Ellen Brown ScheerPost.
MAY 10, 2026

A Universal Basic Income (UBI) has long been proposed as a way to cushion the blow of jobs lost to automation. Under that model, everyone receives a modest monthly payment – enough to cover basic needs and prevent extreme poverty.

But Elon Musk has gone further. On April 16, he posted on X:

“Universal HIGH INCOME via checks issued by the Federal government is the best way to
deal with unemployment caused by AI.

“AI/robotics will produce goods & services far in excess of the increase in the money
supply, so there will not be inflation.”

Rather than a subsistence stipend, Universal High Income (UHI) would be a level of income allowing ordinary people to live well in a world where machines do most of the work. Musk has also said that AI and robotics are the only things that can solve the massive U.S. debt crisis.

That sounds promising, but where will the government get the money to pay the UHI? Critics say any government that tried it would go bankrupt. There are also other concerns, which will be addressed in Part 2 of this article. Here we will look at the financial underpinnings: why UHI is even thinkable, why AI forces a reexamination of how money enters the economy, why the current system cannot scale to meet what is coming, and the implicit transition needed to meet that challenge.

Why the Current Money System Cannot Scale.

The national debt of the U.S. government just topped $39 trillion. China’s is $18.7 trillion. Japan’s is $8.6 trillion. Those of the UK, France, Germany, Italy and Spain are each in the multi-trillion-dollar range. Collective global debt now stands at $353 trillion, 305% of the world’s annual economic output. So even if, hypothetically, everything produced in the world in a year were applied toward liquidating the debt, it still would not be enough to pay it all off.

In fact the debt can never be repaid, because of the way money currently enters the system. Nearly all of the money supply today is created by banks when they make loans. Banks do not lend their existing capital. The loan itself creates the money. The bank adds the loan amount to the asset side of its balance sheet and balances that sum with the same amount on the liability side. When the borrower withdraws or transfers the funds, either the bank takes them from its reserves in “vault cash” or the Federal Reserve debits the bank’s digital reserve account at the central bank. But the lending bank typically has funds coming into its reserve account at about the same rate as they are going out, so its reserves are continually replenished. Thus a very small reserve account can support a much larger money creation engine. For decades before the Fed discontinued the reserve requirement in 2020, it hovered at around 10%.

The chief problem with this debt-based system is the interest, which the bank does not create in its original loan. For a typical long-term loan, interest can double the total tab or more. Where is the money to come from to pay this added liability? Across the system as a whole, it must either come from more borrowing or from existing funds. In the case of governments, that means issuing interest-bearing bonds or tapping taxes and other revenues. The interest on the debt compounds, meaning the government is paying interest on interest. This makes the debt increase exponentially, until it is mathematically unsustainable. Then bankruptcies occur, of banks or even whole governments. Booms turn into busts, and the cycle begins again.

Today, interest on the federal debt is the second largest budget line item after Social Security, exceeding $1 trillion. Meanwhile, workers are losing jobs to AI/robotics, shrinking the income tax base. The system is clearly unsustainable.

How to Raise Demand to Scale to the Upcoming Supply.

A Universal High Income would replenish the shrinking tax base by replacing the lost wages of unemployed workers. But where will the money come from to pay the UHI? The only sustainable solution is for the government to issue it interest-free. That does not mean through the Federal Reserve, which creates money in the same way banks do: it buys federal interest-bearing securities with accounting entries. The Fed collects the interest, which it is supposed to return to the Treasury after deducting its costs. But since 2008, its costs include paying interest on the reserves of its participating  banks, which consumes its profits. (See my earlier article here.)

The only interest-free, debt-free solution that will actually increase the money supply sufficiently to match the projected productivity of AI/robotics is for the money to be issued directly by the Treasury.

This is not a radical new idea. It is authorized in the U.S. Constitution, which provides in Article 1, Sec. 8, that “The Congress shall have Power To … coin Money [and] regulate the Value thereof .…” Abraham Lincoln used government-issued “Greenbacks” to avoid a crippling debt to British-backed bankers. Debt-free government-issued money was also the funding mechanism by which the American colonists succeeded in creating a thriving economy and liberating themselves from the oppressive yoke of the British Empire.

