Understanding economic reality via a board game

I continually am puzzled by the misunderstanding (“disunderstanding”?) of Monetary Sovereignty. It is both simple and obvious, yet many (most?) people have trouble comprehending it.

MS is based on just four simple facts:The case against the American Constitution | The Week

  1. In the 1780s, the U.S. federal government created the laws that created the U.S. dollar from thin air — as many dollars as it wished – and gave them the value it wished.
  2. The government’s own laws give it the power to continue creating dollars, infinitely
  3. The government’s own laws give it the power to continue changing the value of the dollar — a power it has used many times.
  4. The government can change its laws at will.

Really, what could be simpler, more obvious, and less controversial?

Derived from these simple, obvious facts comes the following:

  1. The U.S. federal government never unintentionally can run short of U.S. dollars.
  2. No agency of the government can run short of dollars unless the government wishes it.
  3. Federal taxes are not used or needed to fund federal spending.
  4. By changing the value of the dollar, the government has absolute control over inflation

And that’s it. Monetary Sovereignty.

Intuition is powerful. Many of us prefer to believe our intuition than believe facts.

Interestingly, where fiction parallels facts, you might not believe the facts about the fiction, while still believing fiction about the facts.

That is, you might read a historical novel of fiction, and not believe the background facts presented. Yet, you might be fooled by a conspiracy theory website presenting fiction as fact.

So here is the explanation that may appeal to intuition as well as to facts.

You probably have played the hugely popular board game, Monopolytm. As a game, it’s fiction, but you believe and understand the facts (i.e. “rules.’)Amazon.com: Hasbro Monopoly Money : Toys & Games

Here are some of the facts.

The game is played with multiple players plus a Bank

The Bank pays Monopoly dollars to the players for various benefits.

The Bank collects taxes, fines, loans and interest from the players.

The Bank “never goes broke.” If the Bank needs money, it may issue as many dollars as needed by printing on scraps of paper or simply by creating a bookkeeping tally.

Example of a Monopoly running tally

A sample tally is demonstrated by the illustration at the right.

It reveals three things:

I. Monopoly money is not physical. Those printed $500, $100, $50, $20 $10 $5, and $1 bills aren’t dollars in of themselves.

They merely represent dollars, just as the numbers on a tally represent dollars.

II. The Bank can create an infinite supply of Monopoly dollars.

If needed, the Bank instantly could pay Tom, Dick, Harry, or Bob $1, or $100, or $1,000,000,000 in Monopoly dollars.

In the tally, there is no need to create a column for the Monopoly Bank.

This lack of a column demonstrates the Bank’s ownership of infinite dollars.

It also demonstrates that all dollars sent to the Monopoly Bank are destroyed upon receipt.

If Tom, for instance, sent $100 to the Bank, his $4,400 would be reduced to $4,300. So, what happened to the $100 Tom paid? They simply disappeared. They no longer exist.

Although the Bank can create infinite dollars this creation process does not create Monopoly Bank “debt.” The Monopoly Bank does not borrow dollars nor does it owe any dollars.

Thus, taxes are not levied to “pay off” any Monopoly Bank debt.

By rule, the Monopoly Bank simply creates all the dollars it needs. Although the Bank is not precluded from keeping track of the dollars it receives from players, that record would not indicate how many dollars the Monopoly Bank “owes” or has.

There is no ongoing debt owed by the Monopoly Bank.

All of the above is easily understood by you and by virtually anyone else who has played the game.

Now, in the above paragraphs, substitute the words, “U.S. federal government” for the word “Bank.” And substitute “members of the public” for “players.”

The facts remain essentially the same.

There are multiple members of the public plus the federal government. 

The federal government pays dollars to the public for various benefits.

The federal government collects taxes, fines, loans, and interest from the public.

The federal government “never goes broke.” If the federal government needs money, the government may issue as much as needed by printing on paper or simply by creating a bookkeeping tally.

[Former Fed Chairman, Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”]

Continue reading and substituting until you come to the part that some people have difficulty understanding:

The federal government does not borrow dollars nor does it owe any dollars. Taxes are not levied to “pay off” any federal government debt.

[Quote from Ben Bernanke when, as Fed chief, he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Former Fed Chair, Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.]

The Monopoly Bank and the U.S. federal government both are Monetarily Sovereign. They both are issuers of their dollars. Neither of them can run short of dollars.

Both the Monopoly Bank and the U.S federal government have infinite dollars.

[Former Fed Chair, Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”]

Neither the Monopoly Bank nor the federal government borrows or taxes in order to pay their financial obligations. Spending by the Monopoly Bank or the U.S. federal government does not create future taxpayer obligations.

For that reason, Social Security, an agency of the federal government, cannot run short of dollars, unless that is what the government wants. Even if there were no FICA tax (which contrary to popular myth, does not fund Social Security), that agency need not run short of dollars.

State and Local Governments With the Most Debt Per Capita
The “debt clock.” You have no share.

Medicare for All, college for all, upgraded infrastructure, good housing for all — every imaginable federal benefit — all are easily affordable. The so-called federal debt is not a burden on future taxpayers or on the government.

The famous “debt clock” implies the lie that somehow the federal “debt” is a danger to you, your children, and the federal government.

It is not a debt, and it is not a danger, to you or anyone.

It is just simple deposits by the public into accounts.

The parallels between the Monopoly game and federal financing are stunning.

Yet, though people tend to understand the rules of Monopoly, too many become hopelessly confused by the same set of facts when applied to real life.

Yes, one is fiction and the other is fact, but that difference is not the source of the confusion.

The confusion is caused by the longtime, ongoing, relentless dissemination of false information about the federal government’s finances and by the misnaming of T-securities as “borrowing” and “debt.” They are neither.

The misinformation is promulgated by agents for the rich, who want to prevent you from asking for the benefits the rich already receive: Retirement benefits, medical care, good housing, safe neighborhoods, college education, spending money for a good life.

Neither the government nor you owes the deposits that sit in T-security accounts. These accounts resemble bank safe deposit boxes, which the bank “pays off” simply by returning the contents. No “debt” or tax liability there.

The Monopoly board game is a good analog for the federal finance system. If you understand one, you should understand the other.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell



The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all
  4. Free education (including post-grad) for everyone
  5. Salary for attending school
  6. Eliminate federal taxes on business
  7. Increase the standard income tax deduction, annually. 
  8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
  9. Federal ownership of all banks
  10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.


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