Everything I Know About Economics I Learned Playing Poker

Back in my young adult days, those carefree days BC (Before Children), some friends and I played an informal poker game almost every week. We’d play all night on a Friday, settle up as the sun was rising and crawl to our beds with our winnings. This went on for a while until children started coming, jobs were too exhausting, mortgages taken out—in other words, we soon enough had less time and little money to play.

The game was a quarter to open, nickel bets—pretty low stakes really but the game was for fun and this was, after all, the late 1970’s. We were mostly in our young 20’s and this level of wager was acceptable to our wallets. My friend’s boyfriend, Josh, served as “banker” every week. It was his house (well, he lived there) and his poker chips and he was insistent. So, okay. Didn’t matter.

Or did it?

During the course of the game, if you ran out of chips, you had to dip back into your wallet, toss it to Josh, and he’d count you out some more white, blue or red plastic disks. When I didn’t have money in my wallet, which was frequently, I was out. At this point, I became the runner for snacks and drinks and simply enjoyed observing the game. This was true of anyone in the game—except Josh. As the game went on, when he was out, he simply grabbed more chips out of the box and said he’d settle up with the bank at the end of the game. His wallet was in the other room or something. Because we trusted Josh as one of us, nobody minded.

True to his word, yes, he settled up at the end of the game—but after many weeks it became apparent that he was usually the big winner. Not that he was that great a player. He was fair—as were we all. Since I was sitting out A LOT (testament to my own card prowess!), I noticed something very interesting.

What really happened was that Josh would be out and out and out again. He “borrowed” countless times during the game—even to bet bigger when he got an especially good hand. What I slowly realized over the course of time, was that his endless ability to obtain more chips meant that Josh was able to outrun the chance aspect of the game and wait out everyone’s ability to buy chips until everyone went out and he “won.” Most of the money that had come to the table, left in Josh’s pockets.


Oddly enough, this is what happens in finance today. Every time you play by depositing money, taking a loan or using a credit card, bankers get to legally create money where they had none. They get to loan out, theoretically upon promise of interest payments, $10,000 for every $1111.12 in the vault. They’re “banking” on several assumptions: that not all the depositors would ask for the money back at the same time; that borrowers will pay the interest on those loans, and mostly that they control the government (ironically by debt!) that regulates the “fractional reserve system” that lets them create money out of thin air anyway. They produce nothing and that’s exactly what comes out of the banks’ pockets every time they issue a mortgage, a loan or run a credit card company. Instead, an account is created for you. Numbers go back and forth between accounts without anything of actual value being involved. Ultimately, fear of personal (and to a certain extent global) economic collapse keeps everyone running as fast as they can chasing an ever smaller pool of dollars as the mathematics of principal and interest spiral out of control. The cards, however, are in the bankers’ favor since they possess a nearly limitless resource of credit.

In other words, if we had all had Josh pass us chips on our promise to settle up at the end (like he did), players could then say “Oh, silly me. Don’t have it.” Then Joe would have been left holding the EMPTY bag as it were. As it was, we all ponied up and Joe pocketed a lot of money where he only had maybe a fiver on him to start.

If Josh were a real banker and we didn’t pay, he might then whine, “Okay, but you’ll owe me $2 more since I have to do without that money” (more revenue from nothing!) or even hold a gun to our heads, saying, “Pay up or else.” If he managed to frighten us enough, we’d say, “Okay, man, Sheesh! Don’t get all weird,” and go get the money by whatever means. Or we’d ask to play again in hopes that Lady Luck would shine on us this time. In Josh’s game, as in modern “finance,” she’s nowhere around.

Of course, economics is much more complex than this but only in shades of this theme. For more explanation, YouTube “Money as Debt” and watch the movies by Paul Grignon.

*Maybe the names have been changed to protect us all. Maybe not.


2 thoughts on “Everything I Know About Economics I Learned Playing Poker

  1. Hmmm … I wonder where ‘Josh’ is today; what he is doing, and whether or not his habit of floating himself ever caught up with him. (Actually, it probably isn’t ‘whether’ but ‘when’.) So many ‘regular people’ get into trouble with credit cards in just the same way. There usually is no real wallet in the other room. Very nicely written, as usual. ( Me, I’m into bartering lately.)

    • Thank you, Lisa. I have no idea where Josh ended up except that it wasn’t long after this that he filed bankruptcy and bought a nice expensive car literally on his way home from bankruptcy court. He shoudl have been a banker….

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