Essay by Paul Millerd & Ryan Borker

Look at this cute little guy:

Right now, as citizens of the United States we may become that hamster.  Near term, we don’t really have a choice.  Long term, we might have a choice.

A lot of people have asked us what printing money means. Like, what actually happens and why should we care? That simple question turned into a long investigation. 

The result is this piece, which aims to give you a better understanding of the whole economy using hamsters. Hamsters are fun. They’re playful. We understand their need to run faster and faster on wheels.

But, my friends, the joke is on us. WE are the hamsters right now.

We’ll explain WHY we, U.S. Citizens participating in the global economy, are just like that hamster and explore WHETHER we want to remain on the hamster wheel. 

It’s an ambitious agenda, requiring us to do a first principles explanation of a bunch of economic concepts, including:

  • What money really is
  • How it powers the economy and as a result, our hamster wheels
  • Why fast is never fast enough on the hamster wheel (hint: it’s greed!)
  • What happens when hamsters lose interest in the hamster wheel?
  • What does the future look like? Wheel or no wheel?

Can you really just “print” money?

Apparently, yes. Governments across the world are “printing money” at an unprecedented rate, unleashing trillions of dollars into the economy.  The US central bank has pushed $2.5T of fiscal stimulus which estimates suggest could become $6 trillion with more expected.  

That’s a huge amount of money. But what does it mean to print money?

Printing money now is not like the very old days, where you had to print paper dollars. Physical Money (or “M1” in economic terms) is not where the action happens. Imagine instead, you log into your online bank account and instead of being like “damn, pay day is so far away”, you’re like “damn, that’s a LOT of money” when you see $10 Billion Dollars in your account. That’s what printing money is like these days. It’s a ledger entry: the government says there’s money in your account and voila, there’s money.

That’s what the  government is doing right now. You can go read the technical details but it’s not significantly more complicated than that. They’re distributing money in all sorts of ways: buying financial objects (in particular stocks and bonds), giving banks money to lend, along with standard policies like setting interest rates and spending on government projects. And thank goodness: people are short on cash right now. They’ve lost jobs, businesses have lost customers, all because people are overwhelmingly staying home now.

Intuitively, printing money seems to be a good solution to a crisis. After all if you can just create money out of thin air, why wouldn’t you? And if it works so brilliantly, why aren’t governments doing this all the time?

You probably have some sense that it isn’t quite that simple. And you’d be right. Furthermore, we’re printing money at a scale the world has never seen. It is an extraordinary global experiment, the implications of which are hard to understand or predict at all. 

Before getting there, we’ve assumed we understand what we’re printing (“money”). Let’s make sure we agree on what that is. In exploring money, we’ll also introduce three simple lessons of “Hamsternomics,” or in other words, how we are all like hamsters running around on hamster wheels.

Three Intro Lessons To Hamsternomics

Hamsternomics 101

With a bit of magic, you are now transformed into a hamster:

Hi Hamster.

Hamsters are simple, peaceable creatures. They care about one thing: running on the hamster wheel. 

Running on the wheel seems to provide them food, shelter, and warmth, which they pay for each month with what they call “hammies.”  No one seems to remember when these “hammies” were created, they have just always been part of hamster world.  Asking where they came from to other hamsters gets you looked at funny.

What they all do know is that each time they make the hamster wheel rotate they get 1 hammy. This shows up on a counter right beside the wheel, so they know how many hammies they have. Hamsters love this direct feedback!

At the end of every day, they  press a button called ‘food’ –each time they press the ‘food’ button, a hammy gets moved from their counter into the ‘food’ pile. At precisely 8 PM, food gets divided among the hamsters based on how many hammies they put in.  Over time, this system works nicely. No hamster runs a lot more than they need to because after all they can only eat so much food. 

So you’ve got a ton of hamsters running on wheels, splitting food pretty nicely. Life is good!

One day, overnight, a new button appears next to the ‘food’ button. It says ‘Hamster Prize.’ Intrigued, a few intrepid hamsters press that button a couple of times. One crazy Hamster named ‘Larry’ presses it 100 times. 

At 8 PM, he gets a neon sign in his cage that says “Hamster Prize.” They soon figure out that the person that puts the most hammies in the pot at 8PM wins this ‘Hamster prize.’ 

