Free money programs are likely to spur inflation if adopted at-scale and support crypto prices

The city of Compton, in Southern California, is the latest to experiment with what is essentially a Universal Basic Income program. The program, called the “Compton Pledge” will give 800 of its residents free money every month with no requirements whatsoever. While many nations have social assistance programs, they generally focus on people who are disadvantaged, or have dependents.

Compton Mayor Aja Brown commented,

“I recognized that there’s a need for additional income, especially with the pandemic resulting in record high numbers of unemployment throughout the entire country...People in our community are going through tough times, and I know that guaranteed income could give people a moment to navigate their situation, and have some breathing room to go back to school, explore a new career path, spend time with their children, or improve their mental and emotional wellbeing.”

Why it matters: The economic consequences to the political COVID-19 response are terrifying, and are going to play out over the coming years. Free money programs are a great way to keep the masses pacified, at least until the inflation demon comes to the party. By flooding the poorest areas of society with money that will almost certainly be spent immediately, these programs could cause an inflationary firestorm that could end many fiat currencies. For the moment, major currencies like the USD and EUR can be spend into the economy on a seemingly endless basis, but over time, these programs may help cryptos to fly up in price.

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