Using the Monopoly Game to explain Inflation and the Fed!!!
Posted December 4th, 2008 by Ralph Waldo
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I have been trying to explain the concept of inflation and the FED to a number of people and have about decided the monopoly game is about as good of an example as you can get. Here are the two primary concepts, see if you agree.
1. Inflation:
If 5 people are playing with $100,000 dollars to start the game and someone brings in another $100,000 dollars of play money, the value of the assets on the board did not magically increase in value, instead the original currency loss 50% of its value.
2. The FED.
Instead of the 5 players forming a government to print the monopoly money themselves, they hired a group of foreigners to print the money and let them charge interest on every dollar to the participants. Of course this is unnecessary because the 5 players could have printed the money themselves and saved the interest paid to this outside source.
Furthermore, the interest rate that is charged would be based on what the 5 people are willing to pay instead of letting the outside group arbitrarily set the rate and collect the interest. Besides what makes them smarter than the market of the 5 original players.
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I posted this the other day
http://www.dailypaul.com/...
If you can believe it,
I actually was a Monopoly expert at one time, running annual tournaments. The original outlay is $1500 per player if remember right. I will be revising your excellent #1 and sending it to my friends. Nice job. Economic education is the most important aspect of our movement now.
PS
"Are they smarter than a fifth grader?"
The history of the board game Monopoly can be traced back to the early 1900s. Based on original designs by the American Elizabeth Magie, several board games were developed from 1906 through the 1930s that involved the buying and selling of land and the development of that land. By 1934, a board game was created much like the version of Monopoly sold by Parker Brothers and its parent companies through the rest of the 20th century, and into the 21st. Several people, mostly in the Midwestern United States and near the East Coast, contributed to the game's design and evolution.
The other day, I was thinking . . . what if a seven year old asked you to play, he brought out the board, and said, "I'll keep all the money, and the properties, and I do not have to "go to jail" . . . OK . . . let's play. And the temper tantrums follow.
Our "leaders" are not smarter than a fifth grader. They fail constitutional questions!
LOL I loved this
because maybe they would be able to understand better. Great idea, we need more simple examples to help people understand what is going on.
We have to keep it simple and a real big Ah, Ha! moment for them. Does anyone else have any more ideas like this?
What I am going to do, to start demonstrating the fractional
reserve system is buy some play money. I will take one FRN dollar and 9 dollars of play money. Then I will show that if you borrow 10 dollars from the bank, that only one is real and 9 are imaginary dollars - until you work your guts out and pay it back.