A Way to Fix the Economy: Not the UBI, but the TUBI

A seemingly boring, but revolutionary, idea to save the American economy from Depression.

After the recent panic selloff in the stock markets, the country as a whole became several trillions of dollars poorer. Granted, it was as if your 401k dropped precipitously — meaning that it was not money in your wallet that was suddenly significantly less… much of it was money that wasn’t necessarily active at the moment in the purchase of goods or services.

However, just as when you see your 401k plummet, it’s certainly disconcerting to see the stock market shed trillions of dollars in value.

So, can we fix it? Sure.

First here’s what not to do: give everyone a quick $10,000. You could do that, but you’d turn the U.S. into Venezuela practically overnight. Hyperinflation would turn America into a third-world hellhole fast enough to make your head spin.

You could, though, do something that I’m going to call: TUBI.

Everyone’s heard of the UBI — the Universal Basic Income.  

The Universal Basic Income is a plan under which every American would receive “from the government,” no strings attached, some amount of money each month, to help smooth over the inevitable economic vicissitudes of participation in a market economy. No less than Milton Friedman looked favorably on the idea. Some countries, and even some American jurisdictions, have tried it on a limited basis, and all have abandoned it. It didn’t work, at least as these experimenters executed it.

I propose, however, the TUBI: the Temporary Universal Basic Income.

Here’s how it would work:

