This is a true (well mostly true) story – it really happened and the names, numbers and faces have been changed to protect the truth tellers.

Dad:  I’m going to teach you 3 kids about inflation!  Here’s one candy bar I’ll set on the table right in front of you, and if you want it, you will have to bid for it.  Now, I’m going to give you each a dollar (guaranteed income) so you can bid for it.

Joey: “I bid a dollar Dad.”

Suzy: “I bid a dollar Dad.”

Sammy: “I bid a dollar Dad.”

Dad: “I guess the price of the candy bar is a dollar – right?”

Kids: “Right!”

Dad: “O.K., now, I’m going to play a government banker’s politician and give you a second dollar which is the increase in the money supply and one aspect of inflation.  Here; now bid for the candy bar again.”

Joey: “Two dollars”  –  Suzy: “Two dollars.”  –  Sammy: “Two dollars.”

Dad: “O.K., now the candy bar is two dollars even though it didn’t get any bigger or better; right?”

Kids: “Right!”

Dad: “O.K., now I’m going to steal, or tax you Joey and take one of your dollars.  Sammy, I’m going to demonstrate socialism, and I’m going to give (redistribute wealth) to you with that same dollar I stole from Joey for Sammy as long as he promises to vote for me  – here.”

Sammy; “Thanks dad – I’ll be sure and vote for you!”

Dad: “Now we’re going to bid on the candy bar once again.”

Joey: “one dollar.”

Suzy: “Two dollars.”

Sammy: “Three dollars.”

Dad: “Now the candy bar is three dollars, but only one of you can afford it – right?”

Kids: “Right!”

Dad: “Now, I’m feeling sorry for Joey who is now so poor.  Joey, I’m going to give you a line of credit (money you can borrow with an increase in credit which is the other side of the inflation coin) in the amount of three dollars.

Joey: “Thanks Dad!!!”

Dad: “Now we’ll do a fourth round of bidding for the candy bar.”

Joey: “I bid four dollars.”

Suzy weeping uncontrollably: “I only have two dollars.”

Sammy distraught and chagrined: “I can’t afford the candy bar with ONLY three dollars Dad!”

Dad: “Now the candy bar is four dollars (even thought it’s not any bigger or better), and only Joey can afford it, but he’s now in debt to me for three dollars – right?”

Kids: “Right!”

Dad: “Lesson learned?”

Kids: “No inflation, no debt! – honest money!”

Dad:  “Great you’ve learned a valuable lesson!”

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