What would happen if everyone got 1000 USD every month?

[justusranvier]

Government choose taxation over monetizing operation costs because it allows them to influence (manipulate) via tax policy.  With indirect "taxation" via inflation the effect is universal (i.e. solar panels rise in price as much as crack cocaine does).

The reason they don't try to fund their spending entirely through inflation is because the population would never tolerate it. They'd dump dollars and look for alternate places to store their savings (see Argentina).

The only way the government can spend 25% of GDP is to get control of as many income streams as possible at their source, and to implement capital controls.

[DeathAndTaxes]

Agreed.  My post was getting long so it shouldn't be considered an exhaustive analysis of governmental policy.  There are numerous other reasons why taxation, especially via multiple methods is preferred.

[casascius]

Hey,

I didn't study economics, but I always was interested. With all the discussions about how fair things are these days I wonder whether a system where every single person would receive 1000 USD (like direct from the printing press) could improve things. I am not talking about minimum wage or whatever.

For illustration purposes, join me on a brief journey of the imagination. One beautiful morning, you wake up and realize that you own twice as much cash as you had just last night. Magic money elves entered your home and bank account and simply doubled your entire cash assets. You’re now twice as wealthy (or half as poor as the case may be)...

http://www.ronpaul.com/on-the-issues/fiat-money-inflation-federal-reserve-2/

[phelix]

possible duplicate of https://bitcointalk.org/index.php?topic=109958.0  ( Basic income guarantee - opinions&criticism welcome)

from there:

[...]
I welcome it in a very pragmatic sense for drastically reducing bureaucracy of our social system (only in theory though... we're in Germany after all  ). I furthermore welcome the idea of eliminating existential fears, which I'm confident will create a better and more human standard of living with more care and happiness, and I do believe (unlike most libertarians) that a society with insufficient equality can not realize its full potential.
[...]

this

Bureaucracy is growing like cancer in Germany and is already suffocating the country. Like many things the welfare system is just too bureaucratic. There does not have to be a difference in the financial result for anyone compared to the current situation, basic income would just make things much easier and probably also have some positive psychological side effects.

Of course there needs to be something (majority vote?? ??) to keep the basic income from ever increasing.
[...]

so what would happen? if done right it would make the social system more efficient and make people happier. but the chance of politicians abusing it is quite high ("vote for me and I will double the basic income").

[FreeMoney]

For anyone who thinks this would not be harmful, what is the problem (if any) with giving $10000 or $100000/mo?

[DeathAndTaxes]

For anyone who thinks this would not be harmful, what is the problem (if any) with giving $10000 or $100000/mo?

Or just make the minimum wage law $100,000 per year (and while your at it tax income at >$100,000 at 100%).  See the government doesn't own the means of production, it is still capitalism right?

[enquirer]

Many people would take $1000 and quit their jobs, maybe most people

[johnyj]

Many people would take $1000 and quit their jobs, maybe most people

Won't be most of the people, only those people with bad paied jobs

[nebulus]

A Super-Duper-Hyperinflation and consequences of thereof...

[johnyj]

Money isn't wealth.  Increased money doesn't result in increased wealth.  Money is merely an accounting system.  Increased Productivity results in increased wealth.   You can't produce wealth by merely changing the accounting "rules".  All you are doing is moving wealth from one person to another.  The net effect is zero.

This is mathematically correct, but time is missing in the formula, increased money supply normally do not reach everyone of the society at the same time

Money is a driven power, it drives activities where it flows. Everyone have experienced this: It is the area with most of heavy investments created most job, and those job will in turn result in more produced goods and services. And this is especially clear in a society with high jobless rate

Printing money and give it to everyone at the same time seems will lift the price of every thing, but that is not exactly true either, since some people will save some of that extra income

[johnyj]

Increased money supply will not directly result inflation, because there are two type of requirements of money:

1. transaction
2. saving

The first requirement is related to the produced goods and services in the whole society

The second requirement is much more complex. It varies a lot. During bad times, people tends to save a lot to deal with the bad perspective. And even during good times, people still save for the uncertain future, and this saving can continue endlessly (seen those people with lot's of heritage?), which dry up the money supply constantly

