Adam's sister and brother-in-law, Zara & Zryce, have three adorable kids that sometimes need a little "motivation" for good behavior. A few years ago, they instituted a gold coin reward system where the kids are rewarded for various good behaviors, the kids "save" their gold coins to redeem them for various special treats. I'm sure it's a super common parenting framework and much, as in one other story, has been written about Zara & Zryce's gold coin system by Adam's dad. [check out story below].
However, let's call it what it is because I did major in Economics after all . Zara & Zryce have created their own household monetary system where they "print" money by supplying these tightly controlled gold coins. They've also set up a basket of goods with a price list that they call the "Gold Star Reward Chart." They are the Federal Reserve, the kids "employers," central planners and the company store all rolled into one entity. The kids can only cash in their gold coins with mom and dad who are the only ones who will accept them. Mom and dad set and change the prices for all special treats from iPad time to movies to dessert. The parents also set the good behavior "wage". The kids love their gold coins and they're completely bought into the system. They have every right to trust the monetary authority aka mom and dad. Fortunately, the parents are benevolent autocrats and the kids are motivated toward good behavior so everyone's happy.
Now, this system only works because the kids can't earn gold coins from anyone else. They can't or haven't figured out how to go buy sacks of "counterfeit" gold coins from the very same store their parents are buying them from. Like many planned economies, price adjustments are sometimes required like the time when the price of iPad time basically dropped by half. When Zara & Zryce realized that they had an oversupply of iPad time resources, the changed the price for iPad time. 10 gold coins used to buy you 15 minutes of iPad time, but now it buys you a whole 30 minutes of iPad time.
Sometimes, there's a bit of a gold coin hoarding problem when the kids start obsessively over saving and their little economy gets stagnant because no one is buying stuff. While economic growth is not the main priority, gold coin hoarding does limit the money supply and then the parents run out of these coins to reward the kids. I guess at some point they have to print more money by buying a new sack of gold coins in order to inject some life into this little economy. We'll never know if they've printed more money because I'm sure the minutes to those meetings where Zara & Zryce set monetary policy are highly classified.
I find the entire gold coin alternate economy very amusing. I'm not sure what's the end game when the kids outgrow the system, but they each have a giant hoard of coins. Will Zara & Zryce retire the gold coin system, will they peg their gold coins to an actual currency and allow the kids to trade in their gold coins for cash? Will they peg to the US dollar or the Euro or maybe even the Indian Rupee? I also enjoy entertaining the idea of destroying the gold coin system from outside by devaluing the system and providing counterfeit gold coins. What if I bought my own sack of identical gold coins and started rewarding them willy nilly? How would Zara & Zryce "know" if the gold coins the kids have are legitimate or counterfeit? What if I donated coins by dropping them stealthily into the kids' mason jar banks?
I have lots of great ideas, but I will never actually commit such economic atrocities because I myself would love to earn some gold coins for my good behavior. I wish Adam and I had a gold coin system. 5 gold coins for an extra dessert and 2 gold coins for three extra stories...that's an awesome deal!
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