In his 1729 pamphlet “A Modest Enquiry into the Nature and Necessity of a Paper-Currency,” Benjamin Franklin argued that a lack of currency was a tax on industrious farmers and producers, and that a reliable, locally issued paper currency was the “oil” for the gears of trade. The “Nature and Necessity” of this currency was to facilitate the movement of goods between neighbors. Franklin observed that the British strategy of keeping the colonies short of cash was a method of economic suppression. By forcing the colonies to use gold and silver, which were constantly drained back to London to pay for imports, the Crown kept the colonies in a state of permanent debt and low productivity. When the money supply matched the productive capacity of the people, universal prosperity resulted without inflation.

This logic evolved into the “American System of Political Economy” championed by Henry Carey, economic advisor to Abraham Lincoln. He wrote:

“Two systems are before the world… One looks to pauperism, ignorance, depopulation, and barbarism; the other in increasing wealth, comfort, intelligence, combination of action, and civilization. … One is the English system; the other we may be proud to call the American system, for it is the only one ever devised the tendency of which was that of elevating while equalizing the condition of man throughout the world.”

In the context of the 21st century, the “oil” that best lowers the friction of trade is debt-free government-issued money similar to Lincoln’s Greenbacks and colonial scrip. Rather than implementing a radical financial innovation, we would be returning to our roots.

Inflation or Deflation?

The chief objection to the colonies’ paper “scrip” was that they tended to over-print, so that “demand” (money) outstripped supply. Too much money chasing too few goods produced price inflation. But in the 21^st century, we will soon have the opposite problem: too little money chasing too many goods. Machines don’t need food, clothing, shelter, transportation, medical treatment or other services. So who will buy those goods and services?

Money needs to be issued to human consumers, and not just to a few wealthy human consumers serving as debt brokers thriving on interest. To create sufficient demand for the voluminous output of AI/robotics, it needs to go to the whole national population, evenly distributed. Not only can UHI work in that sort of abundant supply without producing price inflation; it is actually essential to prevent deflation.

In a conversation on X, Musk wrote:

“In a normal economy, issuing more money simply increases the dollar price of the existing output of goods & services, meaning people do NOT get more stuff. If AI/robotics massively increase goods & services output, then you actually MUST issue dollars to people or there will be massive disinflation. “

As paraphrased on Yahoo Finance (reposted from Benzinga), Musk wrote that handing out more dollars becomes a problem only when the economy’s supply of goods and services fails to surge alongside the money supply. His claim is that AI and robotics could lift production so sharply that the bigger risk would be falling prices, not rising ones.

But aren’t falling prices a good thing? In this case, no. Prices would be falling due to a lack of demand, meaning producers can’t find customers for their products. They wind up laying off workers and eventually going bankrupt. When spread across the whole economy, the result is a deflationary spiral: prices fall, businesses lose revenue, and the economy contracts, not because production is inadequate but because purchasing power is insufficient. The result is recession or depression. In the Great Depression of the 1930s, food was rotting in the fields while people were starving, because they were out of work and had no money to spend.

Job cuts from AI are already happening. According to the same Benzinga article:

“Evidence of near-term strain is showing up in corporate announcements: employers disclosed more than 27,000 job cuts linked to AI in the first quarter of 2026, according to Challenger, Gray & Christmas. The outplacement firm said that figure was up 40% from the same period a year earlier. “

Robert Reich reports that wages are around two-thirds of the typical corporation’s total cost, and that in the first four months of 2026, big U.S. corporations cut over 128,000 jobs.

How Soon Will All This Happen?

Another Benzinga article, reposted on Yahoo Finance on March 16, detailed Musk’s projected time frame:

Speaking remotely to the Abundance Summit last week, Musk told XPRIZE founder Peter Diamandis that the global economy is on the verge of an explosion so massive it defies historical precedent.

