It is a slow day in a damp little Irish town. The rain is beating down
and the streets are deserted. Times are tough, everybody is in debt, and
everybody lives on credit. On this particular day a rich German tourist
is driving through the town, stops at the local hotel and lays a €100
note on the desk, telling the hotel owner he wants to inspect the rooms
upstairs in order to pick one to spend the night. The owner gives him
some keys and, as soon as the visitor has walked upstairs, the hotelier
grabs the €100 note and runs next door to pay his debt to the butcher.
The butcher takes the €100 note and runs down the street to repay his
debt to the pig farmer. The pig farmer takes the €100 note and heads
off to pay his bill at the supplier of feed and fuel. The guy at the
Farmers’ Co-op takes the €100 note and runs to pay his drinks bill
at the pub. The publican slips the money along to the local prostitute
drinking at the bar, who has also been facing hard times and has had to
offer him “services� on credit. The hooker then rushes to the hotel
and pays off her room bill to the hotel owner with the €100 note. The
hotel proprietor then places the €100 note back on the counter so the
rich traveller will not suspect anything. At that moment the traveller
comes down the stairs, picks up the €100 note, states that the rooms
are not satisfactory, pockets the money, and leaves town. No one
produced anything. No one earned anything. However, the whole town is
now out of debt and looking to the future with a lot more optimism. And
that, Ladies and Gentlemen, is how the bailout package works.
******************

It was sent to me as a joke, but is it too close to the truth?
;-)
--
Gordon H
Remove "invalid" to reply

On Thu, 16 Dec 2010 14:56:17 +0000, Gordon H
wrote:


It is a slow day in a damp little Irish town. The rain is beating down
and the streets are deserted. Times are tough, everybody is in debt, and
everybody lives on credit. On this particular day a rich German tourist
is driving through the town, stops at the local hotel and lays a €100
note on the desk, telling the hotel owner he wants to inspect the rooms
upstairs in order to pick one to spend the night. The owner gives him
some keys and, as soon as the visitor has walked upstairs, the hotelier
grabs the €100 note and runs next door to pay his debt to the butcher.
The butcher takes the €100 note and runs down the street to repay his
debt to the pig farmer. The pig farmer takes the €100 note and heads
off to pay his bill at the supplier of feed and fuel. The guy at the
Farmers’ Co-op takes the €100 note and runs to pay his drinks bill
at the pub. The publican slips the money along to the local prostitute
drinking at the bar, who has also been facing hard times and has had to
offer him “services” on credit. The hooker then rushes to the hotel
and pays off her room bill to the hotel owner with the €100 note. The
hotel proprietor then places the €100 note back on the counter so the
rich traveller will not suspect anything. At that moment the traveller
comes down the stairs, picks up the €100 note, states that the rooms
are not satisfactory, pockets the money, and leaves town. No one
produced anything. No one earned anything. However, the whole town is
now out of debt and looking to the future with a lot more optimism. And
that, Ladies and Gentlemen, is how the bailout package works.
******************

It was sent to me as a joke, but is it too close to the truth?
;-)

Nothing like. And your tale does not take account of interest, which
is almost always charged on loans.
--
(\__/) M.
(='.'=) Due to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking some articles
posted from there. If you wish your postings to be seen by
everyone you will need use a different method of posting.

In message , Mark
writes
On Thu, 16 Dec 2010 14:56:17 +0000, Gordon H
wrote:


It is a slow day in a damp little Irish town. The rain is beating down
and the streets are deserted. Times are tough, everybody is in debt, and
everybody lives on credit. On this particular day a rich German tourist
is driving through the town, stops at the local hotel and lays a €100
note on the desk, telling the hotel owner he wants to inspect the rooms
upstairs in order to pick one to spend the night. The owner gives him
some keys and, as soon as the visitor has walked upstairs, the hotelier
grabs the €100 note and runs next door to pay his debt to the butcher.
The butcher takes the €100 note and runs down the street to repay his
debt to the pig farmer. The pig farmer takes the €100 note and heads
off to pay his bill at the supplier of feed and fuel. The guy at the
Farmers’ Co-op takes the €100 note and runs to pay his drinks bill
at the pub. The publican slips the money along to the local prostitute
drinking at the bar, who has also been facing hard times and has had to
offer him “services� on credit. The hooker then rushes to the hotel
and pays off her room bill to the hotel owner with the €100 note. The
hotel proprietor then places the €100 note back on the counter so the
rich traveller will not suspect anything. At that moment the traveller
comes down the stairs, picks up the €100 note, states that the rooms
are not satisfactory, pockets the money, and leaves town. No one
produced anything. No one earned anything. However, the whole town is
now out of debt and looking to the future with a lot more optimism. And
that, Ladies and Gentlemen, is how the bailout package works.
******************

It was sent to me as a joke, but is it too close to the truth?
;-)

Nothing like. And your tale does not take account of interest, which
is almost always charged on loans.