People start running on the wheel more to get the “Hamster Prize”, competing against each other. Often to exhaustion and sometimes even to the exclusion of food. This behavior perplexes some other hamsters, but soon enough people seem to take even this behavior as basic.

At this point, even with this simple hamster world. We’ve illustrated what money is. Specifically money (or hammies) is 2 things:

  1. A store of value – the counter shows how many times you’ve run around the hamster wheel, and proves that you did so.
  2. A unit of account for transactions – food is divided according to the number of hammies you put in. The hamster prize goes to the hamster that puts in the most hammies. No hammies, no prize. But having the prize also proves you put the most hammies in one day.

But in a deeper sense, you’ll recall that hammies merely represent the number of times a hamster has run around a hamster wheel. Hamsters believe that they’ll have food when they press the food button at the end of the day. But there is no rule written that they must, and in fact no one guarantees it. In a very real sense, for a hammy, or any money, to have value, hamsters (or humans) have to believe it means something in the first place. That belief is a pattern, renewed every day, by the run-on-the-wheel-then-collect-your-food cycle. Hamsters run because it always seems to work, and it always has.

On another day, everything changes again. There’s now a new alexHAM button in the hamster pen. It allows them to hit the button and then make a small squeak indicating something that they want.  An algorithm powering the button calculates how many hammies it will cost and then the hamster gets to work on the wheel.  At the end of the day they hit the button again and can exchange a number of hammies for the item they wanted.  Some keep the items, but others start producing them for the hamsters in nearby cages.  Things start to get out of hand as hamsters come up with infinite numbers of things they want: fluffier beds, hamster sweats, upgraded water bottles and so on…

With this shift, the hamsters started paying more attention to how much hammies everything cost and they started to have a better understanding of what was valuable in the eyes of other hamsters.

Hamsternomics 102: Debt

With the new buttons, the hamsters started to imagine all sorts of things they could create and new ways of managing how things are produced.  As things became more complicated, they had to come up with better ways to manage everything.

For example, if a hamster gets sick, would they run out of food because they can’t run on the hamster wheel?  No, of course not, hamsters aren’t savages!   

What they do is they allow the sick hamster to promise to run more times in the future in exchange for some hammies now, which they can use to get food. It’s a simple system. A trusted hamster subtracts some hammies from their counter and gives it to the hamster in need. The hamster in need just runs a few more times around the wheel every day to pay it back to their friend. Voila. 

As the rules get more complex, the hamsters start using the word “economy” to describe all the activities related to running on the wheel and acquisition of things.

As the demand for the new things increase, the hamsters figure out new ways to get what they want faster.  Similar to how the hamsters stay fed when they are too sick to run, they start making promises to other hamsters in exchange for hammies that they can use today to buy what they want.  Some of the hamsters make these promises to hamsters they don’t know as well, who demand a small “interest” payment in case they fail to follow through.  Eventually almost all the hamsters make some transactions using this method, which we would call credit and even start to keep track of everything in a digital account rather than exchanging real physical hammies. The whole system works because most hamsters run around the wheel enough times to pay everyone back. 

This enables the hamsters to dream bigger.  They start doing things that were previously impossible, like building hamster mansions that take months, or writing hamster novels which take years. 

Now remember, when one hamster owes another hamster some hammies, you’ve in effect ‘created’ new hammies magically. The ‘borrower’ hamster gets some hammies now – which they can spend on whatever they want. The hamster gets that same amount of hammies later, plus some bonus hammies! Where do those hammies come from? Well, the borrower hamster has to run around the wheel a few times. It doesn’t take too long to realize that every hamster loan represents some hammies in another hamsters bank account, or a promise to run around the wheel a few more times to get more hammies.  Again this might make your head spin, but that’s OK. Just remember, there’s a balance of payments that exists. Every hammy in the hamster economy can be accounted for, by spinning on the wheel or as a promise to another hamster.

The system works well, but over time people notice there are patterns. 

Some of the more astute among you may have noticed some similarities to Ray “Hamster-Legend” Dalio’s conception of the “economic machine.” We were definitely inspired by him and highly recommend his full 30-minute video on the subject, but its certainly not required to understand what’s happening in hamster world.

Hamsternomics 103: Government!

