The point is to show the effect of the flow of money. Money that flows is good for the economy.
Same £50 pays off villages debts
- Thread starter mattyg
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The point is to show the effect of the flow of money. Money that flows is good for the economy.
The point was it didn't work.. It only showed a portion of the story.... Where did the original £50 come from....
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Use cashless if you want but physical money will always be needed.
Soldato
Meanwhile, in real life the restaurant owner never gets £50 because a family walk in, discover they don’t take card and go and eat somewhere else.
In the original story it did.
Soldato
Local village bakery. Amazing story about it in various papers. Put in £10 to start with and ended up with the first £50 to pass on. I forget the exact details, but do remember the shop name funnily enough - 'Dough Rises'.
Soldato
It's flawed logic - the motel owner borrows the customers money and it comes back to him via the prostitute, but he had to use it to replace the original $100 he borrowed so he is the one who is perpetually out of pocket therefore he paid the debt.
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Soldato
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Of course its dumb lol.
No, they all had a net position of zero, no single one of them paid "the debt", they each paid their own debts and no one was out of pocket... the customer's $100 was returned.
Borrowing then paying back $100 doesn't leave you out of pocket, that's a very muddled take on what is a rather silly and fairly easy to follow scenario.
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The motel owner was owed $100 which he never received. He is out of pocket.
He paid $100 with stolen money at the start thus making him +$100 up since he had the services/product and paid for it with the stolen money.
Gives the stolen $100 back at the end and returns to 0.
Actually come to think of it, it sounds like people are confusing this with the broken window story.
It's exactly the same.
We start off with kids breaking a window, get lost in a chain of stimulating the economy and probably giving the local prostitute some trade and thus it was a GOOD THING.
Except the village is down the value of 1 window which is never recovered.
Wait, it's considerably older than I thought it was: https://en.wikipedia.org/wiki/Parable_of_the_broken_window
It's exactly the same.
We start off with kids breaking a window, get lost in a chain of stimulating the economy and probably giving the local prostitute some trade and thus it was a GOOD THING.
Except the village is down the value of 1 window which is never recovered.
Wait, it's considerably older than I thought it was: https://en.wikipedia.org/wiki/Parable_of_the_broken_window
Soldato
I’m not sure what this story proves other than always stay in a reputable hotel chain and pay by card (otherwise you’ll end up in some hooker based scandal).
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Eh?
How are you guys misreading this, everyone is covered in the story, each person in the town is owed $100 and owes $100.
The motel owner owed $100 to the butcher which he paid and he was owed $100 by the hooker which she paid:
Every townsperson's net position here was 0 in the first place, the guest put down $100 on the counter and then received it back, no one is out of pocket.
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People are missing the fact that this would be the same as all the individual town folks just deciding the debt was clear, without any money needing to change hands. None of the individuals are out of pocket and the ridiculous scenario of the business man is a red herring.
Soldato
Question we should be asking here is why can't we just do this with all our real world debt.
I owe money to the bank for my mortgage, the bank created that money out of thin air in the first place so why can't they just cancel it and the whole world be out of debt with each other instantly.
I owe money to the bank for my mortgage, the bank created that money out of thin air in the first place so why can't they just cancel it and the whole world be out of debt with each other instantly.
I was thinking that too, even tho I could see he paid a $100 debt
dowie and ICDPs posts above explain it well tho!
Because real life isn’t an episode of Star Trek, where the entire Federation is one giant hippy commune.
The money for your mortgage does not come out of thin air and even the scenario posited by the OP, implies that nobody works for a profit and lives in a hippy commune.
The people who built your house need paid, the people who provided the building materials need paid, the stone did not magic itself into bricks, the employees at the bank who loaned you the money need paid. Etc etc etc. They all need to make profit as well.
The barter system is still a thing I suppose. What other services can you provide the builder and the bank in lieu of payment? Six thousand deer hides and a hundred sacks of grain
This is not meant as an insult but think before you post such ill conceived theories that banks just magic money into existence.
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Soldato
Governments across the world could instantly create enough money to wipe all personal debt.
If they all did it at the same time, there would be minimal currency devaluation (because currency devaluation is a relative effect, and all economies would create proportionally a similar amount of money).
It could cause inflation though as a bunch of people would no longer be servicing debt so would have more free money. But with all that new free cash, it could also cause some nice growth in the economy. Taxes could also rise to compensate for the rise in personal cash.
What's the downside?