The sun 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 tourist from back east is driving through town. He stops at the motel and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs in order to pick one to spend the night.
As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.
The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.
The pig farmer takes the $100 and heads off to pay his bill at the supplier of feed and fuel.
The guy at the Farmer's Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.
The hooker rushes to the hotel and pays off her room bill with the hotel owner.
The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything.
At that moment the traveler comes down the stairs, picks up the $100 bill, 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 now looks to the future with a lot more optimism.
And that, ladies and gentlemen, is how the United States Government is conducting business today.
This would, of course, not work in the real world because each of these folks (except the hooker) would have had to take sales tax out of the transaction and forward it to the state and/or county authorities.
Then again, our federal, state and local politicians are all currently taking their cut as they distribute that $100 earmarked for "shovel ready" jobs in the bills they write in D.C., until the people actually in need are receiving far far less if anything at all.
2 comments:
Isn't that interesting? Made me think. Now my head hurts.
The real key here is that everyone is both a creditor and a debtor; for every $100 someone owes, they're owed $100 by someone else.
Before the $100 bill enters the equation, the net balance of everyone is $0 (-$100 debt, +$100 outstanding), and the introduction of the $100 bill doesn't change that (-$0 debt, +$0 outstanding).
This little thought experiment is similar to the kind of debt Japan has, where they owe it to themselves. In the U.S., our debt is owed to China, Japan, Saudi Arabia, etc. There's no mathematical trick here to realize a $0 balance, because the actual balance is hugely negative.
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