“I’d say the economy is 10 times its current size in 10 years,” Musk said, before quickly clarifying that the growth could be even more explosive. “Greater than,” he added, framing the projected shift in economic output as a “fairly comfortable prediction.” … “Obviously if there’s like World War III or something, that could put a kink in those plans or those expectations,” Musk warned. “But in the absence of World War III, if current trends continue, I would say the economy 10xes in 10 years.” … The catalyst for this vertical climb isn’t traditional manufacturing or trade, but the “hard takeoff” of artificial intelligence. Musk explained that civilization is currently moving through a period of recursive self-improvement, where AI models are increasingly being used to design and build their successors.”

Ray Kurzweil, author of The Singularity Is Near, sees AI reaching Artificial General Intelligence (human-level intelligence across virtually all domains) by 2029, and full transformative abundance by 2045.

Other experts question these time projections, but a radical transformation of traditional manufacturing and trade is likely to happen sometime in the reasonably near future. The question is, will the money system transition soon enough to rescue all the laid-off workers from homelessness and famine?

The Sovereign Wealth Fund Alternative.

There is another model for distributing the gains of automation, one that can be phased in gradually as the AI workforce expands. It comes from Sam Altman, CEO of OpenAI. In an ironic twist, Altman and Musk, who jointly founded OpenAI in 2015, are now locked in a high-profile legal battle over whether Altman diverted Musk’s $44 million investment to transform what was conceived as a nonprofit “for the benefit of humanity” into a highly lucrative for-profit enterprise.

That dispute aside, Altman’s alternative model for sharing AI-generated wealth is a national sovereign wealth fund seeded by the profits of AI and robotics. His proposed American Equity Fund would take public stakes in the companies and technologies driving automation, capture a portion of the resulting productivity gains, and distribute them as universal dividends. The Fund would not replace a Universal High Income but would complement it.

This approach has several advantages. It ties payments directly to real output, scales automatically with productivity, and can be introduced gradually, avoiding the shock of issuing large payments before the supply side has fully expanded. It would resemble the Alaska Permanent Fund, which distributes oil revenues to residents, except that here the resource would be the most powerful general-purpose technology since electricity.

Conclusion: A New Monetary Logic for a New Productive Era.

For centuries, money has been issued as a claim against the future productivity of human labor, repaid from the income that labor generates. The logic of this debt-based system collapses when machines become the primary producers of goods and services. Then the limiting factor becomes purchasing power — the ability of human beings to access the abundance their own technologies create. That requires a monetary architecture that expands with output rather than debt, and distributes income not through wages alone but through mechanisms tied to the productive capacity of the whole system.

Universal High Income and a sovereign wealth fund are two ways of doing that. One ensures a stable floor of demand; the other ensures that the public shares in the gains of automation. Both would be grounded in real production. But for the public to have access to those gains, the money supply needs to expand in proportion to the expanding pool of goods and services. This can be done by restoring the innovation our forefathers baked into the Constitution: debt-free money issued by the government itself.

How to fund a UHI without triggering inflation or driving the government into bankruptcy is the first objection critics raise, but there are others. They argue that people would stop working or stop learning, that society would collapse into idleness or chaos, that life would lose meaning without jobs, that the government would have the power to control how people spend their money.  Will a UHI ring in the promised utopia or lock us into a state-controlled digital prison? Part 2 of this article will address those concerns.

Be sure to check Ellen Brown’s earlier posts here on the AI Abundance Paradigm.

First published on Scheerpost.com

Shared via Creative Commons.

This month Congress passed the GENIUS Act, an acronym for the “Guiding and Establishing National Innovation for U.S. Stablecoins of 2025.” Designed to regulate stablecoins, a category of cryptocurrency designed to maintain a stable value, the Act is highly controversial.

For most people, however, the whole subject of stablecoins is a mystery, so this article will attempt to throw some light on it. It will also explore some historical use cases demonstrating how the government might incorporate stablecoins into a broader program for escaping the debt crisis altogether.

Stablecoin Mania.