After a while, hamsters realize they want some things that no individual hamster can pay for. So they create a hamster government. The hamster government can make things like space lasers (so cool!) and giant hamster wheels that hundreds of hamsters can go on at the same time (wow!). But sometimes, their projects get so ambitious that there aren’t enough hammies. No problem, AbraHAMster Lincoln says, we’ll lend money to ourselves. 

“What?” says the collective hamsterland?

“Easy” Ham Lincoln replies.

“We’ll give any hamster that wants a promise to get more hammies (when everyone has gone around the hamster wheel a few more times) in the future in exchange for some of your hammies now.”

“That sounds circular,” say the hamsters. “Aren’t we the ones who you rely on to get hammies for projects?”

“Indeed.” says Ham Lincoln. “Indeed.”

That last point is an important point. If you ask a single hamster to go around one more time on the wheel, it’s pretty trivial. But if you ask a single hamster to go around 1 million times, it’s pretty tough! But it’s pretty easy to promise that you’ll go around 1 million times at some point in the future. At 180 rpm’s (seriously), that’s 90 hours of hamster wheel spinning. Not an impossible amount, but a lot of hamster wheeling!

Making promises is great when everything is working normally. Hamsters run, food is provided. However, make too many promises and, you need to have more hamsters, the hamsters need to go faster, or things are going to get pretty uncomfortable for our furry friends.

INTERLUDE: HAMVID-19 CRISIS!  

CRISIS! HAMVID-19, a deadly disease, emerges in the hamster world. AbraHAM Lincoln decides to shut down all the hamster wheels but this causes a major problem! Hamsters have made promises to run around the wheel a number of times but now that is impossible. What will happen? 

Lots of pain, that’s what.

If you’re a hamster that promised to run around the wheel – you have to break those promises. On the other side, if other hamsters promised you hammies, you don’t get those hammies. Now imagine you’re somewhere in the middle – you were a judicious hamster that saved, gave money to some deserving upstanding hamsters, but then made a promise based on those upstanding hamsters so you could buy your own food. 

Utter chaos. 

AbraHAM Lincoln now can’t make promises to other hamsters. He’d certainly look foolish promising that people will run around the hamster wheel when running around the wheel is prohibited!

What if… Ham Lincoln muses… I just change everyone’s counters *as if* they are running around the wheel? Wouldn’t that make everything better?

And with that question and thought experiment, we bid our fair hamsters adieu.

The fragile human hamster wheel

We’re not so subtle. Perhaps you have seen already the parallels between our world and the hamster world. We operate in our own version of hamsternomics, except it’s more complicated. Instead of individual hamster wheels, we build things, move things or offer services to others.  Money is available, saved, and exchanged in significantly more complicated ways. And when something like Covid-19 hits, not all value is immediately destroyed because there are all types of different hamster wheels that exist.  People who work online might be able to keep going at the same speed.  Others who work at restaurants may be off the wheel for months.

What is similar is that we’ve developed special institutions like the central bank that can “inject” money to help keep hamster wheels in motion when people start to lose faith in the system.  This was partially credited with keeping the 2008 financial crisis from becoming an even worse challenge for the global economy.

In short, as we mentioned at the beginning, what AbraHAM Lincoln ponders at the end is *in reality* what is happening now. The $1,200 stimulus checks are being ‘printed’ – given to us without needing to pay it back.

However, printing money is equivalent to the government automatically running the hamster wheels and eventually hoping everyone will ‘get back on.’ The government can keep the wheels running for a short time but eventually needs people to jump on themselves while picking up the speed over time.

In our current crisis, they are not even thinking about that yet, they are just trying to stop things from falling apart.

“A government’s creation of money and credit and its spending of this money and credit cannot produce goods and services or employ people (though it can give them money and credit to not go broke).”

In the short term, the pattern of ‘everything working’ is so strong and instinctive, we trust that it will in fact keep working. And as long as it does, we’ll all be (mostly) happy. But at some point, people will need to be motivated to get back on their human hamster wheels.  

It’s worth restating the assumptions being this, that it critically depends on people believing that the hamster wheel story is true.  The story goes that if you keep the wheel moving and push harder, you will have more food, security and comfort.

But over the past twenty years, cracks have begun to appear. Looking at alternative measures of success like the “cost of thriving”, it becomes clear that it takes the median person in the US almost 12 more weeks per year to earn the same quality of life in 2018 as they did only 18 years earlier in the year 2000. The wheel is going faster and faster. There’s a “Red Queen” problem (from Alice in Wonderland) – you have to run as fast as you can just to stay in the same place!

