Money creation

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Money creation is a very relevant to basic income.

C. H. Douglas in Money and the Price System says (page 15):

"We believe that the most pressing needs of the moment could be met by means of what we call a National Dividend. This would be provided by the creation of new money—by exactly the same methods as are now used by the banking system to create new money—and its distribution as purchasing power to the whole population. Let me emphasise the fact that this is not collection-by-taxation, because in my opinion the reduction of taxation, the very rapid and drastic reduction of taxation, is vitally important. The distribution by way of dividends of a certain amount of purchasing power, sufficient at any rate to attain a certain standard of self-respect, of health and of decency, is the first desideratum of the situation."

Such a scheme might be implemented today in the United States by directing the Fed to create a Basic Income in the form of deposits for individuals, on its own balance sheet, at zero cost to taxpayers.

To hedge against possible unexpected inflation, the Monetary Policy Objectives of the Fed (in Section 2A of the Federal Reserve Act) should be changed from:

"The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."

to, simply:

"The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain purchasing power."

The Fed can maintain purchasing power by indexing all incomes seamlessly, automatically, and immediately to price rises. Purchasing power thus does not decrease. In the unlikely case of runaway, or hyper, inflation, debit cards can be denoted in units of purchasing power. Inflation essentially disappears.