Posted To Mish Shedlock’s Blog 07/09/2018 Regarding UBI

Me:  Too many misconceptions, orthodox blindness and wrong headedness for me to address all of them here. UBI must be paired with an additional policy of a high percentage discount/rebate policy strategically implemented at the point of sale throughout the entire economic process and also at final retail sale which just happens to also be the terminal expression point for any and all forms of inflation….thus eliminating any possibility of inflation and actually implementing what Austrians say they want to see, namely price deflation painlessly and beneficially integrated into profit making systems. Not looking at the temporal universe effects of this additional policy….doesn’t change the truth about it.

MS:  Good Grief – Austrians do not seek price deflation. They seek a free market in currency without government interference. You propose intervention madness. By the way, inflation is not really about prices. So you are off the deep end in many ways.

Me:  It doesn’t matter your opinion about inflation is….only that its terminal expression point is final retail sale. And you and Austrians are always barking about how deflation would be good because it would get rid of malinvestment. I’ve seen that expressed so many times here I can’t count them.

The answer to any and all inflation is the second policy of a 50% discount/rebate at the point of sale and final retail sale. The point of sale is the self determined totaling of all costs for any item or service plus profit margin. Hence if you implement the above policy at that point and require that the consuming business “pass on” that discount to their customer in order to receive their rebate of it back by the monetary authority…you’ve linearized a 50% discount to prices throughout the entire length of the economic/productive process and also doubled the $1000/mo UBI…as well as everyone’s purchasing power that they’ve earned from work for pay. When was the last time any economist or pol has doubled everyone’s income and consequently the total free and available demand for every business’s product and service??? If everyone 18 and older has $24k/yr and $64k if they have a part time job making $20k/yr…what is the reason to have transfer taxes paid by both businesses and individuals??? Or for social secuity for that matter after some form of phase out. As for all of the concern about everyone becoming lazy, if this were going to be true except perhaps for a smallish percentage, the wealthy would have killed themselves long ago. It’s just an unconscious fear that is irrelevant because the set of positive and constructive purposes is larger than the set of purpose through employment only, and if we grew two neurons and had a cooperative effort by the clergy, helping professions and the government to acculturate and guide the populace toward leisure, which is not idleness, but rather self chosen focused and attentive activities…we’d have a much happier, healthier and creative society than we have now…and much more prosperous too.

CO:  Robbing Peter to pay Paul, no matter how it is framed, will not ever lead to a more prosperous society. The number of votes the scheme buys before all Peter’s in the world close shop is another matter.

Me:  The policies I advocate are not socialist/re-distributive but rather directly distributive but implemented at the point of retail sale in a digital manner (equal amounts of debits and credits sum to zero thus a 50% discount followed by a 50% rebate back to the discounter enables the business to be whole on his overhead payments and profit margins and the consumer’s purchasing power is doubled. And taxes can actually be lowered instead of increased.

CO:  I fail to see how the “monetary authority” injecting 50% new money into the economy with retailers on each transaction at the point of sale solves any problems. If anything, that sounds like a good way to make all prices double overnight, and then again the next night, and then again the next night after that…

Me:  Simple, if you get a 50% discount from your vendors and do not pass it along…you don’t get any rebate….while just one of your competitors does pass it along….and your customers don’t buy from you anymore because they can get what they need from someone whose not an anti-social idiot like you. The rules for such a policy would have incentives to honestly participate….and punishments for stiffing your customers even though your vendors gave you a 50% discount on your costs from them. And even if there was 2-3% inflation because of cheating…you just tweak the discount percentage at retail to insure a 50% or more reduction in price and hence a doubling of every individual’s purchasing power.

DN:  The industry rationalizing the last 100 years of monetary idiocy (where banks could create from thin air an “asset” on which they charged rent) can just as easily rationalize something as foolish as the UBI.

There’s a special place in Hades for those who claim that without such “credit-from-nowhere” schemes an economy would be starved for investment capital. Their view supports the idea that an economy should be governed by positive feedback loops. Engineers weep.