FFS.......!!
--
Gordon H
Remove "invalid" to reply

"Gordon H" wrote in message
...
In message , Mark
writes
On Thu, 16 Dec 2010 14:56:17 +0000, Gordon H
wrote:


It is a slow day in a damp little Irish town. The rain is beating down
and the streets are deserted. Times are tough, everybody is in debt, and
everybody lives on credit. On this particular day a rich German tourist
is driving through the town, stops at the local hotel and lays a €100
note on the desk, telling the hotel owner he wants to inspect the rooms
upstairs in order to pick one to spend the night. The owner gives him
some keys and, as soon as the visitor has walked upstairs, the hotelier
grabs the €100 note and runs next door to pay his debt to the butcher.
The butcher takes the €100 note and runs down the street to repay his
debt to the pig farmer. The pig farmer takes the €100 note and heads
off to pay his bill at the supplier of feed and fuel. The guy at the
Farmers’ Co-op takes the €100 note and runs to pay his drinks bill
at the pub. The publican slips the money along to the local prostitute
drinking at the bar, who has also been facing hard times and has had to
offer him “services� on credit. The hooker then rushes to the hotel
and pays off her room bill to the hotel owner with the €100 note. The
hotel proprietor then places the €100 note back on the counter so the
rich traveller will not suspect anything. At that moment the traveller
comes down the stairs, picks up the €100 note, states that the rooms
are not satisfactory, pockets the money, and leaves town. No one
produced anything. No one earned anything. However, the whole town is
now out of debt and looking to the future with a lot more optimism. And
that, Ladies and Gentlemen, is how the bailout package works.
******************

It was sent to me as a joke, but is it too close to the truth?
;-)

Nothing like. And your tale does not take account of interest, which
is almost always charged on loans.

FFS.......!!

Don't worry, Gordon - there's always one...!

I think it's brilliant - so thank you. (And anyway, since this is a
"finance" group, someone will probably point out that "Mark" seems to be
confusing "loans" with "credit".)


--
Martin

Gordon H writes:


It is a slow day in a damp little Irish town. The rain is beating down
and the streets are deserted. Times are tough, everybody is in debt, and
everybody lives on credit. On this particular day a rich German tourist
is driving through the town, stops at the local hotel and lays a €100
note on the desk, telling the hotel owner he wants to inspect the rooms
upstairs in order to pick one to spend the night. The owner gives him
some keys and, as soon as the visitor has walked upstairs, the hotelier
grabs the €100 note and runs next door to pay his debt to the butcher.
The butcher takes the €100 note and runs down the street to repay his
debt to the pig farmer. The pig farmer takes the €100 note and heads
off to pay his bill at the supplier of feed and fuel. The guy at the
Farmers’ Co-op takes the €100 note and runs to pay his drinks bill
at the pub. The publican slips the money along to the local prostitute
drinking at the bar, who has also been facing hard times and has had to
offer him “services� on credit. The hooker then rushes to the hotel
and pays off her room bill to the hotel owner with the €100 note. The
hotel proprietor then places the €100 note back on the counter so the
rich traveller will not suspect anything. At that moment the traveller
comes down the stairs, picks up the €100 note, states that the rooms
are not satisfactory, pockets the money, and leaves town. No one
produced anything. No one earned anything. However, the whole town is
now out of debt and looking to the future with a lot more optimism. And
that, Ladies and Gentlemen, is how the bailout package works.
******************

It was sent to me as a joke, but is it too close to the truth?

It has the great advantage of being simple and straightforward, so that
everyone can see that (given the assumptions made) it is correct.
It makes it plain that financial matters are largely smoke and mirrors,
and that a too-tight money supply can cause everything to grind to a halt.

Some people seem to have difficulty accepting the idea that money flows
from person to person, I don't know why.
Maybe they're afraid that with a little knowledge radicals will want to
change the system, perhaps to a communist one.

Communism is reported to work well enough in small groups like tribes,
clans, and kibbutzim, but its record on larger scales seems to be
abominable.

Governments which can borrow in their own country are usually said to
be in pretty good shape, but the example above might break down if
money had to be borrowed at interest from outside the country, with no
way to repay that interest, instead of being borrowed 'for free' from
the unwitting rich traveller.

It seems to me that the only way to create a deficit is to buy more
goods or get more loans from abroad than can be paid for by exports.
Money spent within a country is just going to circulate around, with
government spending and then getting back in tax what they spent (with
a small time lag), so there's no permanent deficit though possibly a
temporary shortfall.
Putting a squeeze on earnings may prevent people from buying from
outside a country, and may help a deficit in that indirect way, but it
could also make the deficit worse by putting out of business exporters
who rely in part on local customers and local suppliers.

