Saturday, June 27, 2020

The Parable of the Gift Cards

The Best Gift Cards For 2020 And How To Save Money On Them

Scott was a serial entrepreneur. And he knew how to catch a fad. Purple, Serta, Sleep Number, mattress companies were popping up offering high end mattresses with huge margins, there was even one selling mattresses made out of parts of avocados. He decided that the right thing to do was mix a new craze with an old one. Hollywood had taught him that nothing sells like nostalgia, look at the box office: Star wars, Ghostbusters, Beauty and the Beast. For him the obvious answer was waterbeds.

He quickly got with his manufacturing contacts and within a few months Ocean Rest was born. But clearly nostalgia has its limits and while he was making a living the beds weren’t flying off the shelves. The Christmas holiday was fast approaching and Scott decided to get in on the gift card business. Why would you buy gift cards for $25 or $50 dollars for a $2,000 item? Even the optimist in him didn’t think he would sell a lot, but on the bright side because of that many that were sold would never get redeemed. So, he would sell a 10 cent piece of plastic for $25. That was the kind of business he could get into.

He dropped some money on a graphic designer and when he got them back he had to admit, they were very cool looking. He bought a few hundred and distributed them around at some stores. A few days later his phone rang. It was from his friend, Sai, who owned the local hardware store. “We would like 200 more gift cards.”


“You heard me, the 20 you gave us flew off the shelf. We project we could sell 200 more this holiday season.”

“Sai, you’re very funny. But I’m not making 200 cards.”

“Suite yourself, but I’m serious. They like your cards.”

He and Sai often played pranks on each other so he ignored the call until all the others started coming in. “We will take 100 more.” They all said. Something about that card. And after he filled those orders the calls for 1,000 more came almost as fast. People all over the country were calling asking to get his cards. Soon Wal Mart ordered 10,000. For some reason everyone wanted one.

Scrolling through his facebook feed one day he saw it, a woman holding one of his cards saying, “Can’t wait to give my parents their waterbed gift card for Christmas. The day I punctured theirs and flooded the room they will never forget. They are going to lose it when they get this.” And they started popping up, memes, jokes, memories all with his card. Clearly, $2,000 was too much to have a nostalgic experience, but $20 wasn’t.

As the cards came off the shelf the money started pouring in. First thousands, then tens of thousands, hundreds of thousands and ultimately millions. Making gift cards felt like printing money.

“Dad, I don’t know what to say.”

“The polite thing to say is, ‘Thank You’.” Scott said as he sat with his daughter and their family on Christmas.

“But Dad, I can’t accept this.”

“Of course, you can, it's your Christmas Gift.”

“But my home...paid off.”

“I know you and Billy are doing okay but think about how much easier things will be without the mortgage.”

And Scott was also generous with his extended family. Aunts got boats and Uncles got trucks to pull them with. But Scott wasn’t worried it seemed the money poured in faster than he could spend it. So, he just kept spending.

But all crazes die, and when this one died, it died in two phases. Phase 1 was when people stopped buying the cards. The money slowed down and Scott began to scramble. In addition to gifts he had bought many nice things for himself, and the beach condo had a steep HOA, and the water bill at his new mansion with the lazy river, equaled most people's house payment. Things were getting very tight, he even wondered if he would have to sell one of the six new homes when Phase 2 hit.

In Salt Lake another young entrepreneur’s wheels were turning. The world was flooded with $20 gift cards for water mattresses that were almost worthless to those who held them. People would gladly cash them in for pennies on the dollar.

Scott was excited when he got the first order for 15 waterbeds. After all, he could use the money. But then he noticed how they were paid for, all with gift cards. He wouldn’t see a dime, he already had and spent the money for these. This was painful, but he had to deliver. Then another order for 20, then 30. The young man in Salt Lake was buying $2,000 waterbeds with worthless gift cards and selling them for $500 and turning a decent profit.

