'Double Or Nothing!'
Economics 101
Dan Carr, DC Coin and AmeroCurrency.com
When I was in High School, we had a lot of free time.
We’d play poker in the cafeteria. Money was exchanged
under the table (literally) after each hand. At first it was
just a few ordinary coins. Once in a great while a dollar
bill came out. After a while, the “fish” ran out of money.
The smarter players had taken all their present assets.
So “credit” was extended, so as to take their future
assets as well. Some players became indebted.
“Double or Nothing !” was eventually heard. And then
many more times. With this new credit boom, poker
wages skyrocketed. Some hands were played for $20
or more in “credit”. Large debts were commonplace.
Debts were swapped.
If you owed Johnny $40 and Johnny owed Willie $40,
and Willie owed you $40, the debts were all cancelled
roundabout. But then the inevitable happened. Steven
got in a jam, and he needed to collect on a debt to buy
something he needed. He needed to collect that day.
Billy owed Steven $12, Steven needed $5, and Billy had $6. Billy didn’t want to pay anything. But a deal
was struck.
Billy paid Steven $6 and the debt was cancelled. 50-cents on the dollar ! Soon word got out that this
was the way things were going. Debtors wanted ever more-favorable terms. Things got ugly when
Kevin owed Mark $10 and Mark owed Tony $10.
Mark wanted a switcheroo to cut himself out and make Kevin owe Tony the $10 directly. But Tony
wouldn’t have it since the credit-worthiness of Kevin was lower than that of Mark. So Mark just refused
to pay his debts and his perceived credit rating plummeted – below that of Kevin. It was an all-out race
to the bottom !
Finally at the end it got to where over $600 in (NET face value !) debts were settled in a multi-way deal
with the only actual money or asset changing hands was an old 1878 silver dollar (worth about $3 at the
time !). After that fiasco, no more credit was extended. Either you paid up after every hand, or you didn’t
play. The regulators (teachers) finally found out about our little financial experiment going on in the
cafeteria and shut it down. So we just moved it off campus to a friend’s apartment nearby.
I learned more about economics and finance from all this than I did during my entire High School and
College education.
Economics 101
Dan Carr, DC Coin and AmeroCurrency.com
When I was in High School, we had a lot of free time.
We’d play poker in the cafeteria. Money was exchanged
under the table (literally) after each hand. At first it was
just a few ordinary coins. Once in a great while a dollar
bill came out. After a while, the “fish” ran out of money.
The smarter players had taken all their present assets.
So “credit” was extended, so as to take their future
assets as well. Some players became indebted.
“Double or Nothing !” was eventually heard. And then
many more times. With this new credit boom, poker
wages skyrocketed. Some hands were played for $20
or more in “credit”. Large debts were commonplace.
Debts were swapped.
If you owed Johnny $40 and Johnny owed Willie $40,
and Willie owed you $40, the debts were all cancelled
roundabout. But then the inevitable happened. Steven
got in a jam, and he needed to collect on a debt to buy
something he needed. He needed to collect that day.
Billy owed Steven $12, Steven needed $5, and Billy had $6. Billy didn’t want to pay anything. But a deal
was struck.
Billy paid Steven $6 and the debt was cancelled. 50-cents on the dollar ! Soon word got out that this
was the way things were going. Debtors wanted ever more-favorable terms. Things got ugly when
Kevin owed Mark $10 and Mark owed Tony $10.
Mark wanted a switcheroo to cut himself out and make Kevin owe Tony the $10 directly. But Tony
wouldn’t have it since the credit-worthiness of Kevin was lower than that of Mark. So Mark just refused
to pay his debts and his perceived credit rating plummeted – below that of Kevin. It was an all-out race
to the bottom !
Finally at the end it got to where over $600 in (NET face value !) debts were settled in a multi-way deal
with the only actual money or asset changing hands was an old 1878 silver dollar (worth about $3 at the
time !). After that fiasco, no more credit was extended. Either you paid up after every hand, or you didn’t
play. The regulators (teachers) finally found out about our little financial experiment going on in the
cafeteria and shut it down. So we just moved it off campus to a friend’s apartment nearby.
I learned more about economics and finance from all this than I did during my entire High School and
College education.
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