Macbeast
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| posted on 30/6/09 at 08:33 AM |
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I thought this worth sharing :-)
This is a very interesting analysis.
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 Kingdom Government is doing business today
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Dangle_kt
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| posted on 30/6/09 at 09:58 AM |
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quote:
Originally posted by Macbeast
This is a very interesting analysis.
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 Kingdom Government is doing business today
except 15% is sliced of each time due to VAT... well maybe not the hooker - I guess it depends if she is over the VAT limit... 
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smart51
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| posted on 30/6/09 at 10:33 AM |
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An interesting allegory of quantitative easing. For those who don't know, it isn't printing money, not in the Zimbabwean sense.
The bank of England has typed on its computer a billion pounds into its account. The money doesn't exist.
They lend a few millions of this to the high street banks by electronic transfer. It still doesn't exist.
The high street banks lend a few thousand to you in a similar way. You then buy goods by switch or maestro and take the goods home. No money has
moved at this point.
You pay back your loan to the bank, with interest. They then pay back their loan to the bank of England, with slightly less interest. The bank of
England then deletes the original amount because it never actually existed. The flow of promises to pay got the economy flowing again and all is
well.
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