Today Ninja Grandma tells a story about how she teaches children how inflation works—using the simple method of playing a game of blocks.
Today I played a game with children.
A 10-year old asked me, “Do you like Bitcoin?” I answered yes. So she asked, “Why?”
I'll admit there was a moment of panic. But then I told the 5-year old and the 8-year old to come join us, and bring three blocks. I grabbed a box of Kleenex and gave them each a tissue. “You now have a tissue dollar each, and you can buy these blocks from me.”
I sold them each one block for a 'dollar', earning three dollars. I then bought a block from the 10-year old, and now she had a dollar. I told her she can buy from one of her siblings. She did. I bought from the other sibling. I now had a dollar and a block, and the two girls had a block each. The 5-year old boy, bless his heart, refused to buy my block from me. "I want to save it!"
I smiled and pulled out three more tissues from the box. I bought the blocks back from the two girls, giving them two dollars each. They were thrilled. Till I explained that now there were three blocks among us, and six dollars. Which meant that now, each block cost two bucks, and our 5-year old friend had only his one saved dollar, which meant he could never buy a block again.
The 10-year old grinned and said, “But I can give him my dollars!” Which she then did, thinking she’d outsmarted me. He now had 3 dollars.
I pulled three dollars out of the box. I set all the tissues on the ground; nine. Three blocks. I pointed out that now the blocks each cost 3 dollars.
It was at this moment that one of them piped up and said, “Wait. Why do you get to have extra dollars?”
I laughed, rather proud of her, and said, “Because I can. I’m in control of making the money.”
They all made faces, and their guardian spoke up and said, “That's called inflation. Banks make more money like she just did."
I told them that's why everything costs more now. Their eyes got big, then lit up; they understood.
"That is why I like Bitcoin. Nobody controls Bitcoin, so nobody can make more dollars. Things don't get more expensive this way.”
They now understand inflation better than most adults. They also understand one reason I like Bitcoin.
It’s so simple a child can understand.
I've got more reasons though. I guess we'll have to play more games.