A Universal Basic Income (UBI) Funded by Central Bank Money Creation: A Closer Solution to Global Crises

Global economic issues such as crises, unemployment, and disparity require innovative solutions that can address their root causes. Among various economic philosophies, the concept of a Universal Basic Income (UBI) has gained significant attention. However, traditional approaches to funding UBI, like taxation, may not fully capture the essence of a sustainable and equitable solution. An intriguing alternative involves using central bank money creation to fund such income.

Traditional UBI Proposals and Their Limitations

Most UBI proposals advocate for financial support from government tax revenues. While this method ensures a stable funding stream, it may also imply a higher tax burden for citizens, which could stifle economic growth. Additionally, tax-based UBI schemes can lead to redistribution inefficiencies and do not directly address the underlying issue of economic resource distribution.

Central Bank Money Creation: A New Approach

A more innovative solution lies in leveraging central bank money creation to fund UBI. Central banks have the authority to create money through mechanisms such as quantitative easing (QE) and open market operations. This method of funding UBI eliminates the need for tax-based revenue and offers a more direct approach to ensuring financial resources for all citizens.

Implementation of Central Bank-Funded UBI

The central bank can initiate a program to distribute UBI to every citizen, starting with a small weekly payment, say $20. As the economy approaches full employment, the payments can gradually increase. At this equilibrium point, resources should be fully utilized, and any further increases in UBI could lead to inflation and a shortage of labor, while decreases could lead to increased unemployment and reduced consumer spending.

By providing a basic income without the stigma of welfare, citizens can have enough financial security to pursue other interests or business opportunities, thereby stimulating the economy. This dynamic UBI system can help achieve a more balanced and stable job market, reducing the risks associated with over-reliance on traditional forms of employment.

Addressing Economic Disparities and Inflation

Unequal wealth distribution and economic disparity continue to challenge societies, but the real issue lies in the insufficient income available to the majority of the population. The key to reducing economic disparity is ensuring that the basic needs of all citizens are met. A UBI funded by central bank money creation could go a long way in addressing this problem, providing a safety net for those in need.

While the rich may own significant assets, these are often used to create wealth for the collective benefit. The actual resources consumed by the wealthy are minimal, and most of their wealth is tied up in businesses and enterprises that serve the broader community. The true problem is not that the wealthy have too much; it is that the poor have too little. Ensuring a basic income through central bank money creation can provide a substantial boost to those who need it most, thereby alleviating poverty and economic disparity.

Additional Measures to Address Incentive and Addiction Issues

While a UBI funded by central bank money creation can significantly reduce poverty and unemployment, it is not a one-size-fits-all solution. Challenges such as drug abuse, addiction, and mental health issues still require targeted interventions. Combining UBI with additional social welfare programs and support services, funded through tax revenues, can help address these issues more effectively.

Conclusion

In conclusion, the use of central bank money creation to fund a Universal Basic Income offers a compelling and innovative solution to the complex economic challenges facing our world. This approach not only addresses immediate economic disparities but also fosters a more balanced and prosperous society. As the world continues to navigate economic crises and inequality, central bank-based UBI deserves serious consideration as a transformative policy tool.