Which brings us back to our friend from the beginning. Get thrown off the wheel too many times and you’ll stop believing in the story.

The Three Motivators: What Gets People Back on The Wheel?

Few people have any memory of experiences with the economy working in a different way, so believing in the story is the only option people think they have.  

Our current story enables different people to have different motivator for why they participate in the system.  Three of them we want to highlight are meeting our desires, trying to become wealthy and/or to be employed as a way to contribute to society.

These were all on fragile ground before the crisis, but because of it the cracks are becoming more visible.

Motivator #1: Our “Insatiable Desire”

As humans we have two kinds of needs: relative and absolute. When your child says they ‘need’ a new toy, we consider that a relative need. When a bystander says that an unconscious victim on the beach needs CPR, we consider that an absolute need. The categories are intuitive, but non-obvious. People live without things we’d consider ‘absolute’ needs: consider homeless people. However, we generally agree as humans that certain things should be provided: food, shelter, health care (to a degree) etc. The key to understanding the desire for Universal Basic Income and the like is that we, as a US economy, theoretically have way more than enough to provide for everyone’s basic needs.

Relative needs, then, are where the action is. Many things we want *because* others have them. We want other things because we simply want more of them. It’s not enough to have *a* yacht, you yearn for a bigger yacht. Humans have an innate comparison mechanism to others. We gather our own self worth not absolutely, but for the most part in relation to other humans.

The insatiability of our relative desires means that the conceptual growth of an economy can be modeled as ‘infinite’ – as long as there is something for which we humans are willing to work for, we’ll continue to work for it and go after it. Money is the simplest measure of how badly we want something.. That number can change, and motivate people to do more to get the things they want. You’ll often hear common terminology for this phenomenon: supply and demand, and where they cross as the market price. Prices are extraordinary things in plain sight

but they’re tangible representations of what we value in society.

And so the hamster wheels turn.

Motivator #2: Take Risk, Get Rich

Are we all just hamsters making promises to each other to spin more times around the wheel? You might ask how do we keep getting ourselves into this predicament?  What stops us from looking around and declaring “I finally have enough!”and just live out our days in leisure? 

Essentially, it’s the fact that our relative  needs are a ratchet.  The more you have the more you want.  We are on the hunt for things that are better, faster, cooler and make us stand out compared to others. 

One hypothesis for why the US has been so economically successful is that it is has created better incentives and ecosystems than any other country for individuals to attempt to meet the insatiability of human desire.  

In short, if you have an idea — however crazy — you are encouraged to pursue it and if it succeeds, people readily accept that you should become extraordinarily wealthy because of it..

While this incentive structure can have terrible effects when those people try to hack the financial system (e.g. ahem, too-big-to-fail banks), on the balance it has created the greatest economic engine the world has ever seen.

Things that people want come from the U.S. market: Silicon Valley technology, Hollywood entertainment, World-beloved consumer brands that wash our floors and clean our dishes, and sexy electric cars.

The sheer madness of some of the investments means that some people end up looking like Jeff Bezos, and others like Adam Neumann. And while WeWork’s valuation was magical thinking, the ability of Adam Neumann to keep the borderline fraud alive for so long is a fundamental part of our system.That Neumann can create the company and fail and then try again is a feature, not a bug.

Many other systems wouldn’t allow this to occur, and in fact systematically take actions to prevent it.

Without risk, there is no chance of asymmetric reward. Without that reward, the hamster wheel slows, as we’ve seen from other economies like France and Japan. 

Motivator #3: Get A Job, Be A Good Member of Society

To be on the hamster wheel is to take part in a collective society.  Increasingly, at least in the US, this means paid employment.  

As one of the only countries in the world to embrace “employment-at-will” the amount of people in the labor force is a lot more dynamic in the US than in other countries.  During “normal” times there is an argument that this kind of labor relationship enables companies to react more quickly, hire faster (and more people) and generate more wealth than they would with another setup.

For our current crisis, however, we’ve seen an unbelievable amount of people become unemployed in a short time.  In a 28-day stretch starting March 26th, the US saw more than 30 million people file for unemployment with still more likely to come.  Compared this to Germany, where in a country fourth the size of the US, they only expect about 2.35 million people to collect unemployment benefits throughout the entire crisis.

