Christmas is coming – and in many households that means one thing: compulsory board games. There are any number to choose from, but none more guaranteed to cause a flaming family row than that old favourite: Monopoly.

In an imaginative piece for Bloomberg, Matthew Klein suggests that you ring the changes with a modified version of the game he calls Deregulated Monopoly:

“The biggest problem with the official rules is that it’s unrealistically difficult to borrow money. You can’t even collect rent from properties you have mortgaged. Yet leverage is the special sauce driving booms and busts since the beginning of civilization. The Bible repeatedly mentions the importance of regular debt forgiveness, yet traditional Monopoly makes it hard to understand why.”

These are the additional rules that you’ll need:

“1. Let every player borrow and lend from any other player. They are free to negotiate all terms, such as the interest rate, the repayment schedule, collateral and down payment requirements (if any), and what happens in the event of default…

“2. Players who lend cash in exchange for pledges to be repaid can use those promises to secure loans from other players. They can also sell them.

“3. Let players sell shares of the rental income generated by specific properties. The stakes can be traded and used as collateral for loans…

“4. Let players write derivatives contracts with other players, such as insurance policies that pay out when a player lands on specific properties and options contracts that give a player the right to buy un-owned properties at preset prices from another player if he lands on it first.”

As you can imagine, a game played along these lines could soon descend into chaos:

“These rule changes create opportunities for cooperation, as well as the possibility of crises. That’s because most players will probably end up owing far more than they can hope to repay if they ever have to cover all of their debts at once. A few unfortunate throws of the dice can create situations where there literally isn’t enough money in the game…”

“Players who go through this often enough may come to the same conclusion that many others have reached in the real world: The ‘bank’ should intervene.”

Players would therefore learn something about how bail-outs happen in what is supposed to be a free market. And that’s just the start of the game’s educational potential. For instance, because the modified rules give players the ability to create and borrow large amounts of money, the price of each property would soon go through the roof – a little lesson in how to create an asset bubble.

Something else you’d discover is that all those pretend loans, securities, options and derivatives would be very hard to keep track of. Some of the brighter players might offer to handle the paperwork on behalf of the other players – in return for a modest fee, of course. These specialist players would be called ‘bankers’ and they’d be the only ones to know what was really going on.

If the other players were worried that were borrowing too much or the whole system was getting too complicated, they could ask the ‘bankers’ for their advice. Of course, because the bankers wouldn’t make any money if the other players stopped borrowing, their advice might not be all that reliable.

Thank goodness it’s only a game!

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