Where does the Money come from in a Monopoly game?

It has been some time since I last played Monopoly. The Board Game.  As I remember we have several players and a banker who assumes a similar role to government in our economy. He hands out money at the start of the game. Whenever we pass GO, or draw a lucky card from the community chest we get a bit more. He charges us tax,  super-tax, and might put us in jail from time to time.

We don’t like it when that happens, but where does the money come from in a Monopoly game? The more right wing players might argue it comes from other players when they land on the their Mayfair or Park Lane properties which have houses and hotels on them! They like to think that wealth creates money rather than the reverse. But those of us who take a wider view know it all comes from the banker originally.

The government/banker is always in debt. He has to be. His debts are the players’ monetary assets. Penny for penny. Would the game work at all if he insisted on always balancing his budget?

PS Apologies if this is a statement of the bleeding obvious! But, many of our highly educated (over-educated?)  politicians still seem to be in need of such.

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4 responses to “Where does the Money come from in a Monopoly game?

  1. The apparent obsession that all money is debt stems from the failure of double entry accounting to cope with “acquired assets” or gifts. It is the duty and responsibility of any Sovereign state to ensure that its economy has a debt-free money supply appropriate to the size and activity of that economy. If the state/central bank fails to ensure this there is not just a risk but an inevitability that there will either be economic stagnation or that an exponentially expanding debt mountain [both private and/or public] will be created, Eventually this becomes unsustainable and also results in stagnation. Accordingly this means that the current system of providing virtually all money as debt [>97% at present] that we seem hell-bent on adhering to is inherently dysfunctional. We either “wise up” or are consigned to an on-going shambles of kicking the can down the road until it all blows up.

    • The principle of double entry bookkeeping does, as the name might suggest, require that every transaction be recorded twice. Once as the transfer of an asset , once as the transfer of a liability. So the creation of money by anyone, including government, has to conform to that rule.

  2. http://www.theglobeandmail.com/globe-investor/personal-finance/taxes/how-splitting-the-dinner-bill-relates-to-tax-cuts/article24441644/
    Can you do a post on why the ‘dinner bill explanation’ is wrong. I see this a lot in discusiion re “taxing the rich.”

    • My first reaction is that is just another case of applying microeconomic principles to a macroeconomic problem.

      The implication is that the money paid to the restaurant is tax and owner is the government. So if the government is decided by the majority, the 9 can mandate the govt to make up the spending shortfall by taxation, by the issuing of bonds, or by simply creating extra cash. As the amount of spending with or without the co-operation of the wealthy person is the same as previously, there is no question of creating any extra inflation.

      If the wealthy person removes himself to another country, taking his accumulated store of government currency with him and swaps that currency on the forex markets, there would initially be a slump in the sold currency and a rise in the bought one. That could just be temporary. Currency valuations are largely determined by the productive capacity of their economies. If the wealthy person made a large contribution due to some personal skill then he could be a net loss. On the other hand, if he did nothing much at all, but just lived off the interest and dividends then he’d be no loss at all to the economy which would carry on just as before. If the GDP were the same as previously, there’d be one less person with whom to share the production internally but maybe another person externally.

      Another way of looking at it is to say there’s no dependence by Canada on the Canadian dollars owned by any one individual for example. Canada can never run short of Canadian dollars. If a wealthy Canadian moved to the USA taking his fortune in Canadian dollars with him then those Canadian dollars can only be used, by whoever ends up with them, to buy stuff from Canada or be saved in Canadian dollar securities. Those Canadian dollars are claims on the production of the Canadian economy ie a net liability of the Canadian Govt.It would only make a difference to the extent that the liability could be reduced by taxation if the holder was resident in Canada but not if outside Canada.

      The wider question would be to what extent economies benefit by recruiting wealthy people to live in them. Do the people in London or the UK net benefit from London being a popular summer home for the world’s ultra rich? A Russian multi-billionaire might cause the pound to rise if he changed his fortune to pounds from rouble or US$ or whatever. That would mean that the people in the UK generally could afford more imports. That might be a good thing if the government was MMT educated and increased its deficit to maintain full employment. If he left and made the reverse transactions the pound would fall and as those pounds were spent the UK would have to export more to pay for those previous imports.

      So if we do accept the MMT line that more imports are a good thing, and IF govts know what they are doing and happily deficit spend to accommodate the desire of the ultra rich to save in a new currency, then attracting rich people could have some benefit. That’s a big IF though. In practice, and with the politicians we have, I’d say it would be better to keep them out, except of course if they wanted to visit temporarily, unless they had something other than money to offer.

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