It’s a paradox that keeps economists up at night: the world’s most economically developed nations, often considered the wealthiest, are simultaneously the most heavily indebted. Think about it – countries with robust infrastructure, advanced technology, and high living standards are teetering on mountains of unsustainable debt. This isn’t just a fiscal challenge; it’s a symptom of a deeper structural shift, and it’s leading us towards a financial future more alien and orchestrated than many realize.
At the heart of this dilemma, as brilliantly explained in a recent video by Miles Harris, is the fundamental mechanism of debt management. For decades, the golden rule has been simple: keep nominal GDP growth consistently above interest rates, and your debt-to-GDP ratio remains stable. Economic growth, fueled by production and consumption, essentially “grows” the economy out of its debt.
But this golden rule is under unprecedented threat. The rapid acceleration of automation and artificial intelligence isn’t just changing industries; it’s fundamentally altering the labor market. As machines and algorithms take over tasks, wage stability for human workers is eroding. This isn’t just about job displacement; it’s about a downward pressure on incomes, leading to weakened consumption – the very engine of GDP growth.
If wages stagnate and consumption falters, the ability of nations to grow their way out of debt disappears. Interest rates, even at low levels, can quickly outstrip anemic GDP growth, sending debt-to-GDP ratios spiraling upwards towards an inevitable breaking point.
Enter Universal Basic Income (UBI) and similar income support programs. Historically viewed through the lens of social welfare or radical progressive policy, UBI is now being reconsidered by governments – not out of philanthropic altruism, but out of sheer economic necessity.
With wages under pressure from automation, UBI potentially becomes a critical mechanism to maintain consumer demand and prevent widespread civil unrest. It’s less about a moral imperative to eradicate poverty and more about a strategic move to keep the economic wheels turning and prevent societal collapse.
This new architecture revolves around programmable money. Imagine digital currency that can be coded with rules – dictating where, when, and how it can be spent.
In this scenario, UBI payments would be delivered as tokenized digital money. Here’s the kicker: these UBI payments would effectively become proxy holders of government debt. How? By creating a closed liquidity loop. The programmable digital money, distributed as UBI, would circulate within the economy, eventually finding its way back to support demand for new government debt. This ingenious (and somewhat terrifying) system would automatically, even algorithmically, support government debt, stabilizing the financial system without relying on genuine economic growth.
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Miles Harris warns us that this isn’t an evolution towards a more equitable or prosperous future; it’s a form of financial alchemy. This emerging system is designed to maintain a fragile, Ponzi-like debt structure, extending its lifespan rather than fostering real economic growth or genuinely improving living standards.
UBI, despite its political baggage, is poised to become a permanent fixture in our economic landscape. It won’t primarily be a tool for empowering individuals or fostering innovation, but a necessary prop to support weak wage incomes, mask anemic economic growth, and sustain ever-expanding sovereign debt.
The implications of this shift are profound, touching every aspect of our lives from privacy and economic freedom to the very definition of money and value. We are on the precipice of a financial system unlike anything we’ve ever known, where the lines between income, debt, and digital control are becoming increasingly blurred.
This future isn’t far off; it’s being built now. Understanding these mechanisms is crucial to navigating the profound changes ahead.
For a deeper dive into this fascinating and concerning topic, I highly recommend watching the full video from Miles Harris.
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