Banks will lend those saved money out, but in bad times, they could not lend that much, even in good times, they have to keep some reserve, saving anyway have an impact on money supply

Back to the topic, if everyone get $1000 per month, there will still be some people save part or all of that money, so the inflation will not be that significant

Inflation is a difficult topic, because it is dynamic. Technology advance will always create a downward pressure of price and increased money supply will counter this effect

Print and give me one thousand dollar, I put it under matress and I can guarantee it won't create any inflation for the society 

[FreeMoney]

Printing money and give it to everyone at the same time seems will lift the price of every thing, but that is not exactly true either, since some people will save some of that extra income

Surely some people will save more, but on the whole people will flee from saving in a unit that is being debauched. Unless it can be done in a way that gives credibility to the notion that it will not be done again (highly unlikely) prices will rise by more than the increase in the supply. The existence (or lack of) of alternatives is an enormous factor as well.

[myrkul]

What will happen?

[nebulus]

Increased money supply will not directly result inflation.

Oh, yes, it will and here is why.

Take for example state of Georgia where minimum wage is less then $5.15. A person who earns that for living and works full-time makes about $824.00 a month. The $1000 incentive gives him a pretty good reason to quit his job. You can say that a person might keep his job after he receives the check. I highly doubt this though. In my experience, people usually choose their dignity if circumstances allow. Who would want to work a crappy job if they have money rolling in guaranteed?

Now, a person who makes minimum wage usually works somewhere maintaining a business asset (cleaning it or what have you). If a whole bunch of people leave their jobs or posts rather, a whole lot of business assets are going to be unattended losing value even faster. I hope I do not have to illustrate the connection between inflation and asset devaluation to prove to you that you're wrong.

[Luno]

Consumer prices would rise.

When NATO soldiers take time off in a small city, in their country of occupation. Local shop owners bump their prices to meet the extra demand - and the local starve as their living costs have risen.

Ten years ago, we started getting a yearly October "childrens-cheque", around 300$ pr. child in every family. It was thought like a tax break for families. in reality the retailers go into Christmas overdrive late September and we have two extra months with elevated prices. So the market adjusts to higher purchasing power with higher prices. Government get most of it back in sales taxes and employment in retail get a boost, but the families don't have more purchasing power than before. Poor families have a benefit as they extra money are used on basics.

So if you gave everybody 1000$/month it would just be inflation, prices would adjust and some businesses would make some extra profits the first months, but no one would get richer or gain a better standard of living. It's just like changing the denomination of a currency, everybody are now "Cents millionaires"..

Export of goods and services, and national natural resources gives wealth to society. Money are only for playing monopoly.

[andrew12]

This would completely devalue the USD and make coins completely worthless. The paper that is used to make a dollar bill will probably become worth more than the dollar itself.

[johnyj]

Printing money and give it to everyone at the same time seems will lift the price of every thing, but that is not exactly true either, since some people will save some of that extra income

Surely some people will save more, but on the whole people will flee from saving in a unit that is being debauched. Unless it can be done in a way that gives credibility to the notion that it will not be done again (highly unlikely) prices will rise by more than the increase in the supply. The existence (or lack of) of alternatives is an enormous factor as well.

This is very true, but I think the people's believe in USD is still mainstream

[johnyj]

What if we say like this: You get $10000 dollar for free each month, but you must guarantee that you don't make inflation rate higher!

And we tell you that inflation rate is measured by calculating the price of a basket of goods, so please do not buy any goods in that basket with your free money

You end up buying a house instead 

[DoomDumas]

Money is evil, Capitalism, Socialism, FreeMarketism, any-money-involved-ism is can't be a good way to manage peoples, population.  Go read about RBE (Ressource Based Economy) - the only way I know that could be sustainable, durable, and good for each and every earthling.. To acheive it, we must first make big change in our value.

[myrkul]

Money is evil, Capitalism, Socialism, FreeMarketism, any-money-involved-ism is can't be a good way to manage peoples, population.  Go read about RBE (Ressource Based Economy) - the only way I know that could be sustainable, durable, and good for each and every earthling.. To acheive it, we must first make big change in our value.

And our population. Kill 'em all!