However, new, more profound problems arise if we introduce a BI into a ‘functional finance’ paradigm (Wray, 1988). We argue that the BI approach locks the economy in to an inflationary bias which when combined with the current ‘independent’ central banks would prevent it from achieving sufficient growth to offer real employment options to the workers. Following the logic of the previous section, it is clear that to avoid ‘locking the economy into persistent unemployment, the introduction of the BI should be in the form of a net government stimulus (that is, deficit-financed). However, the two approaches to income insecurity depart at this point in because a JG maintains price stability (anchors the value of the currency) whereas the BI approach is inflationary. In this setting, a deficit ‘financed’ BI constitutes an indiscriminate Keynesian expansion and as it lacks any inbuilt price stabilisation mechanisms, inflationary pressures would result. This follows directly from our analysis in the previous section on the financial options facing government.
