For a reductio ad absurdum that might illustrate where your analysis falls down, consider how someone with net worth of $0 and someone with net worth of $100k would each be differently affected by getting a $5k handout, accompanied by a 10% decrease in the purchasing power of a dollar. The end result is not the same as the status quo.
The intent is not to make everyone richer, but to redistribute wealth in an equalizing direction. (In fact this might also make everyone slightly richer on average in real terms, because of second-order effects related to economies of scale that make it slightly easier to meet the growth in demand when wealth is distributed more evenly).
Of course, the decreasing value of the dollar is an undesired side-effect of any government spending; this is why you counterbalance it with taxes to pull money back out of the system and control price growth. These taxes don't exactly cancel the UBI if they disproportionately fall on the wealthy; this is why I like consumption taxes, which fall more heavily on people who have more money to spend.
To clarify. If everyone in the US is given an extra 5k a month do you believe that the price of goods and services remain the same as they are at present?
If my landlord is charging me 2k for rent, does she not increase it knowing I now have an extra 5k of UBI monthly?
Or, if there’s a bidding war on a home that might typically sell as high as 300k, does that still hold true now that everyone has an extra 5k, or does the house sell for more?
Will a plumber still charge $30 an hour when he has a guaranteed 5k on top of what he’s making? Or will he start to bump his price up to make it worth his while?
I really don’t see how prices don’t just climb and re-equalize so that we’re back at square one. And your response didn’t address that concern.
There's a lot to unpack here, so I hope you don't mind a long and nuanced reply.
UBI on its own is obviously inflationary, like any other government spending. But it can be combined with taxes to reduce the growth in the money supply, as necessary to keep prices stable. Those taxes will tend to be aimed at the wealthy, and will take more than $5k/month away from them, so people bidding for a $300k home might have less purchasing power, not more.
But also, AGI-fueled unemployment is likely very deflationary, and that is the premise of this conversation. Let's talk about your landlord's situation. Sure, your tenant is now getting $5k/month UBI, but they've also lost their job, and so has most of the population. There might not actually be more juice to squeeze out of that lemon than there used to be. Plus, workers won't be bidding up rents in (formerly) high-wage cities for jobs that don't exist anymore. Your unemployed tenant is only staying in town because they like the weather. They could move elsewhere if you charge too much rent; it won't affect their commute.
The effect on prices will really vary a lot by type of good. For things that get effectively automated by AGI (let's say, for example... legal services and architectural drawings), the price may drop precipitously due to increased productivity. For other things (plumbing), the price would go up a lot. It would become quite rewarding to be a plumber.
Lastly, depending on the types of goods demanded, prices can be quite stable. If you give everyone $1k and they use it to buy an iPhone, the price of iPhones might not even go up that much, because it gets cheaper to produce in large quantity. In fact, they may even get cheaper. However, if you give one person $100M and they use it to buy a yacht, you don't get the same efficiency benefits from economies of scale. A more even wealth distribution favors mass production of goods, which keeps prices low.
We don't end up back at square one because:
1) The goal of UBI isn't to make everyone $5k richer, but to shrink the gap between rich and poor in a world where a few people are very rich from owning capital and many are poor due to a decrease in demand for labor.
2) We don't end up back at square one because at the end of the day, an unemployed person getting $5k/month has more purchasing power than if they got $0/month, even if prices do increase.
3) But aggregate prices don't even necessarily have to increase, because of changes to taxes and productivity, and also because of economies of scale.
Prices would climb, but not "re-equalize." Let's say everything got 2x more expensive. People currently making very little could still afford much more. People currently making a lot could afford less.
Right now you are correct that giving everyone 5k would not produce more stuff so the dollars would devalue.
The idea however is that at the same time as giving everyone 5k, AI workers would produce more than an extra 5k/head of stuff.
As an alternative having the AIs produce all the cars and houses we need but giving all the money to Sam Altman wouldn't make sense as no one would have the money to buy them apart from Sam who couldn't use them all.
The intent is not to make everyone richer, but to redistribute wealth in an equalizing direction. (In fact this might also make everyone slightly richer on average in real terms, because of second-order effects related to economies of scale that make it slightly easier to meet the growth in demand when wealth is distributed more evenly).
Of course, the decreasing value of the dollar is an undesired side-effect of any government spending; this is why you counterbalance it with taxes to pull money back out of the system and control price growth. These taxes don't exactly cancel the UBI if they disproportionately fall on the wealthy; this is why I like consumption taxes, which fall more heavily on people who have more money to spend.