--
Windmill, Use t m i l l
@ O n e t e l
. c o m

In message , Martin
writes

"Gordon H" wrote in message
...
In message , Mark
writes
On Thu, 16 Dec 2010 14:56:17 +0000, Gordon H
wrote:


It is a slow day in a damp little Irish town. The rain is beating down
and the streets are deserted. Times are tough, everybody is in debt, and
everybody lives on credit. On this particular day a rich German tourist
is driving through the town, stops at the local hotel and lays a €100
note on the desk, telling the hotel owner he wants to inspect the rooms
upstairs in order to pick one to spend the night. The owner gives him
some keys and, as soon as the visitor has walked upstairs, the hotelier
grabs the €100 note and runs next door to pay his debt to the butcher.
The butcher takes the €100 note and runs down the street to repay his
debt to the pig farmer. The pig farmer takes the €100 note and heads
off to pay his bill at the supplier of feed and fuel. The guy at the
Farmers’ Co-op takes the €100 note and runs to pay his drinks bill
at the pub. The publican slips the money along to the local prostitute
drinking at the bar, who has also been facing hard times and has had to
offer him “services� on credit. The hooker then rushes to the hotel
and pays off her room bill to the hotel owner with the €100 note. The
hotel proprietor then places the €100 note back on the counter so the
rich traveller will not suspect anything. At that moment the traveller
comes down the stairs, picks up the €100 note, states that the rooms
are not satisfactory, pockets the money, and leaves town. No one
produced anything. No one earned anything. However, the whole town is
now out of debt and looking to the future with a lot more optimism. And
that, Ladies and Gentlemen, is how the bailout package works.
******************

It was sent to me as a joke, but is it too close to the truth?
;-)

Nothing like. And your tale does not take account of interest, which
is almost always charged on loans.

FFS.......!!

Don't worry, Gordon - there's always one...!

I think it's brilliant - so thank you. (And anyway, since this is a
"finance" group, someone will probably point out that "Mark" seems to
be confusing "loans" with "credit".)

It was sent to me by my daughter in CA, and I thought it might amuse.

The idea isn't brand new, I've heard similar stories told as a
conundrum.
--
Gordon H
Remove "invalid" to reply

On 16/12/2010 22:47, Martin wrote:

Don't worry, Gordon - there's always one...!

I think it's brilliant - so thank you. (And anyway, since this is a
"finance" group, someone will probably point out that "Mark" seems to be
confusing "loans" with "credit".)

Ho-yuss. I once had to sit through a tedious lunch while our client
took nit-picking issue with 'Trading Places'. She steadfastly
maintained that didn't work as a film because its central premise was
inconceivable in real life. FFS, indeed!

Gordon H writes:

It was sent to me by my daughter in CA, and I thought it might amuse.

The idea isn't brand new, I've heard similar stories told as a
conundrum.

Doesn't it prove the utility of money as a form of book-keeping?

If Joe owed Bill 100, and Bill owed Joe 100, they would see right away
that it cancelled out.

But if there are 100 intermediaries in the circle, you need cheques,
money, or some such, if you want to easily get it all straightened out.

And if there's no money in circulation (or very little) you've got a
problem.

No?

--
Windmill, Use t m i l l
@ O n e t e l
. c o m

"Windmill" wrote in message
...
Gordon H writes:

It was sent to me by my daughter in CA, and I thought it might amuse.

The idea isn't brand new, I've heard similar stories told as a
conundrum.

Doesn't it prove the utility of money as a form of book-keeping?

If Joe owed Bill 100, and Bill owed Joe 100, they would see right away
that it cancelled out.

Quite.

But Bill's & Joe's accountants would add 100 to creditors 100 to debtors
in their balance sheets.

And charge for the privilege... :-)


--
Martin

In message , Windmill
writes
Gordon H writes:

It was sent to me by my daughter in CA, and I thought it might amuse.

The idea isn't brand new, I've heard similar stories told as a
conundrum.

Doesn't it prove the utility of money as a form of book-keeping?

If Joe owed Bill 100, and Bill owed Joe 100, they would see right away
that it cancelled out.

But if there are 100 intermediaries in the circle, you need cheques,
money, or some such, if you want to easily get it all straightened out.

And if there's no money in circulation (or very little) you've got a
problem.

No?

It provides a more convenient way of living than bartering livestock and
grown crops I suppose.

Money would be useless after an apocalypse, though.

Except to buy guns and ammo.
--
Gordon H
Remove "invalid" to reply