While this experiment may prove to be a “feature,” not a bug in our ability to respond to the crisis, there is no doubt that the scale of the response will have dramatic implications for the future of the business world and how people think about work and what motivates people to take risk.  

Ultimately, the idea that we collectively contribute to society by being employed has a strong fundamental basis historically. The question is whether that’s true anymore.

No Off-Ramps from the Hamster Wheel

John Maynard Keyes suggested in the 1930’s that we faced an “economic problem” which was simply how do we produce enough as a species to meet a satisfactory level of needs – what we called “absolute needs” earlier.  He projected that by 2030 we would have achieved a level of economic prosperity that would enable us to once and for all solve this problem and that the real problem would shift to how people would think about spending their time after working a minimum number of hours during the week.

Many who argue for a Universal Basic Income are using this line of thinking and trying to tell us “We’ve solved the basic economic problem! Let’s start acting like it!”

While this may be true the argument falls down once you recognize that most of these absolute needs are met within the context of a market economy – the hamster wheel needs to keep turning.. We saw this most clearly in many Western nations in their early reactions to the pandemic.  When the hamster wheel stopped moving, there were breakdowns in production and supply chains.  While people were able to quickly react in some cases, like making masks for their communities or sharing food, people can’t just manufacture their blood pressure medicine in their kitchen.  

Many people are projecting that eventually people will return to their hamster wheels.  That the things that have motivated them in the past will motivate them in the future.  This is a bet that things will return to “normal.”

However, here again we see Dalio pointing out the obvious about human nature and its relationship to economic activity.

The level of economic activity that we will see will depend on how we are changed by this experience with the virus …I believe that we will be profoundly changed by this experience for many reasons including how the discussions about who will pay the bills (e.g., will we pass this debt on or will we raise taxes) and about who should have what (e.g., should there be fewer differences in our access to basic needs) occur. Many other profound changes will also occur, such as attempts to have self-sufficiency in an interdependent world and the changes in the global world order.

There are very difficult questions about life that will come up. Despite being a rich country, there are still people that go without food or shelter and many more struggle to find adequate housing, work that pays a living wage and affordable healthcare. 

Yet, it remains unavoidable that no country has found a system to provide those needs for everyone in a society. Many charismatic leaders were certain that utopia was close, but all have either come up short or taken disastrous turns towards violence and repression.  

For now, all hail the indomitable hamster wheel!

Epilogue: Three Questions About The Hamster Wheel

Why do people stay on the hamster wheel?  Simply, because it’s worked so far and everyone else is on the wheel.  If they keep doing it, their family will be kept safe and secure.  Or at least that’s always been the case.

We do what we do because dammit, that’s what we do!

This crisis is unique in that it is giving millions of people a clear view at the hamster wheel and people are starting to question if it’s all worth it.  Should we go back to the wheel?  Are we getting a good deal? 

No one is really sure, but people are starting to wonder.  Most people want to keep their lives going as they have been going.  They want to meet their absolute needs and also want to keep their relative needs met, but the whole thing is showing more cracks and is more fragile than ever. 

This would be the point when others might pivot to a very clear vision of what comes next and how we will shift.  We’re not so confident.  We see the flaws in utopian thinking.  But we do think it is time to contemplate the questions underlying the hamster wheel.  

  1. Is the Hamster Wheel still as important as it has been historically?
  2. Is there an alternative to the hamster wheel? What would that look like?
  3. What kind of future do we want to build?

These are not easy questions and may even be uncomfortable to even think about. But given what we now know about the hamster wheel – it appears the days of happy mindless spinning may not be as sustainable as it has been in the past..

Unless we decide what we want to do next – there may be a lot of unhappy hamsters.


About This Essay

This essay was a collaboration of Paul Millerd and Ryan Borker, who both have experience jumping on and off the hamster wheel at multiple points in their lives.  This essay put us out of our comfort zone, but we are deeply curious about what we got right and what was missing. We’d love to keep the conversation going and you can join in the conversation by emailing us your thoughts, sharing on social media or following along on our newsletters.  You can easily find Paul’s link to subscribe on this page, but you can also join Ryan’s explorations on “the future is work” by subscribing here.



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