I'd like to know which would be the most likely outcome of a city of 100,000 people where we can consider any consuming good or service can be achieved if everyone were given 1 billion dollars from one day to another.

With only that condition it's clear what would happen would be that there would be an over the top inflation in the city, so an hamburger might cost 1 million dollars.

But there's a catch with several conditions with the given money that have to be fulfilled.

  1. Prices for any of that consuming good or service must stay the same as they were before the money was given.

  2. People can buy things from other parts of the world but only to be sold in any commerce they had previous to be given the money or being used to some service their company offered, they could only buy things for their own consumption or being given a service in other commerce or companies that are part of the city.

  3. No security forces live in the city but they enforce the law in the city, so any breaking of the law may end with its corresponding punishment, specially making anything that breaks point 1) or 2), or trying to bribe security forces either directly, or indirectly via another people, will be heavily punished either for the persons of the city and for anyone that collaborated with them. Security forces that enforce the law in the city are also heavily watched over to avoid corruption and have severe punishments in they are caught if engaging in such activities, but they can gain some extra money and job improvements if they give evidence that any person of that city has tried to bribe them.

  4. People cannot get out of the city.

Which is a likely outcome of something like this? I guess maybe people may try to bribe security forces in order to gain favors anyhow, but point is everyone could do the same in equal manner, apart from that citizens would doubt in doing it as it would result in being severely punished and security forces would hesitate into accepting it as they may also get severely punish. So at the end I think it wouldn't change things too much. What I don't see is what would come next.

Any ideas of the most likely outcome?

  • $\begingroup$ Wait, every day you give everyone a billion (new) dollars? $\endgroup$ – Draco18s no longer trusts SE May 6 '17 at 18:08
  • $\begingroup$ If you have one hundred trillion dollars to spend per day I for one would be ready to volunteer to take part in the experiment. Please note than the annual GDP of the USA is about 20 trillion dollars, which means that the entire American economy couldn't fund this city for more than a few hours. Funding this city for 6 hours would instantly cause 50% inflation in the USA... $\endgroup$ – AlexP May 6 '17 at 18:08
  • $\begingroup$ Not eveyday, one day and they are left with that for whatever they want. $\endgroup$ – user2638180 May 6 '17 at 18:08
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    $\begingroup$ A mad rush on supplies followed by hording as people realize that price can't rise but goods are still scarce, thus it is first come first serve everyone else is screwed. $\endgroup$ – John May 7 '17 at 1:17
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    $\begingroup$ I find requirement #2 unreadable. What does "commerce they had previous" mean? $\endgroup$ – Brythan May 7 '17 at 2:34

The obvious consequence is that you have a lot of money you can't spend.

The first ramification: Nobody works for anything anymore, so no labor is producing burgers, ice cream, vegetables, etc. Nobody is waiting tables, or cooking in restaurants. No clerks in the stores. Only artists (including writers, singers, musicians etc) and some research types work for the joy of the work; everybody else is working mostly for money. Nobody is cleaning toilets for the satisfaction it gives them. Nobody is keeping the sewer system running because they love the work. More important than those two functions: Law enforcement risks their lives for the pay, so they may be off the job too. If those people get a billion, they stop working forever.

Domino from first: There's very little to buy for the billion you have, and infrastructure starts to decay. Garbage isn't collected, the water, electric and sewage systems all fail. Food isn't delivered or stocked on the shelves. Managers, lawyers, accountants, cops, all quit their jobs and stay home.

The second ramification: Competition for a product usually sets the prices, but you have frozen prices. This effectively makes money worthless.

Therefore, who gets one of the limited number of Hershey bars left in the city must be determined by other means. Like violence, bribery, sexual exchange or other barter. Family or Gang ties or fealty. Having a billion dollars but being refused a $2 Hershey bar makes the billion worthless.

When that is true (and it has been elsewhere in the world, like Somalia) then society tends to devolve into camps (gangs) led by sociopathic warlords that use violence and murder quickly and without remorse to "make a point" and remain king of the hill.

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  • $\begingroup$ Thanks for your answer but I think you've missed one point. I've said that no security forces live on the city (they are all from other places) but enforce law on it. So they couldn't quit as there none of them and if some apocalyptic scenario like that happened they would act as law would be being broken. $\endgroup$ – user2638180 May 6 '17 at 19:30
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    $\begingroup$ @user2638180: That hardly changes things; so law enforcement does not quit but everyone else does. If the only reward for collecting garbage is a paycheck, and you have a billion dollars, why work? It is a fatal flaw in your system, other than the exceptions I noted, nobody works the menial jobs and servant jobs for money if they already have a billion dollars. No repairs, no food prep, no cleaning, no child care, no plumbers or electricians or bookkeepers, nobody answering phones, manning cash registers or helping customers in stores or shops. No city resident works for money anymore. $\endgroup$ – Amadeus-Reinstate-Monica May 6 '17 at 21:08
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    $\begingroup$ You've basically given people a bunch of green pieces of paper. Unless there is a reason to treat those pieces of paper as money, they remain simply pieces of paper. They say "you can't eat gold" for a reason. A quadrillion dollars is worth ziltch if there's no one who finds those dollars useful enough to trade for goods and services. $\endgroup$ – Cort Ammon May 6 '17 at 21:57
  • $\begingroup$ They can always treat that pieces of paper as money with the rest of the world as long it's for their commerces or services and also in the city as long as anyone would be willing. $\endgroup$ – user2638180 May 6 '17 at 23:15

This is one description I’ve heard for a post scarcity economy, which is often discussed here.

This article, The Economics of Star Trek: The Proto-Post Scarcity Economy, describes what you are asking as a model for an economy that is post-scarcity but not unlimited:

Next, imagine that this kept happening until society could afford to give the equivalent of something like $10 million US dollars at current value to every man, woman and child.

His summary: “I think that is basically what’s going on on Star Trek.”

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