Universal Basic Income (UBI) has recently been gaining traction. Arguments exist on both sides in favor of and against it. Like any other financial tool, UBI can be useful if used with discretion. This paper seeks to clarify how UBI affects the economy, including how it can be beneficial. The key point is to regulate the rate of UBI based on the inflation rate. This should be done by an independent institution from the executive branch of the government. If implemented correctly, UBI can add a powerful tool to the Federal Reserve toolkit. UBI can be used to reintroduce inflation to the countries which suffer long-lasting deflationary environment. UBI has the potential to decrease the wealth disparity, decrease the national debt, increase productivity, and increase comparative advantage of the economy. UBI also can substitute the current welfare systems because of its transparency and efficiency. This article focuses more on the United States, but similar ideas can be implemented in other developed nations.
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