Universal Basic Income sounds like a really nice idea in theory. But if everyone was given $20,000, wouldn’t most of the value be wiped out by inflation and the cost of living increases?

No. Here’s why.

First, let’s rule out the usual argument for rising inflation. Many people assume that if everyone was running around with an extra $20,000 in their pockets, companies would just raise their prices to soak it up. This is called demand pull inflation . Supply and demand theory says that when demand rises, supply will rise to meet it. In the short run, prices may rise, but once supply rises, the market will reach a new equilibrium and prices will stabilise at the new, higher production rate. The period of demand pull inflation can be avoided by starting […]

Full Post at www.quora.com