One by one the six homes were sold. Pouring all his money to fulfill orders that didn’t bring in a cent. It was staring at a computer in his daughters basement at an order of 100 mattresses that he realized the game was up. He didn’t want to declare bankruptcy but it was his only option. In desperation he called a number he had looked up sometime ago.

“Hello, this is Anash, did you want to order a mattress?”

“Anash, this is Scott, owner of Ocean Rest. I can’t do it.”

“Do what?”

“I can’t fill any more orders. I’m bankrupt, I can’t afford to sell you any more mattresses.”

“But that doesn’t make sense. You were paid in advance for these orders. Paid one gift card at a time. You should have money to spare. Getting paid in advance of the orders is an advantage, how could you not have the money?”

Scott knew Anash was right, he knew money today is worth more than money tomorrow, but he also knew why in his case, that hadn’t been the case. “I didn’t expect people to use the gift cards. I assumed most would get lost or thrown away. At least, I guess that is what I assumed. I probably didn’t really think about it enough. I’m sorry, but you have to stop.”

“I can’t, I have orders to fill. I’ve taken another 50 since I sent you that last order yesterday.”

“Then it looks like we're both going out of business.”


I think this parable needs some explanation. Scott is you and me. It’s all the citizens of the United States and the gift cards are $100 dollar bills. Since the great recession the demand for $100 dollar bills has skyrocketed. As demand goes up they simply print more. They now print more $100 dollar bills than $1 dollar bills. There are several reasons for this. Many countries knowing that large bills are often used in crime stopped printing large currency bills. The Euro for instance discontinued their 500 Euro note for this reason. The US dollar is also amazingly stable, so it is seen as a safe place to store your money if you are overseas.

So with all this printing of money why are we not seeing inflation. And isn’t having the world use our currency a good thing? We are not seeing inflation because much of the money isn’t going into circulation. We get to essentially spend it for goods and services and then it goes into someone's mattress or in some cartels shed. Is this good for us? Like Scott and his family members it is, in the short run. We get the world's goods and services and what do we have to provide in return? Nothing, or practically nothing, a 12 cent piece of paper.

The danger is that just like Scott, this game will die and die in two phases. Phase 1 will be when the demand for $100 bills stops. When people in India, China and drug cartels no longer want to use $100 bills as their preferred source of money storage. That will be painful, because no more buying goods and services for practically nothing. But it is nothing compared to the pain we will feel in Phase 2 when people decide to begin to liquidate the bills they have. There will be massive inflation. That is when we will be forced to make goods and services and get nothing in return. Just like in the story the pain will be shared by both us and those who hold our money.

What should we do? We need to realize that we can’t keep printing money without consequences. The decision to print or not print money is based on keeping inflation low, because deflation would also cause economic pain. The best way we could control this is do what Europe and other nations have done and discontinue the $100 bill. It would be a tough decision. It would be like Scott deciding not to sell gift cards when they are flying off the shelf. But we need to. Because the only other option is actually to use good times to save money and prepare for the payback when it inevitably comes. And unfortunately I don’t see us as a nation doing that.

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Sunday, June 7, 2020

Privilege - A parable

Like A King In A Palace In India: Taj Umaid Bhawan - Traveltomtom ...

A wise king had two sons. Like most fathers he loved them very much and desired to give them every advantage he could. They received the best education, ate the best foods, had access to every comfort available at the time, married the most beautiful maidens and were able to travel and explore the world. But the one limit that the king had was he only had one kingdom, and therefore only one of his sons would inherit the title of king.

Unlike many kingdoms the title did not simply go to the eldest, but rather the decision was left to the father. He loved his people and was a benevolent king who desired a great future for his kingdom, and therefore took the responsibility of choosing his successor seriously.

On a beautiful spring morning the king called both his sons to his chambers. “Sons, I grow old and soon must choose my successor. I lay before you a challenge, the winner will be crowned king. In front of each of you is a bag with 1,000 gold limnah.” This was more money than either child had ever seen, as 1 gold limnah was sufficient to purchase anything in the local market. “Take it, in two weeks you will present a gift to me. He who presents the gift that pleases me the most will be awarded the kingdom.”

