Eureka

Now that the lira no longer exists and it is not their problem, the Italian state has found a way to fight inflation. Amazingly it is also a way to make Italians watch the news. Like most countries (but not the USA) Italy has public television with a mass audience and commercials. This means it has a trace of public spirit (in the sense of people thinking they know better than other people what the other people should be doing). Thus the aim to get people to watch the news on public (which is not, shall we say, quite at the level of independence and quality reached by the BBC).

Thus in Italy if you want to be a millionaire and are willing to settle for seeing someone else become a millionaire, you have to wait through all this news to see if they correctly answered the key question. That is there is a dumb high prize game show interrupted not only by commercials but by half an hour of news. My wife and daughter get information from the TV news so I am exposed to game shows (really I hate them I swear). Lottery extractions are similarly used to force people either to watch the news or to be nimble with the remote control.

Recently they began a particularly irritating broadcast with a name like Eureka or maybe Euroeca (we watch with the sound off waiting for the news and the show has a logo with particularly irritating font). I just learned what this show is. Eureka. The cure for the shoe leather costs of inflation. The idea is that it is like a lottery extraction but no tickets have been sold to take money from fools. Instead a serial number on a 20 Euro bill is chosen at random and anyone holding that bill gets the prize. This means everyone plays. Well at least everyone didn’t just run out of cash in a supermarket where the debit card links to the banks were down (but that’s another story).

Brilliant. Now if this program were massively expanded with small prizes for everyone who say had a 20 Euro bill with a serial number starting with the right 3 digits, then it would pump up the demand for money.

One aspect of this would be solving the problem of dynamic inconsistency due to desire for senioriage . If all money supply increases were of the form of such prizes there would be know seniorage . More to the point such prizes cause increased money demand (this is compared to the same increase in money supply with the seniorage. The transactions costs of people cashing in on their prizes are smaller than the costs of giving money proportional to money holdings (not everyone wins). The choice between many small prizes and fewer larger prizes is a standard efficiency equity choice.

By the way, neither Word nor I know how to spell signoraggio in English. This is new to me. I never could spell but it is odd to know how to spell something in Italian and not in English. Worse I was so desperate that I decided to look it up in a book. I looked in a chapter on hyperinflation and I found the word signoraggio oops the book was written in Italian. I hadn’t realised that would be a problem. And wait I have something good to show about semi lottery on Italian TV. Not to mention I’m thrilled (pumping my fist in the air thrilled) that the giudice nel caso Imi-Sir, Lodo Mondadori have entered the Camera di consiglio. This is all getting alarming.