The cryptocurrency craze began with Bitcoin in 2008. Conceived as a decentralized alternative to government-issued currency, Bitcoin uses blockchain technology — a transparent, tamper-resistant ledger that all users can view and verify — to facilitate peer-to-peer transactions without relying on banks or payment intermediaries. But to be widely accepted, a currency must have a stable value, and Bitcoin’s value has vacillated wildly. Stablecoins were devised to solve that problem. They are cryptocurrencies that are backed by safe assets (e.g., short-term U.S. Treasuries). Supposedly, holders of stablecoins can redeem the coins at par and at will for cash, just like demand deposits and money market funds.

Stablecoin use has exploded in recent years. As of March 2025, their total market capitalization reached $232 billion, a 45-fold increase since December 2019. Projections suggest this figure could hit $400 billion by year-end and as much as $2.8 trillion by 2028. Stablecoins Tether (USDT) and USD Coin (USDC) dominate the market, holding 86% of it. In 2024, stablecoins processed $27.6 trillion in transfer volume (the total value of stablecoin transactions recorded on blockchains), surpassing the combined volume of Visa and Mastercard. Daily volumes could hit $300 billion in 2025.

Stablecoins are said to be transforming cross-border payments, remittances and DeFi (decentralized finance). They offer faster, cheaper transactions and are used in 71% of cross-border payments in Latin America. In crypto markets, stablecoins account for 60–80% of trading volume on major exchanges. Latin America and Sub-Saharan Africa lead retail and professional-sized stablecoin transfers, with over 40% year-over-year growth. Major banks and fintechs are also integrating stablecoins or have started stablecoin initiatives, including Bank of America, Wells Fargo, Stripe, JPMorgan, PayPal and Société Générale.

Despite their name, however, stablecoins are not entirely stable. They have faced liquidity crises and transparency issues and are vulnerable to runs. Hence the need for regulation. The GENIUS Act of 2025, signed July 18, 2025, requires stablecoin issuers to be banks or approved nonbanks, to maintain 1:1 reserves in safe assets (e.g., U.S. Treasuries, cash) that are audited monthly, and to comply with KYC (Know Your Customer) and AML (Anti-Money Laundering) rules.

The “Backdoor CBDC” Issue.

Was the intent of the Act to create a “backdoor CBDC”? The concern of critical commentators is with privacy and “programmability” — the ability of the issuer to program a digital currency in order to control or block its use.

Skeptics of the backdoor CBDCs theory note that President Trump signed an executive order banning CBDCs in January, citing privacy and economic stability concerns, and that stablecoins are not centrally issued but have many private issuers globally. Any digital currency is “programmable” unless specifically protected against it, and most of our currency is already digital, created on the ledgers of banks when they make loans.

It has been argued that programming the use of deposits could actually be done more easily with our existing network of banks than with globally scattered stablecoin issuers, just by sending the banks orders in automated messages by API. (An API, or “application programming interface,” is “a set of rules or protocols that enables software applications to communicate with each other to exchange data, features and functionality.”) In a July 22 Substack post titled “Has Brazil Invented the Future of Money?”, former New York Times columnist Paul Krugman writes:

“[T]he government can access private bank records under certain circumstances and certainly has the technological ability to watch every financial move you make. The only thing that keeps it from doing so is the law, specifically the Right to Financial Privacy Act. If we ever do create a CBDC, it will surely involve comparable privacy protection.”

Krugman suggests that it is really the banks that are afraid of CBDCs, because people will withdraw their funds from their private bank accounts in favor of their central bank accounts, cutting out the banker middlemen and their much higher fees. He points to Brazil, which has a CBDC-like system called Pix – a sort of publicly-run Zelle in which transactions settle in three seconds on average, versus two days for debit cards and 28 days for credit cards; and the Brazilian authorities have set a requirement that Pix be free for individuals. It is used by 93% of Brazilian adults, compared to a mere 2% of Americans using cryptocurrencies for trade.

