It doesn't have to be that way. For one thing, you don't need to means test it. Just give the same amount of money to everyone. Then if you work you still end up ahead. So no dis-incentive to work. For another, if implemented properly the amount would go down if production declined, or up if production increases. This way it's self-correcting in the aggregate. As people leave the workforce, the UBI goes down, nudging some people at the margin to go back to work.
But this still leaves people free to choose for themselves, without interference from the government.
Yes. That’s why UBI is a neat idea as a replacement or enhancement for welfare, and other social services. That’s not the context in which we’re discussing it though. We’re discussing it as an alternative to work in a world where almost all human jobs have been automated. In that context it’s not a good solution, and in fact it’s dangerous because it leaves everyone reliant (and obedient) to the government, and a select few mega corps.
If everybody makes the same amount then all you’ve done is inflate the currency. Money is used to control access to finite resources, with the goal to get more tokens than the other person. If you give everybody X tokens per month, then in aggregate things will cost X tokens more.
No inflation required. People buy things from whoever owns the production, and the producers pay high taxes to fund the UBI. No net money creation required.
Then you've created a net deficit. You can't ignore algebra and pay more than it costs to make something and put it on the shelves. Without those paying people to put it on the shelves making more than it costs to pay those people there's no incentive. This is a pipe dream without causing inflation and doing nothing in aggregate.
But this still leaves people free to choose for themselves, without interference from the government.