All entries for Tuesday 27 March 2007
March 27, 2007
Frequently Asked Questions About Dropping Pennies In The River To Mitigate Inflation:
Q: Why drop pennies in the river?
A: To mitigate inflation.
Q: Does dropping pennies in the river mitigate inflation?
Q: How does dropping pennies in the river mitigate inflation?
A: Inflation is caused by increased money supply. Dropping pennies in the river effectively decreases money supply by taking currency out of circulation (and into the river).
Q: I don’t understand.
A: Broadly speaking, if we all have less pennies, the pennies we do have become more valuable.
Q: I still don’t understand.
A: Consult your friendly local economics student.
Q: How many pennies ought I to drop in the river?
A: Opinions vary, but it is important to drop no more pennies than you can realistically afford to lose.
Q: What about larger denominations (two pence coin, five pence coin, etc.)?
A: Dropping coins other than pennies in the river is also viable. As ever, please use your own discretion.
Q: Is it more ethical to drop pennies in the river, or give pennies to a beggar?
A: Perhaps surprisingly, the former. If you give pennies to a beggar, only the beggar benefits. However, it benefits everyone to mitigate inflation.
Q: What if I believe the beggar will go on to drop pennies in the river?
A: Then you can feel free to give generously.
Q: Someone told me that dropping pennies in the river does not mitigate inflation.
A: This person may subscribe to the Keynesian school of economics, and ought to be responded to with skepticism.