Explaining Inflation by Buying Drinks by Cutting Uncut $2 Bills
When I was on the reality TV show Below Deck, one of my guests brought a bunch of uncut sheets of currency with him.
On the table is 16 sheets of uncut $2 bills. They have a legal tender value of $512, but they cost $4,000 to buy from the US Mint. So each uncut sheet is worth $250. Cut up the sheet into individual bills and it becomes $32.
But no one would cut up the sheets, right?
Inflation devalues your money and cutting up uncut sheets of $2 bills is a great way to explain it. When it’s a whole sheet, you can buy $250 of drinks with it, but cut out the bills and you can only buy $32 of drinks. Inflation isn’t just the price of things going up, it’s also the buying power of your money going down.
We gave the remaining uncut sheets of $2 bills to the Below Deck crew and told them it was gift wrapping paper.