Understanding Inflation so a First Grader Gets it
Here is a super simple first-grade lesson plan about how unfair injection of money into the money supply can affect their quality of life.
This lesson uses very basic concepts, relatable examples, and hands-on activities.
How Printing Too Much Money Can Make Life Harder
Objective:
Students will understand that printing too much money (injecting money unfairly) can make things cost more and make life harder for people.
Materials
Play money (or printed paper money)
Small toys or snacks (to represent things kids might want to buy)
A simple chart or drawing of a piggy bank and shopping cart
Lesson Steps
1. Introduction (5 minutes)
Ask: “What do you use money for?”
Possible answers: Buy toys, snacks, books, etc.Explain: “Money helps us buy the things we need and want.”
2. Activity: Buying Toys (10 minutes)
Set up: Give each student 3 play dollars.
Show: Offer one small toy for 1 dollar.
Let students buy: Most students can buy a toy.
Increase money supply: Give each student 10 more dollars (now everyone has 13 dollars).
Ask: “What would happen if everyone had more money to buy toys?”
Show: Offer the same toy for 5 dollars now.
Discuss: “Now you need more money to buy the same thing. This is called inflation.”
3. Discussion: Why Is This a Problem? (5 minutes)
Ask: “Is it good if things cost more and more money?”
Explain: “If things cost more, your money doesn’t go as far. You can’t buy as much as before.”
Relate: “If your family’s money doesn’t go as far, it’s harder to buy food, toys, or go on trips.”
4. Connection to Real Life (5 minutes)
Show: A simple drawing of a piggy bank and shopping cart.
Explain: “When the government prints lots of money, it’s like giving everyone a lot more dollars. But if there aren’t more toys or snacks, the prices go up.”
Relate: “This can make life harder for families.”
5. Wrap-Up (5 minutes)
Ask: “What did we learn today?”
Summarize: “Printing too much money can make things cost more and make life harder.”
Assessment
Observation: Watch how students use money and react to price changes.
Question: “What happens when everyone gets a lot more money?”
Extension (Optional)
Discuss: “What if you saved your money instead of spending it right away?”
Explain: “Sometimes, saving money helps you buy things later, but if prices keep going up, it’s still hard.”
Imagine a classroom full of first graders, each clutching a handful of colorful play dollars. Their teacher sets out a pile of small toys, each priced at one dollar. Eager hands reach out, and soon, every child has a toy and a few dollars left to spare. The lesson feels like a triumph—until the teacher announces she’s going to give everyone ten extra dollars, and suddenly, the price of each toy jumps to five dollars. Now, the same toy costs five times as much, and even with more money, the children realize they can’t buy as much as before. Some are confused, others disappointed—but all are learning a powerful lesson about money that applies far beyond the classroom.
This simple experiment mirrors a complex reality that adults have faced for decades: when the government injects large amounts of new money into the economy, prices tend to rise. Economists call this inflation, and it’s a concept that shapes the quality of life for millions of people. The connection between “printing” money and rising prices is as clear in a first-grade classroom as it is in the world of grown-ups.
The story of inflation in America really began to unfold after 1971, when the United States ended the dollar’s link to gold—an event known as the Nixon Shock. Since then, the government has had more freedom to create money, especially during times of crisis or war. If you were to look at a graph of the U.S. money supply from 1971 to today, you’d see a green line climbing steadily upward, punctuated by sharp spikes after major events like the wars in Afghanistan and Iraq, and especially during the COVID-19 pandemic.
Each of these periods is marked by increased government spending, often to pay for military action or to support the economy during tough times. For example, after the Vietnam War (which continued into the early 1970s), the Gulf War, the long conflicts in Afghanistan and Iraq, and the broader War on Terror, the money supply grew rapidly. These increases are often necessary in the short term, but over time, they can lead to higher prices for everything from groceries to gasoline.
Just like the first graders who found that more money didn’t always mean they could buy more toys, adults have learned that when the money supply grows faster than the supply of goods and services, their dollars don’t go as far. Families feel the pinch at the grocery store, at the gas pump, and when planning for the future. Savings lose value, and paychecks seem to shrink even if the numbers stay the same.
The lesson from the classroom is simple but profound: when everyone has more money, but there aren’t more things to buy, prices go up. It’s a truth that first graders grasp with play dollars and toys, and one that adults live with every day. Understanding this connection helps us make better choices with our money and reminds us why it’s important to keep an eye on the bigger economic picture—whether we’re seven years old or seventy.
Here’s how you can visualize and interpret the relationship between the end of gold convertibility (the Nixon Shock in 1971), major US wars since then, and the expansion of the US money supply (M2):
Graph Description
A graph covering the period from 1971 to the present would display the following:
X-axis: Year (1971–2025)
Y-axis: M2 Money Supply (in trillions of USD)
Line Chart: The M2 money supply would be shown as a green line, rising steadily and sharply, especially after 2001 and during the COVID-19 pandemic1.
Shaded Regions: Each major war since 1971 would be represented as a shaded area (spanning the war’s start and end years) beneath the line chart, with different colors or patterns for each conflict.
Major Wars Included Since 1971
Vietnam War (post-1971 phase): 1971–1975
Gulf War: 1990–1991
War in Afghanistan: 2001–2021
Iraq War: 2003–2011
War on Terror (broader): 2001–2021
Note: The Vietnam War began before 1971, but its final years are included here for completeness, since the war’s costs and financing continued into the early fiat era.
end of segment
buy silver and gold because they can not be printed
buy silver and gold because politicians hate them both
why do they hate them both?
because a constrained monetary system keeps them tethered to responsibility vs printing money for wars
not financial advice