Why wouldn’t the top 1/10th of 1% love a central bank-funded guaranteed minimum income?
It is widely assumed that the super-wealthy top 1/10th of 1% are against a guaranteed minimum income (GMI)Â (also known as guaranteed basic income or basic income guarantee) because this would somehow limit their wealth and power.
On the contrary–the top 1/10th of 1% are fine with a guaranteed minimum income for households, with one tiny caveat: as long as they don’t have to pay for it. But wait, you say: that’s the entire idea: tax the rich and redistribute the money to those below.
Ah, but you’re forgetting the magical power of central banks and treasuries of the world to create money out of thin air. As the top 1/10th of 1% understand, the GMI could be paid with freshly issued money–a method of funding that leaves the top 1/10th of 1% untouched beyond the taxes they already pay (substantial in many cases).
But wait, you say: printing and distributing helicopter money is highly inflationary. (Helicopter money refers to former Fed chairman Ben Bernanke’s famous claim that deflation could be reversed by dropping money from helicopters.)
Not only is printing money inflationary, it soon burdens the nation with crushing debts. So goes the conventional line of thinking: printing money is inflationary and borrowing money by selling bonds leads to crushing interest payments on the ever-rising debt.
But what if the conventional thinking is wrong? Consider the following thought experiment:
1. The central bank pushes interest rates to near-zero as a permanent policy.
2. The government funds a guaranteed minimum income (GMI) by selling $1 trillion in freshly issued bonds every year.
3. The central bank buys the $1 trillion in freshly issued bonds with $1 trillion in freshly issued money. This is known as monetizing the debt.
4. Five years later, the government declares a debt jubilee and voids the $5 trillion in bonds. In effect, the government defaults on the bonds.
