A Stimulus Story

It is the month of June, on the shores of the Black Sea.
It is raining, and the little town looks totally deserted. Times are tough and everybody is in debt, living 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..



Now can somone explain how ( one terms deal ) is different

because people are greedy

The first time the $100 changes hands the government takes 30%. That leaves $70. The next time that $70 changes hands, the government takes another 30%. That leaves $49. The third time around, the government takes another 30%. The pig grower has $34.30. The government now has $65.70.

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You don't need a weatherman to know which way the wind blows - Robert A. Zimmerman

That's exactly how the postwar boom in the late 40's-50's got started.

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1984 300TD

Howdy,

The fallacy is this: "everybody" is not in debt. In order for someone to go into debt, someone else must first earn this money (or a portion of it), defer spending it, and provide it to the debtor for interest.

The story assumes that the debt is a big circle but it is not. It stops with the savers--either domestic or foreign.

Sholin

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What else, '73 MB 280 SEL (Lt Blue)
Daily driver: '84 190D 2.2 5 spd.

Not to mention the hotel clerk would take the 100E, put it in some interest bearing vehicle that earns 8%, borrow 100E at 5%, and net 3% for nothing.

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1984 300TD

there is no "money", only "checks, drafts and notes".

All things remaining equal, supposing the .gov doesn't take a cut, supposing everything really happens the way it does, that 100 Euros really does wipe out 600 Euros in debt.

Or do I have the wrong idea of debt? Is that 600 Euros only really worth 100?

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You don't need a weatherman to know which way the wind blows - Robert A. Zimmerman

two negatives do not equal a positve. -2 + -2 = -4. a "note" represents a liability, therefore nothing ever gets "paid". a "note" merely "discharges" a debt. think of it as trading one debt for another debt. I owe you $100, so I "exchange" a "note" (a debt instrument) for another debt, the $100 I owe you. debt is being exchanged for more debt which is why we are digging ourselves a bigger and bigger black hole each and every day. anyone remember the so-called "debt clock" that hung in Times Square? it was removed because it ran out of digits. the U.S. congress voted in 2006 to raise the "debt ceiling limit" to ELEVEN TRILLION AND COUNTING. can you say red ink???

Not really.

It starts with the lenders, who are not required to actually HAVE the money that they lend; they only need to actually have a letter of credit for a very, very small fraction of what they are going to lend and make interest on. This is because they have inserted themselves into our monetary system in such a way as to codify their practices into law.

So suppose I extend someone $100 in credit for a TV they bought from me. I cannot count that sale as income right?

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You don't need a weatherman to know which way the wind blows - Robert A. Zimmerman

Thats a fantasy. In real life the whore spends the 100 Euros on crack.

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1985 380SE Blue/Blue - 230,000 miles
2012 Subaru Forester 5-speed
2005 Toyota Sienna
2004 Chrysler Sebring convertible
1999 Toyota Tacoma

LOL!

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2016 Corvette Stingray 2LT
1969 280SE
2023 Ram 1500
2007 Tiara 3200

This is merely a short term "loan" where the hotel clerk is "borrowing" (stealing) 100euro to pay off one debt. Thankfully for his sake the prostitute came through on a debt she owed to him; and he decided to pay off his debt of borrowed money.
This is a story of 'velocity of money supply'. If anyone in theis chain decided to save this money or buy something else; the story would end right there with the proprietor owing the potential customer for the "loan".

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"Our Lady of Blessed Acceleration...
don't Fail Us Now"

This is what we call False Economy

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1984 300SD Orient Red/ Palomino
1989 560SEC
2016 Mazda 6 6 speed manual
1995 Ford F-150 reg cab 4.9 5speed manual