Financial commentator Mark Goodwin contended in a recent interview on the Corbett Report that a programmable currency issued by a private stablecoin company could actually be more dangerous than a CBDC. Some of these companies aren’t even domiciled in the United States, and they are not subject to Federal Reserve control. In a July 26th podcast, macroeconomic historian Miles Harris explained that risk like this:

“In the GENIUS era, private stablecoin issuers function as offshore central banks. Liquidity creation occurs outside the Fed’s control, but the underlying collateral—U.S. debt—remains on public books. This creates a governance gap: liquidity is generated by private actors driven by profit, not monetary stability, yet systemic risk returns to the public sector if things unravel. During the Bretton Woods era, confidence in the dollar was theoretically anchored to gold. Today, no such backstop exists. The Anti-CBDC Act prohibits the Federal Reserve from issuing a central bank digital currency (CBDC), leaving no public digital dollar to counterbalance private stablecoins.”

To explain all that might take another article, but in any case the GENIUS Act has passed and is a done deal. Whether or not we approve, we now need to consider its ramifications. Its main purpose seems to be to salvage the federal bond market, which is in perilous straits.

Propping Up the Bond Market and the Dollar. 

The rapidly expanding stablecoin market is projected to be able to fill the void left by disenchanted governments that are dumping Treasuries and “dedollarizing” in response to Western sanctions and U.S. tariffs. According to Senator Bill Hagerty (R-TN), who sponsored the GENIUS Act, it could lead to stablecoin issuers becoming the “world’s largest holders of U.S. Treasuries by 2030.”

Treasury Secretary Scott Bessent says stablecoins are a strategic tool to “lock in dollar supremacy.” As financial commentator Lyn Alden observes, when residents of countries with unstable currencies (such as Argentina) purchase U.S. stablecoins to protect their savings from runaway inflation, the stablecoin issuer uses the local currency of the purchaser to buy U.S. Treasuries. In effect, the local currency has been converted to U.S. currency. That is also true for other institutional uses of stablecoins.

The problem with privately-issued money, however, is that untrustworthy issuers are subject to destabilizing bank runs; and that has been true for centuries. Gaining the confidence of users requires regulation to establish the stability and liquidity of the stablecoins, and hence the need for the GENIUS Act.

How Lincoln Solved His Debt Crisis.

In a 2023 research paper titled “Taming Wildcat Stablecoins,” Professors Gary B. Gorton and Jeffery Y. Zhang compared stablecoin issuers to the private “wildcat banks” that issued their own paper currencies as banknotes during the Free Banking Era before the Civil War. Private state-chartered banks issued their own paper banknotes, which were thinly capitalized and of uncertain reliability and exchangeability. Bank runs were common. The problem was solved through the National Bank Acts of 1863 and 1864.

The Acts sought to stabilize a very chaotic system of private currencies by encouraging banks to acquire national bank charters that would allow them to issue a uniform national bank currency. To ensure its uniformity and stability, the banks were required to back their National Bank Notes 1 to 1 with federal bonds or precious metal coins deposited with the U.S. Treasury. This pool of liquidity — the forerunner of today’s central bank “reserves” — not only stabilized the currency against runs but helped fund the war effort and created a market for federal debt.

It helped, but the bonds purchased by the banks were not sufficient to fund the government’s needs. British-backed bankers were demanding 24–36% interest on loans — usurious terms that risked “recolonizing” the U.S. through debt. President Lincoln avoided that crippling debt by reverting to the funding mechanism of the American colonists – government-issued paper money. Under the Legal Tender Act of 1862, the Treasury issued $450 million in U.S. Notes or Greenbacks — fiat currency spent directly into the economy for soldiers, supplies and contracts.

These innovations allowed Lincoln’s government to bypass foreign lenders, fund the Civil War, and preserve the country from colonization by debt. A similar approach could arguably solve the government’s debt crisis today.

Fast Forward to 2025.

