The primary objective of the classic board game Monopoly is to collect properties, build hotels, collect rent, wipe out opponents, and eventually win the game by owning everything. Much like in real life, “Real Estate” is the primary asset in the game that is sought after to retain and grow what little income you may be collecting along the way.
According to Investopedia, an asset is defined as a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.
If you notice while you play a game of Monopoly, the player that holds the most valuable assets slowly begins to ‘absorb’ the cash and assets of other players. Why is that? When used properly, assets tend to function much like gravity in the sense that they are used to collect additional revenue and assets from other players via rent, fees, or other mechanisms. By utilizing and growing their assets, the rich can quickly start to compound their wealth at the expense of the other players.
But what happens to the players that do NOT own properties or monopolies? Where can they build houses and start collecting that valuable rent? They of course inevitably slowly bleed their wealth as they painfully march around the board. The rent and fees they owe begin to outpace their limited sources of income. They are forced to mortgage or even sell the few properties and assets they do have. Their income and assets will always flow to the players that have the more powerful properties. This is exactly what is happening throughout the economy today. As the winning players increase their wealth, they use that new income to purchase more houses (assets) and increase their income even further! This is one of the underlying reasons of exactly why the rich get richer and the poor get poorer!!!
Most financial advisors and wealth builders insist that the best way to increase your net worth is to acquire valuable assets like equities and real-estate. But how can a new player to the game acquire these assets if their bills and rent are quickly outpacing their income? It’s an American foundation that your home is usually the most valuable wealth generating asset that you can own. But how can you “invest” in a home when you have been completely priced out of the market? Unfortunately, we have to live somewhere so many of us are forced to rent with no ability or access to build any equity in real-estate, much less own a home.
Just like in the board game, wealthy homeowners and huge corporations are using the advantage of their assets like gravity to absorb any incoming revenue from those who rent or own none. Younger generations have lost the ability to participate in what has been known for generations as the safest and most dependable wealth building strategy. Even if they manage to collect any savings or capital, they are forced to turn to more risky investments in a desperate attempt to grow their wealth at a pace to keep up with inflation.
One of the lesser known secrets about Monopoly is that the game can be drastically shortened by simply changing only one of the key variables. As everyone knows when players pass “GO”, they collect $200 as part of their basic regular income stream. However, if you change that amount to $300 or $400, something very interesting happens. The entire process accelerates and the game ends faster! The more money you add into the system, the quicker the houses and hotels go up. The quicker the weaker players get bought out. Suddenly, jail becomes the best place to be.
Providing economic stimulus to the players that are falling behind makes them feel great! Of course they love it! That extra $100 allows everyone to breathe a little bit more as they march around the board desperately trying to dodge the growing number of houses and hotels. But the increased income always ends up going to the players that continually keep growing their assets. And of course they grow the power of their assets by acquiring more assets!
This is the underlying key problem with inflation. Adding more money into the system only accelerates the gravitational forces of wealth being diverted to the heavy players. Assets become more valuable which in turn makes them much harder to acquire.
-Howard Minor