  • The federal government would print and distribute “TUBI Cash.
  • TUBI Cash is cash (it’s important that it be cash for reasons that will become apparent). It’s cash with a significant difference: It’s cash with an expiration date. Let’s call it a year. I’ll just throw some numbers out there, because the bankers, accountants and other bean counters would have to calculate the real numbers. Here’re the details:
    • Let’s say that every American citizen(1) gets $1,000 of TUBI Cash each month for a year. Not enough to live on certainly, but enough to get many millions of people through the upcoming rough patch that today’s financial turmoil will bring.(2)
    • TUBI Cash would have the following characteristics:
      • TUBI Cash would be legal tender for all legal transactions between people or non-bank businesses, but could not be exchanged legally at a bank for regular cash. It absolutely could be exchanged for real cash, without restriction, in transactions between people, though there would be little incentive for the holder of standard cash to exchange it for TUBI Money.
      • Banks could not use TUBI Cash for any purpose– except for some exceptions explained later on — but would administer the TUBI program.
      • Banks and financial institutions would not be able to count TUBI Cash on any balance sheets, or as an asset in any way. (In other words, if someone were to rob a bank of all its TUBI Cash, the bank would not suffer a loss — again with one exception, explained later — nor would it need to file an insurance claim because it would not have lost an asset.)
      • Only non-bank businesses and citizens could use TUBI Cash for any transactions, and these transactions would not be restricted as to their nature.
      • TUBI Cash could not be deposited into any bank or financial institution, or into a savings, checking or investment account of any kind, for any reason. TUBI Cash has one purpose: to be spent, not saved. To generate economic activity as soon as possible after it’s produced.
      • TUBI Cash could be used by private non-bank businesses or citizens to purchase any legal goods or services, without restriction.
      • TUBI Cash could be used legally to pay down a debt or revolving credit of any kind.
    • The program is scheduled to last exactly one year, but would work in the Money Supply for two years, and it could be renewed or extended easily at the expiration date if necessary.
    • There would be no incentive to hoard TUBI Cash, to the contrary, there’s every incentive to spend the TUBI Cash, because it will expire in a year. Therefore, people would spend it. Often when there’s serious economic turmoil in an economy, millions of people cut their spending to a bare minimum, thereby causing the gears of economic dynamism to grind to a screeching halt. TUBI Cash’s expiration date would guarantee that would not happen.
    • Moreover, since 1/12th of the TUBI Cash supply expires each month, spending would be fairly evenly spread over the entire first year of the program and the second year of the program’s impact. This would eliminate sharp consumer spending spikes and dips.
    • Furthermore, TUBI Cash would allow people to keep more of their actual traditional savings, leaving them better positioned financially when the national economic rough spot turns around.
    • This program would “cost” about $330 billion per month, or $4 trillion in total. That’s about the amount of money lost (so far) by the stock market in the recent selloff, and the reason for the $1,000 figure at top.
    • Importantly, the government would print TUBI Cash monthly, and each bill would have an expiration date exactly twelve months out from day one of the month in which it’s printed..
  • More about TUBI Cash:
    • On day 365 of the first year, government distribution of TUBI Cash would cease.
    • Near the eleventh month of the program, people would notice that their older money is about to expire, and would have an incentive to spend it more quickly. Or, they could exchange it, on a 1:1 basis at a bank for standard cash.  But only in the eleventh month of a TUBI note’s lifetime. Note: In the eleventh month of a TUBI note’s lifespan, it could also be exchanged for standard cash, then deposited into a checking, savings or investment account if the holder wishes.
    • They will be able to do this with any TUBI Cash in their possession that is in the eleventh money of its designated lifespan. 
    • Eleven-month old, or expired TUBI Cash in a bank’s possession, would then have only one legal use: to be exchanged with the central bank for standard money.
    • In this way, the inflationary pressures exerted by the gradual injection of four trillion dollars into the economy would begin automatically and gradually to decrease; and would diminish by exactly 8.3% each month. (1/12th of the TUBI Cash expiring each month, exiting from the Money Supply, and tightening money.)
    • In this  way, at the outset of the TUBI Program, The Central Bank would have a bunch of new “free” money in its “inventory;” it would distribute that “inventory;” it would then regain that “inventory;” and it would then destroy it… almost as if it had never been there  in the first place!
    • Now, what happens as we near the end of year two of the TUBI program, and the end of the TUBI program itself? Well, a certain amount  — less than 12th — of soon-to-be expired TUBI Cash will still be in circulation. If people are unable to exchange their TUBI Cash before it expires, they can still exchange it after expiration at a bank — only at a bank — for 80 cents on the dollar of standard money. In this way, some of the banks will realize a small windfall.
    • By day 365 of year two:
      • All $4 trillion of the TUBI program will have gradually entered into the money supply, 1/12th at a time.
      • It’ll have produced guaranteed economic activity and, of course, introduced some inflationary pressures.
      • And it’ll have then gradually exited from the money supply, thereby eliminating all the inflationary pressures it brought with it.
      • Economists believe that one dollar generates about seven dollars of economic activity — that is: a dollar is exchanged about seven times for goods and services over its lifetime. The lifetime of the various notes in existence varies, but the expiration date on TUBI Cash would accelerate its movement through the economy. I was thinking of referring to it as Rapid Circulation Currency (RaCiCur?), because it would generate economic activity much more quickly than standard currency. If over its lifetime Rapid Circulation Currency returns to the economy about the same amount as regular currency, then the $4 trillion that the TUBI program cost should put about $28 trillion worth of economic activity back into the economy.
      • Assuming that inflationary pressures exerted by the program are not overwhelming (a vitally important assumption to test and monitor, by the way!), this would be a very, very good program for America indeed.
      • However, even if over the life of the program, inflation were to cause TUBI Cash to lose half its value, then the $14 trillion of contribution to the economy would still mean that the program was well worth it.

Important Note: The numbers I used — the duration of the TUBI program itself, the amount each American citizen would receive, the duration of the lifespan of TUBI Cash, the exchange rate for expired TUBI Cash– are all off-the-cuff quantities, used only for the purpose of easy illustration.

Each value would need to undergo careful scrutiny, and be assigned a real value, in line with the imperative that the program generate the maximum benefit for the most people, along with the greatest possible contribution to the economy of the nation as a whole.

So, what do you think?

TUBI or not TUBI… that is the question.

— xPraetorius


(1) Only American citizens, of course. If non-Americans were to receive TUBI Cash, then nothing in the world would stop them from swamping the border, and destroying the country.

(2) As mentioned in the previous note, the real amount might be $1,500, or $500, or something else. I used $1,000 to make things easier and, as you’ll see, to do some numbers balancing with the amount of money lost in the recent stock selloff.

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