Blogs & Articles: Monopoly IRL Is No Game: My Second Statement at the House of Commons 🔗 3 years ago

I was invited by The House of Commons’ Standing Committee on Finance to provide a statement in view of its study of Pre-Budget Consultations in Advance of the 2021 Budget.

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Questions:

https://medium.com/media/78ed4dc325b5c7cd6a8eb9c669be5262/href

Here is the transcript of my statement:

I want to thank the Finance Committee for inviting me to speak to you again. On my last invite to this committee, as outlined in my book I explained that: An economic policy that requires inflation is incompatible with exponentially advancing technology. They are opposing forces. Entrepreneurs using technology are trying to deliver more value for less to society (deflation), whilst inflation is moving in the opposite direction. And while it is easy to get fooled looking backwards, most of the technological gains are in front of us which means getting more for less (deflation) is a completely natural process that embraces human innovation, and the free market. In other words, a policy that is unmanipulated allows the abundance gained from technological progress to be broadly distributed to society instead of concentrated.

By failing to recognize the root problem and instead deal with the symptoms, policymakers have become unknowing participants in a game that will have disastrous consequences for us all.

I will illustrate what is happening through a simple game.

In the game Monopoly, once enough properties are owned by a single player, renters can’t afford to pay rents and are therefore forced into bankruptcy — and the game ends.

For those who have played, you will notice how systems work. Once you have an early advantage, the game becomes easier (because you have the rents) to acquire more properties, add more houses/hotels. A “positive feedback loop” is created — concentrating wealth.

You might also notice that the wealth in the game “might” be due to luck because landing on the right squares early in the game gives you a massive advantage. The right place right time.

Conversely, missing out on acquiring those assets early creates a “negative feedback loop” which also reinforces on itself. The poor become poorer until they become insolvent as they move around the board paying higher and higher rents.

Fortunately — it is just a game. The game ends! Someone gets bragging rights — and all are given a fresh chance to “win” when the game begins anew with everyone being equal.

BUT…

What would happen if the same positive and negative feedback loops happened in life? With the “winners” acquiring ever more because they had the assets first — concentrating their wealth, and enjoying privileged access to the best education, medical, and other services.

And for the sake of argument, let’s “imagine” in this life game that there was a giant force. Let’s call it a “Central Bank” that required inflation and therefore wouldn’t let prices fall, which only concentrated wealth faster and wouldn’t allow a reset of the “game” where new players had a chance.

How long would the “losers” of the game keep playing the game when they realized that the game was rigged against them. What if they couldn’t pay their rents, education or buy food…with the “game” continuing to get worse. What if the game wouldn’t end for them?

What would they do? More importantly, if you were them, what would you do? You might do one of 3 things:

1. Listen and elect leaders who tell you they will give you free money. The irony of that “free money” is that comes at a huge cost in perpetuating a system of inequality. Because the debt is too big to ever be paid back with higher taxes, the “free” money must come through money printing and higher inflation. Inflation is the worst tax of all for society because it is a hidden tax — levied upon societies most vulnerable because they don’t have the assets that rise with inflation and they don’t know better. Inflation is a process by which the purchasing power of their real wages and savings gets destroyed.
2. Rise up against the “winners” and burn the game to the ground (uprisings and revolutions) or
3. Play a new game where your money couldn’t be confiscated by inflationary policies (Bitcoin)

The societal consequences of changing the “rules of the game” to stop the natural clearing function of markets (and lock new game players out) is concentrating wealth and power and in doing so, making the world ever more dangerous.

The consequences are very predictable.

And the crazy thing is that the same thing Central Banks and Governments are trying so hard to prevent — Prices falling naturally because of exponentially advancing technology — might be the best “game” we ever played.

My message is non-partisan. I fully comprehend the severity of the choices that policymakers on both sides of the aisle are grappling with in trying to save a system while only making the problem worse.

These are difficult choices with no easy answers.

But instead of platitudes, I do believe, Canadians deserve the truth with respect to something so important as their money, where it comes from and why manipulation is a requirement of the existing system. Manipulation of money has consequences, and those consequences are far more severe than the monetary theorists and policymakers seem to realize.

Technological progress has changed the rules. Ignoring that structural change by printing money is coming at a great cost to our society, our environment, and our children. On the current path, it will get much worse.

For the sake of all Canadians, I encourage the Government to investigate this deeper. There is a much better path, one that is congruent with where human innovation and technological progress is taking us.

A path that leads to broad-based abundance.

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I dive deeper into this situation in my book called The Price of Tomorrow, Why Deflation is Key to an Abundant Future. Available now in all formats at thepriceoftomorrow.com/amazon.