Completely support a “MMT UBI,” for many reasons. https://twitter.com/frfriedpotaters/status/1277776595948834816

The history of printing money for government spending goes back at least as far as late Rome, and is particularly common in times of war, causing the historical phenomenon of wartime inflation.

So the MMT “proposal” of printing for spending is not new.

What’s new is that ever since Japan’s deflationary crash in the late 80’s, economists have been puzzling over the stalking threat of deflation, which the Keynesian framework doesn’t account for.

Unfortunately, MMT also does not attempt to explain the reasons for persistent deflation, being content instead to use the “lucky” situation to push deficit spending and FJG. “Don’t worry!”

Austrian economists, OTOH, suggest we should embrace deflation as friend, not foe.

The reason for persistent threat of deflation is simple. If you imagine the economy as a production machine, productivity growth reduces the size of the labor input required.

Unfortunately, “exogenous” to the machine and to most economic theories, the labor input hooks up on the other side to the production output when consumer/workers by the goods and services produced.

This is the “Watts Factory Effect.”

We’ve automated the “factory”, “laid off” the workers (not really, they’re still allowed to work, but since they’re not actually needed much, their wages are really low), and now we’re confused why noone’s buying the products and the “factory” is never busy.

It’s no coincidence that the 19th century, when the Industrial Revolution and associated productivity growth really took off, is also the same time period that we began to see secular deflation under the gold standard.

To this secular deflation in prices, we add the bidirectional self-reinforcing “Paradox of Thrift/Paradox of Plenty,” which works through the positive feedback loop of labor input connected to production output through the spending of the consumer.

As labor income decreases, the consumer is able to spend less, which decreases the workload of the “machine,” thereby reducing labor input further, causing labor income to decrease even more.

This trend eventually accelerates into a crash, giving us the Great Depression.

It’s reversed by progressive economic reform (redistributive/distributive policies), which reflates the consumer and reverses the operation of Paradox of Thrift/Paradox of Plenty.

As consumer income increases, increased consumer spending puts “the machine” back to work, causing labor income to increase again, allowing consumer spending to increase further.

This continues until the 70’s, when spending bumps up against the productive capacity of the time, causing inflation, before the deflationary force of productivity growth on labor/consumer takes the upper hand again, bringing us back into the Paradox of Thrift part of the cycle.

We’re now entering the crash phase of the Capital-Consumption Cycle, as aggregate demand and labor demand crash together.

Only reflating the consumer with UBI fixes the crisis.