An economist has proposed a daring idea to reduce income inequality by giving every newborn in the US a trust fund of up to US$60,000 ($92,414).

The funds would be set aside in federally managed coffers and grow at about 2 per cent each year until the child reaches adulthood.

Professor Darrick Hamilton of The New School and Professor William Darity of Duke University made the wild proposal at a TED conference in New York last week, saying the money could be used for "asset-enhancing activity," like pursuing education, buying a home or starting a business.

He believes every child should enter the world with at least US$25,000 in the bank, the basic premise of a "baby trust" — to combat income inequality.


"Wealth is the paramount indicator of economic security and wellbeing," the economist told the crowd.

"It is wealth that begets more wealth."

A baby trust would give an infant anywhere from US$500 for those born into the richest families to US$60,000 for the poorest, with an average endowment of US$25,000, according to TedBlog.

The child would then be able to retrieve the funds when they reach adulthood, withdrawing it for educational purposes, property or to help start a business.

Essentially social security in reverse, Prof Hamilton described it as "an economic birthright to capital for everyone".