"If the governments devalue the currency in order to betray all creditors, you politely call this procedure 'inflation'." ~ George Bernard Shaw
In fourth grade, I attended a private school in the suburbs of Richmond , Virginia . The students spent a good deal of time worrying whether our shoes were the latest model or our shorts had enough zippers on the pockets. We poked fun at some classmates, were made fun of by others. We also chewed on a lot of cinnamon toothpicks.
In case cinnamon toothpicks are not universally popular, I'll explain what they are. Quality cinnamon toothpicks are made by soaking wooden toothpicks in a strong cinnamon oil extract, and then slowly baked to dry the oil. The thicker the toothpicks, the longer they soak, and the more pure the oil, the higher the grade.
Cinnamon toothpick manufacture became the rage at school. Everyone who was anyone on the bus or behind the building at recess would have one sprouting from between their lips.
Cinnamon oil, in high concentrations, is a poison. Not necessarily lethal, I believe, but it can upset the stomach. My parents knew this. They would not let me use the real oil to make my own stash. I tried making some with a powdered cinnamon and water mix, but these cut-rate toothpicks just were not worth the effort.
The school authorities also became aware that cinnamon oil (in large doses) was a poison. Perhaps some parents had called in an alert. Perhaps there was a nationwide war on cinnamon toothpicks at the time, and I was too young to be aware. For whatever reason, the school banned our savory, splintery favorites.
Some of us were undeterred. Our desire was too great to be stomped out.
Fortunately for me, Tommy, one of my small band of friends, was still able to get the good stuff. Maybe his parents were rebels (his father was the one who took us a year later to see Van Halen, and sat with us just two rows from some degenerate cannibal type who was smoking pot through a drilled out apple, and didn't even make us leave.) So perhaps his folks were defying authority by letting him cook up some more batches of toothpicks.
Being kids, we really didn't have anything to offer him in exchange, and I suppose he just was not the charitable type. So we began to write IOU notes to pay him whenever we got a little money. This meant that we had to write new IOUs for each purchase. We were regular users by this time, and writing all of those notes became tedious.
I think it was David who decided to make the money. We snuck into the classroom supply closet and took some construction paper and scissors, and that night cut the paper into small squares, each representing a penny. (We eventually wrote numbers on different colored papers to have denominations.) We would trade these bills with Tommy for the toothpicks, and he would redeem them for US money once a week. This would pay for the oil and toothpicks, and also gave him a nice profit (for fourth grade.)
This arrangement worked well for us. But our teacher caught us one day with the banned toothpicks and chits of paper one day, and demanded to know what was going on. He would have punished us for the toothpicks, but he took interest in our simple exchange system. He could expand it and use it as a teaching tool, he thought.
Soon he brought the whole class into our little economy. We were no longer allowed to trade for toothpicks, of course, as the exchange was now official and open before the school authorities. But we would have a market time set aside each day. The students would bring in some change to buy paper chits, and something to sell. Then we would exchange for pencils, gum, erasers, high end paper footballs, etc. The money traded in would be kept in a large jar to be used at the end of the year for a class picnic or party.
We had quite a little economy going on. We developed banks with credit, interest bearing loans, traded ownership. When a good amount of cash was in the jar, our money was taken off the penny standard. Performing small tasks in class would be repaid by new money from the mint. We even developed taxation. Some kids were not as successful construction paper entrepreneurs as others, did not earn cash at market times. So, of course, everyone had to fork over a percentage of their income so that these kids would be able to buy things too. This meant that political officers were needed, and they also had to be paid. More taxes and more new money. (Yes, our economy even had inflation.)
There were also more academic lessons to be learned. Class discussions would be devoted from time to time to economic subjects. We had short biographical lessons about the great economists (in progression: Smith, Marx, Keynes). We learned how the stock markets worked and how the Great Depression started because people were too greedy to know what they were doing. (Only the New Deal and a war could reverse this.) Sometimes regulation was needed, because businesspeople don't always look out for other people's interests.
And we were still not allowed to buy cinnamon toothpicks.
It was about this time that the embezzlement and counterfeiting began.
One of the political posts was treasurer, which printed the new money (alright, wrote it with a ballpoint pen) and kept records of how much was being pumped into the economy. To keep things fair, the idea was, this office rotated from student to student. An enterprising student could simply account for less than was written up, and pocket the extra cash. It was also easy to swipe some paper and copy the handwriting of whoever was treasurer at the time, and make one's own money. (I was particularly good at this method. Never got caught.)
This money then flowed into the lively black market, which then sprang up. All sorts of nefarious goods and services were available: blackmail scams ('I'll tell her you like her if you don't pay up,') outright thuggery (One's enemies could be whacked for a fee. Of course, I mean whacked on the back of the neck by an open palm.), and naturally the prohibited cinnamon toothpicks.
The legal economy had started to lose its luster. How many erasers did one really want. Everyone had enough of my designer construction paper wallets, even though I kept making them smaller, but with more pockets. It was mainly the well connected (teacher's pets; most popular kids) who held offices and powers that could profit. The trading at market times became slower as the class began to lose interest in the project. Dodgeball seemed a better way to spend time than on another rigid learning activity.
A holiday intervened, and when we came back to school, the teacher had decided not to start the economy up again. I don't think anyone was too upset. We could still buy toothpicks from Tommy, on the school bus, but he wanted only US money by that point.
I felt we had a pretty good economic education, had learned all the fundamental facts of capitalism. People were bad, stupid and greedy, but had to pay the bills. The government could help them through the system of capitalism, by allowing them to sell things, but curbing their unhelpful instincts. The whole enterprise was stifling, sordid and depressing, I felt. For years, I actively avoided studying the subject of economics. I preferred the more emotional arguments about apparent fairness and justice in the allotment of goods.
I never felt comfortable with the solutions this approach led to, though, because really, I just wanted a cinnamon toothpick.