August 11, 2015

Fiat Dollars and Monopoly Money: The Fed vs. Hasbro

By In Blogs, C.Jay Engel
helicopter%20ben.jpg-550x0
Helicopter Ben gracing the economy with free money, that our daily bread may be provided for.

Most of us who know that the Federal Reserve just loves to expand the money supply will often say that “one of these days, it going to be worth less than monopoly money!”  Monopoly money, of course, is printed in abundance and has no market value.

Interestingly though, according to Hasbro as calculated in 2008, there have been around 250 million monopoly sets sold.  Each set, up until 2008, contains $15,140.  After 2008 (interesting choice year, given the Fed’s bailout of the financial system), the new editions have included $20,580.

250 million sets, multiplied by 15,140 gives us 3,785,000,000,000 (3.8 trillion) “monopoly dollars.”  Since they sell an average of 3.3 million sets per year, we can guess that, since 2008 when they made the change, there have been about $475,398,000,000 (~4.75 billion) produced (3.3 million multiplied by 20,580 multiplied by 7 years).  This latter number, plus the previous number, calculates out to around 4.25 trillion.

Now at the same time, the Federal Reserve’s balance sheet currently reflects that as of this month, they have expanded the supply of money to roughly 4.5 trillion dollars.

This means that the Fed has out-printed Hasbro!

Obviously I’m not saying that monopoly money is more valuable than the dollar.  Value is subjective and monopoly money can’t buy you milk.  The point is merely one of interest and humor, since a decade and a half ago, most people would have laughed at the thought of the Fed expanding the money supply to a greater extent than even “Monopoly money.”  Before the 2000 housing boom was set to grow by the Fed’s easy monetary policy, the balance sheet weighed in at about 500 billion dollars, quickly blossoming up to 900 billion by the time the bubble popped in 2008/09.  Our beloved central bank’s reaction, of course, was not to let the debt liquidate and the economy to recover on its own; but rather, to throw caution to the wind (caution, after all, is for “old cranks” like Ron Paul), and slam on the gas… jumping from just shy of a trillion dollars to our current state of 4.5 trillion.  In other words, the Fed’s shenanigans have multiplied the balance sheet by 5X in this century alone.

Nice try Hasbro, leave money-printing to the Experts.

Federal Reserve chairman Ben Bernanke and his successor Janet Yellen
Here we have Bearded Ben and his heir Janet Yellen. Exceedingly wise, they are our Professional Money Printers. Ben the Beard is busy computing exactly how many dollars he needs to print to bring the US economy into Utopia.

Written by C.Jay Engel

Editor and creator of The Reformed Libertarian. Living in Northern California with his wife, he writes on everything from politics to theology and from culture to economic theory. You can send an email to reformedlibertarian@gmail.com