We know what would happen if every player in a game of Monopoly was given a huge amount of extra money by the bank in the middle of the game. Assets would go up in value, but rent and mortgage values would not change because they are set out on the Title Deed card for each property and can’t be changed.

In this new situation, staying in Mayfair and Park Lane hotels had become very affordable because everyone had a lot of cash. The only people struggling were those that had bought too many properties at higher prices, had less luck than others, and therefore less cash. When they sold their properties they still received inflated prices. 

What happens if the situation is reversed and the bank decides that it wants its money back again? Things would be very different: asset prices would fall - very quickly if the money was to be returned in one tranche - and players would no longer have a fat pile of cash as a cushion. Many would go bankrupt much faster, and these forced sellers would trade in their properties for distressed prices (or even the mortgage value), realising great losses.

The only thing that will save the game will be the discovery of another source of money to replace the money being withdrawn by the bank. What could do that? The plan is for it to be global economic growth but it needs to be a large number. Will enough be available when it is needed? Can we rely on Chance or Community Chest? No one knows.

While they may have some discretion, Trustees with assets and contracts need to have sufficient liquidity to meet their ongoing obligations.

Yoke and Company is the trading name of Yoke Financial Consultants Limited, incorporated in England and Wales (No 10787996) and registered at 6 Normanhurst Road, London, SW2 3TA. Yoke Financial Consultants Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register reference number 826126)
Log in | Powered by White Fuse