The older brother had seen much of the world, he knew of beautiful rugs, and exotic species and fruits. These would allow his father a chance to experience things he had only heard tales of. The trip would not be easy, but if he moved fast he could make it. He gathered his fastest comrades and horses and was off.

The younger boy was at a loss. His father was the king, he had access to anything his heart desired. What could he get his father, no matter the amount of money he had, that would impress. Walking down the road of the street market, he looked into each merchant's tent. There were clothes, lamps, food, and jewelry. All things his father had more of than he could possibly want. But no matter how hard he tried to focus on trying to find something unique to purchase, he couldn’t stop thinking about what he always noticed when he came to market street; Chaos.

Everytime he came here he was always being bumped into. People were always having to stop on the curelom for long periods of time in order to wait for people who zig-zagged in front of them. He had long ago thought of a system of backpassages and dividers that would encourage traffic flow to be more organized. It would allow people to more quickly get their goods, and to the place where they wanted to shop without so much chaos. In addition it would help limit crime as constant bumping allowed for pickpockets to more effectively work their trade.

Such a system could be easily built, but it would cost more money than he had ever had--until now. He quickly figured for 400 gold limnah he could get the work done. That would still leave 600 to buy his father a wonderful gift.

He quickly got to work with builders and began to put into place his new system of roadways for the market. The system was simple and with large crews and a few days it was completed. The first day or two were rough as people wondered what was going on, but they soon caught on and before long people were pleased with their ability to get to and move freely in the market.

The next day he went back out into the market to find something for his father. To his delight, a merchant had set up shop selling maps of his new system to people as they entered the market. They were only a few senine, but he bought one. He then realized the merchant who sold it to him returned too much change. This was a common occurrence in the market. He corrected the error and realized that part of the reason this was so common was that most of the merchants never had any schooling. He wondered how often merchants either cut themselves short or their customers simply because of poor training.

That night he went back to the palace and asked his tutor if he would be willing to teach a class to the local merchants at night on simple accounting.

“I am not hired to teach simple merchants. I am the royal tutor!”

“I will pay you handsomely. 100 limnah.” That was money that no one would refuse.

“I accept, but where would you have me teach this class. You can’t have merchants coming into the palace.”

“I will buy a large tent and place it at the edge of the market. That way it will be easy for them to come as they close their shops.”

The whole plan was more expensive than he had imagined: there were the flyers to get people to come, the tent, the set up, and his hard-to please-tutor. He was so anxious for it to succeed that he even offered food. Probably a mistake in hindsight as it filled the tent to overflowing, and a chance to be taught by the royal tutor was sufficient to attract even the most prideful merchant.

Many of the merchants were so grateful, they sent letters of gratitude to the prince. Given the price of parchment, this was no small gesture, and the prince was grateful. But despite the warmth he felt from this success, a feeling a dread also lingered. He was now down to 300 limnah.

He walked the streets anxiously. Tomorrow was the day he and his brother were to present their gifts to their father, and he had nothing. That means that he would never be king. He took mild comfort from the fact that being king was not that important to him. It was the disappointment he feared would be on his father's face that really worried him. His father had always believed in him, even when he didn’t believe in himself. Rain began to fall. At first it did not bother the prince as the night was warm, but as the rain intensified he ran to seek shelter, but found there was little to be found. The roofs were limited to the homes and besides, this shelter was scarce. He finally found an awning that stood at the end of the roadway, but as he approached it was filled with men. Travelers were not uncommon to the kingdom and many slept on the streets before traveling back to their homes in the outer villages. He had never thought about what they were to do when it rained.

The next morning in total defeat he gave his last 300 limnah to builders to extend awnings and other shelters throughout the center of the kingdom so that there would be more shade in the sun and shelter from the rain.

