Re:Trends that will create demand for an Unconditional Basic...
by dllthomas on Thursday July 11, 2013 @04:23PM
(#6028955)
It should grow with inflation, but not necessarily automatically with CPI.
My quite tentative, back of envelope analysis:
If it grows at a fixed rate, then when inflation outpaces it we will see the real value shrink. Since a larger BI is likely to be inflationary, this shrinkage would lead to some deflation (or at least reduced inflation), which will grow it again. Hopefully this would act as some stabilization and give the Fed a hand at targeting a particular rate of inflation, and a predictable rate of inflation seems to be what's best.
My quite tentative, back of envelope analysis:
If it grows at a fixed rate, then when inflation outpaces it we will see the real value shrink. Since a larger BI is likely to be inflationary, this shrinkage would lead to some deflation (or at least reduced inflation), which will grow it again. Hopefully this would act as some stabilization and give the Fed a hand at targeting a particular rate of inflation, and a predictable rate of inflation seems to be what's best.