Me: Fiat is here to stay, gold bugs and libertarian fantasies of being able to cost cut our way to a free flowing economy to the contrary. The one thing no economic theorist on the left or right is willing to look at and see is that because of the ever increasing depreciation costs of fixed capital facilities there is no way to have a stable modern economy without monetary gifting being integrated into the debt based money system. Engineers….and everyone else must weep….until this reality is recognized and acted upon.

S60:  Over 1.2 million people emigrated from Zimbabwe in 2010 alone, out of a population of 12.5 million. 9.9% of the population according to the World Bank. Desperate people will go looking for food regardless of pride.

Me:  The reason Germans didn’t emigrate was because Hitler spent money into the economy and built infrastructure and a military and so made things good for Germans. If Hitler hadn’t been a homocidal maniac he probably would have been the greatest German leader of all time. Of course his reich wouldn’t have survived any longer than Keynesianism has because he didn’t know how to implement the new economic paradigm of Direct and Reciprocal Monetary Gifting at the point of retail sale.

SG:  There was at least a 10-year gap between the Weimar hyperinflation of 1923 and the Nazi ascension to power in 1933, let alone any measurable economic effect of NSDAP policies.

Me:  Yes, along with riots in the street and the formation of the Nazi party, however, Germany still retained its productive capabilities and the Weimar Republic DID inflate its way out of the onerousness of the Versaille treaty which was the point of the hyperinflation. The point of positive if temporary effects of government economic stimulus also remains the same.

MS:  The “WindowCleaner” seems like a resurrection of “Mr. Give the people a dividend” What was the name? I forgot.

Me:  Who I am is irrelevant to the truth that a 50% discount/rebate policy at the point of retail sale would double everyone’s purchasing power while also absolutely ending inflation and in fact miraculously integrating price deflation into profit making systems and just as a “kicker” implement the new monetary paradigm while ending the rule of the current one that has afflicted human civilization for like 5000 years. Look at the temporal universe effects of the policy Mish instead of not looking at it. Realize that the discount/rebate policy is in the intersts of both the individual (increased purchasing power) and enterprise (twice the demand for their product) and is an offer they cannot refuse….unless they want to make their customers pay the full price for their products and services while their competition will only be charging 50%. They can not participate….right up until they go out of business in like a couple of months.

SG:  Riiiiiiggght …. but the lack of German emigration had absolutely zero to do with alleged Nazi economic success that occurred no earlier than 13 years after the hyperinflation, which was your original point. Glad we now agree on that salient fact.

Me:  You’re correct, but it’s a minor point. What’s important is Mish asserts in his original post that Turkey will have a mass immigration which is not a fait accompli merely a possibility. And of course none of this invalidates anything regarding the dual policies I advocate to right ourselves from our inherent economic and monetary instability. You’re good at spotting inconsistencies. Are you just as good at looking at temporal universe policy effects?

MS:  (In Venezuela) Gasoline is priced well under the cost of production. The black market siphoned off most of the supply which soon collapsed.

Me:  Of course discounting your primary national resource without rebating it back to enterprise is idiocy. And over all Venezuela’s productive facilities are crappy on top of that so it’s a no brainer that the country is a basket case. But if you had a sane policy like the discount/rebate and even a half decent productive capability you’d have the very definition of economic good times, i.e. lots of demand and low prices. In fact with those two policies the US could quickly re-industrialize in the most efficiently productive and ecologically sane fashion and you wouldn’t have to worry about unemployment because the utterly sane and necessary paradigm of monetary gifting would compensate for it. In fact the additional demand would make investment in things other than financial vehicles very good so you’d undoubtedly have more employment than if you didn’t implement those policies on top of everything else….like the complete elimination of transfer taxes for welfare, unemployment insurance and social security,and the slashing of income taxes that would result as well. So many good things for constituencies on the left and the right. Integration of opposites….it’s a primary signature of a paradigm change.

 

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