May 19, 2009

Printing money

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I’ve been coding hard the last week or two on a secret squirrel project, thus this blog has been a little neglected. Fear not, I have a few posts planned once I have some spare time. For the meantime, here is an After School Special in honour of the UK inflation figures announced today.

When I was in primary school there was a strange little fad for a couple of weeks that illustrated some concepts in supply and demand. For some reason, I don’t remember why, one student agreed to become another’s servant. I think the “servant” was Jason, but the “master” was definitely Ben. In return for following Ben around and doing the occasional little task, Jason would receive a dollar a day. It wasn’t a real dollar. Instead every morning Ben would present Jason with a piece of paper (about the size of an old Australian dollar note, or at least the best approximation thereof that could be managed by ripping up our workbooks) with “1 Dollar” written on it and Ben’s signature. Jason didn’t think this too bad a deal since Ben was the cool kid in class and getting to hang out with him was a blessing.

After a couple of days this agreement showed no sign of being forgotten. Instead, Ben even hired a second servant. At this point a number of other kids in the class decided they wanted servants too, and thus the problems began. About a third of the class wanted servants, but less than a third wanted to be a servant. A day’s wage rocketed. Over consecutive days we started to see handmade $2, $5, $10 and $20 bills passed around. Some kids tried to make their notes more ornate and artistic to entice potential servants to prefer their money, which seemed to work for a bit.

By this stage some of the servants were building decent piles of worthless paper. There was a constant problem of what to use the money for beyond servants. Some was passed around as servants subcontracted or paid for small tasks. Occasionally someone might swap sides to get or spend cash. However, people were beginning to lose interest in the concept. There wasn’t much of an economy until Jason (definitely him this time) starting making rings. By a ring I mean wire soldered into a small loop with a shard of glass at the join. With this innovation a whole range of backyard jewellery was produced, most of the class got involved as master, servant, jeweller or consumer. Some people from other classes joined in too. Prices continued their rise for another week or so but at a less frenzied pace as people were hitting the limits of being able make money by hand (strangely no one thought of producing a note with greater than $100 face value, the largest real Australian note available at the time). Then people began to print money.

Literally print money. I went round Ben’s place one Sunday (he lived just round the corner) and he had obtained a toy printing press and paper guillotine. With each crank he produced six $100 notes and he was cranking hard! On Monday he instantly became the richest kid in class. By Wednesday the economy collapsed and we (the boys at least) went back to playing soccer and A-Team.


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