The United States now grapples with a $36.72 trillion federal debt and an interest burden projected to be $952 billion for 2025, consuming 18.4% of federal revenues. The debt to GDP ratio is an unsustainable 124%. Neither raising taxes nor slashing the federal budget will solve what is essentially a math problem: the debt-at-interest is growing faster than the economy itself.

The GENIUS Act, requiring stablecoins to be backed by U.S. Treasuries, follows the same funding model as the National Bank Acts, and it has the same limitations as a funding model. Stablecoins can bolster the market for U.S. debt, but they won’t tame the voracious interest monster that is consuming the federal budget. President Lincoln largely met his funding crisis with currency issued directly by the Treasury, and President Trump could do the same.

This would have to be done, however, through the Treasury, not the Federal Reserve. The Fed can only issue “bank reserves” and is not allowed to fund the federal debt by buying Treasuries directly from the government. It must buy them on the open market, with reserves injected into the reserve accounts of the banks of the sellers. The banks then credit the sellers’ deposit accounts with dollars, but the dollars go to the sellers, not to the Treasury; and the interest on the bonds goes to the banks, due to the Fed’s controversial policy of paying interest on the banks’ reserves.

Today, this interest paid to the banks is actually greater than the interest the Fed earns on the bonds it buys from them, resulting in a negative balance in its portfolio. In a recent interview on Fox News Business, Treasury Secretary Bessent said the Fed was “losing $1 billion a year because of a mismatch in the bond portfolio from the short-term rates.” In 2023, this loss amounted to $114 billion; and it actually accrues to the Treasury, since the Fed is required to rebate its profits to the Treasury after deducting its costs. The Fed has now amassed a negative balance that will take years to pay off.

Thus Federal Reserve purchases of federal securities through “quantitative easing” won’t solve the debt problem. Treasury-issued currency, on the other hand, is legal and constitutional, as established by Lincoln’s Greenbacks and the subsequent legal tender cases of the Supreme Court; and it could actually solve the debt crisis.

Dealing with the Inflation Question.

Printing the whole $37 trillion needed to pay off the federal debt would no doubt be inflationary, and Congress would consider it a bridge too far in any case. But the Treasury could print enough to cover the interest on the debt, or to buy the debt as it comes due, or to cover the budget deficit.

The risk, of course, is that an out-of-control Congress will run the presses as a “magic money tree” to fund all of its pet projects; but limits could be put on these expenditures. They could be required to be “productive,” adding to GDP, lowering the debt to GDP ratio to manageable levels. The German government did this in the 1930s with Mefo bills, avoiding speculative exploitation of the funds by issuing them as payment for specific industrial output.

The People’s Bank of China has hugely increased the money supply of that country without creating price inflation. Prices have been kept stable by increasing supply (GDP) along with demand (money). (For details, see my earlier article here.) Increasing the country’s GDP has been facilitated by China Development Bank, the world’s largest development bank, which has funded massive infrastructure and development across the country.

HR 4052, The National Infrastructure Bank Act of 2023, is currently before Congress and has 48 co-sponsors. Like the Reconstruction Finance Corporation that pulled the U.S. economy out of the Great Depression, the bank is designed to be a source of off-budget financing, without adding new costs to the federal budget. It follows the model of the First U.S. Bank established by Alexander Hamilton. Capitalization is to be with debt-for-equity swaps: Treasuries held by the public will be traded for shares in the bank, paying 2% over the interest earned on the Treasuries. For more information, see the Coalition for a National Infrastructure Bank’s website.

At the local level, state-owned banks could do something similar. Currently our only state-owned bank is the Bank of North Dakota, but it is a very successful model that not only funds state infrastructure and development but generates income for the state and acts as a “mini-Fed” for local banks. For more information, see the Public Banking Institute website.

The GENIUS Act can stabilize the bond market, but it is only a stopgap measure, buying time in the battle against an ever-growing debt. To escape altogether, as Lincoln’s government did, Congress needs to issue some of its own “sovereign” money. If issued for productive purposes in a sustainable way, this money could arguably fuel the economy without reliance on federal debt markets at all.

First published on Scheerpost.com.

Shared via Creative Commons.