How a Fund Manager Teaches His Kids About Money and Banking

Inside Money

Toby Nangle, a fund manager, uses a unique approach to teach his children about money by introducing them to the concepts of inside and outside money. He explains that outside money, like coins, is tangible and often spent quickly by his kids, while inside money involves a household bank ledger with interest rates to encourage saving. This method aims to instill the value of delayed gratification and saving, akin to the Stanford Marshmallow experiment, where children choose between immediate rewards or greater future benefits.

I give them 10% a week on their balances. And I thought, well, we'll set that into trade and see what happens.

--- Toby Nangle

Nangle's experiments reveal how children's attitudes towards interest rates evolve, highlighting demographic factors that influence financial behavior 1 2.

   

Monetary Policy

Nangle's household experiments with money offer insights into unconventional monetary policies like quantitative easing (QE). He argues that QE1 was crucial during the liquidity crisis to prevent the collapse of the inside money banking system. However, subsequent rounds of QE aimed at asset price manipulation had mixed results, highlighting the complexity of monetary policy's impact on savers and the economy.

Once we went on to QE two, Qe three and the like, that seemed to be more about what economists would call the portfolio balance effect.

--- Toby Nangle

Nangle's perspective on inside and outside money also sheds light on government borrowing and taxation as tools to maintain currency value, challenging conventional views on fiscal policy 3 4.