With his head bowed low, he entered his father's court. He wanted to crawl into the gold laced woodwork. On the other side of the chamber his brother was lining up camels filled with rugs, artwork, fine china, spices and dates.

“Welcome, my sons. What have you brought me?”

The older son presented first and, for hours, exhibited each of the exotic items he had purchased. When he finished, the king said, “Thank you son. These are beautiful and bring me great pleasure. They were not easy to get and I appreciate what you have done for me.” He then turned to his younger son. “And from you?”

The young prince sat with nothing but a small sac of papers he clutched in his hands. Holding back tears he said, “Father, I am sorry, but I have failed. I could think of nothing to get you.”

“What is in your pack? Surely you have something?”

He now wished he had not carried the pack with him. But he slowly pulled out first, the map, “This is a simple map that was made of the roadway system that I used a portion of the money to build.” He said, full of embarrassment.

He noted the laughter in his older brother.

“Go on, what else do you have?” The king asked.

“Then there are notes from merchants, they were in gratitude for a class I put together to help them with accounting.”


“The last is a drawing of the shelters and awnings I asked to be built in the center of the kingdom to provide shade and protection from the rain for travelers. I’m afraid I have spent all your money and neglected to find a gift.”

“Sons, you were both given great privilege in your lives. You will likely have these privileges as long as you live. Privilege is not bad, although many will scoff at you for having it. Some may wonder why God did not see fit to give it to them. But in the great and last judgement God does not care how much privilege we had, only what we did with it.

“My greatest glory is not held in the walls of my palace. It is found everyday walking the streets of my kingdom. It is my people. The greatest gift you can give me, is to make their lives better. And that is also the greatest thing you can do with the privileges given you. Use it to help others have those same privileges.

“Throughout your lives you have both had access to easy access to goods, education and shelter. Others do not have these, but now many of my people have more of them. My young prince,” The king said turning to the younger brother. “Your sack of papers is the greatest gift I have ever received, you shall be king.”


There has been much said lately about white privilege. It has made me think about the many ways in which my life is privileged. I was privileged with having a loving father and mother in my home that both received great educations and helped me to receive the same.

I am privileged historically, as I get to come forth in a world filled with technology and comforts that would have made my ancestors' heads spin.

I am privileged in my location. I was born in the most prosperous nation the world has ever known. Just being a citizen of the US has given me access to wealth and opportunity most of the world can only dream of. I was raised far below the poverty line in American and yet I was still rich by most of the world's standards.

I was privileged to be raised as a member of the Church of Jesus Christ of Latter Day Saints. This gave me access to friends and a safety net. It helped me avoid some of the most dangerous pitfalls in life in regards to addiction and immorality. It has helped me be wise with my funds. And it has given me access to life changing knowledge that I will forever be grateful for.

But one of the lessons my faith teaches me is these privileges are not to be hoarded but used to give others the same privilege. This was made clear as they have asked every worthy young man to give up two years of his life to work day and night to give others the privilege of gospel knowledge and access to the same teachings, society, and safety net that I was born into.

One of the greatest examples of understanding privilege and how it should be used was King Mosiah. When his sons refused the kingdom, probably because they were raised by such a great father. He got rid of kings among the Nephites. Chapter 29 of Mosiah is the most beautiful chapter ever written on politics in my mind but among the many great things he says is:

Mosiah 29:32 “And now I desire that this inequality should be no more in this land, especially among this my people; but I desire that this land be a land of liberty, and every man may enjoy his rights and privileges alike…”

And the greatest example is God himself. He has the privilege of being the owner of, and most powerful being in the universe, and what does he do with it? He shares it with us and desires to give us all that he has.

We can't control what others do with their privileges and many live ignorant of just how privileged they are. But we can recognize our own privilege and seek to use it wisely. I hope we all take the time, no matter our race or creed, to focus on the many privileges we have been given. There is nothing wrong with privilege, but we should each examine what we have done and what we should do with our privilege and how we can use that to help others increase their access to those same privileges.

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