A decentralised Universal Basic Income platform based on personal currencies
UBI proponents should be cognizant of stagflation. During the 1960s and 1970s, demand-side fiscal policy was based upon the Phillips curve, an observed correlation between low interest rates and low unemployment. After the oil supply shocks, this observed correlation began to break down as interest rates were lowered to compensate for the rise in fuel costs. By the late 1970s the US was experiencing stagflation, a combination of low interest rates, high inflation, and high unemployment, which should have been impossible according to the Phillips curve.<p>In reality the Phillips curve was too simple. What was happening was that since wage increases came to be anticipated due to the consistent low interest rate&#x2F;moderate to high inflation environment, producers would preemptively raise prices to soak up all of the wage gains. This led to a wage&#x2F;price spiral with no actual improvements in productivity.<p>Eventually stagflation was ended by dramatically raising interest rates and triggering a nasty recession.<p>UBI could lead to stagflation because the income allotments and any increases would be according to some formula known ahead of time. This means that producers could anticipate demand and simply raise prices to soak up any income increases.<p>Something to keep in mind when devising these systems.