A Stimulus Story

[bizzykehl]

Got this e-mailed to me today, found it interesting.

It is the month of August, on the shores of the Black Sea . It is raining, and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.


Suddenly, a rich tourist comes to town.


He enters the only hotel, lays a 100 Euro note on the reception counter, and goes to inspect the rooms upstairs in order to pick one.


The hotel proprietor takes the 100 Euro note and runs to pay his debt to the butcher.


The Butcher takes the 100 Euro note, and runs to pay his debt to the pig grower.


The pig grower takes the 100 Euro note, and runs to pay his debt to the supplier of his feed and fuel.


The supplier of feed and fuel takes the 100 Euro note and runs to pay his debt to the town's prostitute that in these hard times, gave her "services" on credit.


The hooker runs to the hotel, and pays off her debt with the 100 Euro note to the hotel proprietor to pay for the rooms that she rented when she brought her clients there.


The hotel proprietor then lays the 100 Euro note back on the counter so that the rich tourist will not suspect anything.


At that moment, the rich tourist comes down after inspecting the rooms, and takes his 100 Euro note, after saying that he did not like any of the rooms, and leaves town.


No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism .


And that, ladies and gentlemen, is how the United States Government under President BHO and the State of California under Governor Arnold are doing business today and actually in California for a long time already.


At least the hooker and the hogs made out okay.

 

[Bofu2U]

hahahahah

 

[alexb]

Interesting.

 

[HarveyJ]

This is how any money based economy works though.

Money itself has no value. The value of any currency is that it is a promisory note for an amount of goods or services that you have received.

Now, flaw #1 in this story is that the hotel proprietor actually stole the note in the first place. The rich tourist put it on the counter but hadn't actually used the goods or services of the hotel proprietor at that point.
Flaw #2 is that everyone happened to owe everyone else precisely the same amount... Which is bullshit. For some [sarcasm]bizarre fucking reason, economies are not a zero sum game[/sarcasm]. Items and services are produced and procured, sometimes literally from nothing (how much is the tune that a busker sings on the street physically worth? Yet you throw him some coins anyway). Value is added, not all values are the same. There will be amounts that are added or subtracted from each flow through effect in the economy. The only way this isn't a flaw is that they all owed more than 100EUR, and that the 100 they put down merely covers a fraction, great or small, of what they owe, not the entirety...
In which case, there is still debt, just less of it, but it's all predicated on the criminal acquisition of the money in the first place.
Flaw #3 is that national economies aren't nearly half as insular as that of a town. Even the town still has money that flows in and out. The tourist brings his money in, it flows around, the supplier of feed and fuel though does not own an oil derrick and refinery, the hotel owner probably did not use locally quarried stone & mortar, and the hooker's clothings were made from fabrics that did not come from within the town.

All of these simplistic analogies for this current financial bullshit simply do not work unless the USA decides to embargo all trade and be entirely self sufficient... which isn't going to happen.

 

[DreamMachine]

This is how any money based economy works though.

Money itself has no value. The value of any currency is that it is a promisory note for an amount of goods or services that you have received.

Now, flaw #1 in this story is that the hotel proprietor actually stole the note in the first place. The rich tourist put it on the counter but hadn't actually used the goods or services of the hotel proprietor at that point.
Flaw #2 is that everyone happened to owe everyone else precisely the same amount... Which is bullshit. For some [sarcasm]bizarre fucking reason, economies are not a zero sum game[/sarcasm]. Items and services are produced and procured, sometimes literally from nothing (how much is the tune that a busker sings on the street physically worth? Yet you throw him some coins anyway). Value is added, not all values are the same. There will be amounts that are added or subtracted from each flow through effect in the economy. The only way this isn't a flaw is that they all owed more than 100EUR, and that the 100 they put down merely covers a fraction, great or small, of what they owe, not the entirety...
In which case, there is still debt, just less of it, but it's all predicated on the criminal acquisition of the money in the first place.
Flaw #3 is that national economies aren't nearly half as insular as that of a town. Even the town still has money that flows in and out. The tourist brings his money in, it flows around, the supplier of feed and fuel though does not own an oil derrick and refinery, the hotel owner probably did not use locally quarried stone & mortar, and the hooker's clothings were made from fabrics that did not come from within the town.

All of these simplistic analogies for this current financial bullshit simply do not work unless the USA decides to embargo all trade and be entirely self sufficient... which isn't going to happen.

Great, Great answer.

The only thing I can really add is that the speed at which money flows around the system (gets spent) is measured and is called the velocity of money.

 

[Enigmabomb]

Yeah no one did anything in that story. I wish I could see the douche bags who write this shit

 

[Bombastic]

I think the Obama plan is more like, take the hotel customer's note, photocopy it and print a million more of them and let them circulate throughout town so everybody thinks they have money again. Then in a couple years they'll all be freaking out when everything costs more than it does now and their savings are worth less.

It's not just Obama, it's everyone, but he has stepped it up a few notches.

 

[nvanprooyen]

I think the Obama plan is more like, take the hotel customer's note, photocopy it and print a million more of them and let them circulate throughout town so everybody thinks they have money again. Then in a couple years they'll all be freaking out when everything costs more than it does now and their savings are worth less.

It's not just Obama, it's everyone, but he has stepped it up a few notches.

Lol, nice.