you will see that the reason corporations raised prices was because of future anticipation of costs rising - inflation.

https://www.kansascityfed.org/research/economic-review/how-m...

[toomuchtodo]

I have read it. Have they lowered prices? Or have they held them high because they can?

https://www.ippr.org/media-office/revealed-how-powerful-comp...

https://www.axios.com/2023/05/18/once-a-fringe-theory-greedf... ("In March, the chief economist at UBS Global Wealth Management, Paul Donovan, published a note on "profit margin-led inflation," describing how in late 2022 and into this year, companies — particularly retailers and consumer goods makers — convinced consumers that they needed to raise prices. (They didn't really.)"

https://www.interest.co.nz/business/122533/paul-donovan-what... ("Paul Donovan on what profit-led inflation is, how it happens and how to combat it")

https://www.federalreserve.gov/newsevents/speech/brainard202.... ("Retail markups in a number of sectors have seen material increases in what could be described as a price–price spiral, whereby final prices have risen by more than the increases in input prices."

https://www.nytimes.com/2023/07/13/business/pepsico-earnings... | https://archive.today/RgxsB ("Price Increases Lead to Big Jump in Profit at PepsiCo")

[Workaccount2]

Why would they lower prices if the market easily bore the cost of those goods?

Yeah of course corporations were racking in cash, so were consumers.

https://fred.stlouisfed.org/series/WFRBLN40059

https://fred.stlouisfed.org/series/M2REAL

[aaomidi]

Correlation vs causation is a helluva drug