# Economics



## parkmoy (Jul 4, 2007)

Its a slow day in Northampton 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 London is driving through town. He stops at the Park Inn and puts a £50 note 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 £50 note and runs next door to pay his debt to the butcher. The butcher takes the £50 note and runs down the street to pay his debt to the pig farmer. The pig farmer takes the £50 and heads off to pay his bill the supplier of feed. The guy at the Feed merchant takes the £50 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 tart rushes to the hotel and pays off her room bill with the hotel owner. The hotel proprietor then places the £50 back on the counter so the rich traveller will not suspect anything. At that moment the traveller comes down the stairs, picks up the £50, states that the rooms are not satisfactory, pockets the money, and leaves Northampton. 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 British Government is conducting business today.


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## Hobbyfan (Jul 3, 2010)

Yes, but the £50 that the hotel owner received from the prostitute to pay her hotel bill had to be given back to the tourist, so in fact the hotelier actually didn't get his room bill paid.

So he is now £50 worse off because the tart no longer owes him £50 but he has no money to show for it.

Fortunately most of the people running our economy would have been able to work out the flaw in the scenario!


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## GEMMY (Jun 19, 2006)

Yes H F but he's paid his butchers bill so.....

tony


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## Hobbyfan (Jul 3, 2010)

GEMMY said:


> Yes H F but he's paid his butchers bill so.....
> tony


So he's exactly where he was in the beginning. He no longer owes the butcher £50 but the tart owed him £50, which she no longer does!

So all that's happened is that the debt has moved around. He was owed £50 in the beginning by the tart but he's lost that debt and cannot now claim it from her in the future, but he no longer owes his butcher. He's no better off and no worse off!


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## GEMMY (Jun 19, 2006)

That's what I was inferring, all debts have been cancelled. :wink: 

tony


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## parkmoy (Jul 4, 2007)

> He was owed £50 in the beginning by the tart but he's lost that debt and cannot now claim it from her in the future,


Why would he want to? She's paid it already, no different to her coming to him one day and giving him £50 which he then has to pay out to the butcher :?


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## Glandwr (Jun 12, 2006)

Looks like we are going to be looking at a non monetary exchange here boys.

Dick


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## Glandwr (Jun 12, 2006)

Thinking of it HF wasn't the hotelier the only one that did wrong by "borrowing" the money in the first place. 

Fine morality tale if someone else lost out!

Dick


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## Hobbyfan (Jul 3, 2010)

No one lost out! Take the pig farmer who was paid £50 by the butcher. He then paid that £50 to his feed supplier.

Now at first glance he seems to be £50 better off because he's paid off his debt to the feed supplier. He now owes nothing but, nothing is owed to him.

Previously, he was owed £50 by the butcher, so you could say that he was worth £50 because although it's a debt, it's an asset that he has.

But he himself owed £50 to the feed supplier so, in effect, he really had nothing, no debts, no assets. He owed £50 but he himself was owed £50!

After the transaction he has no debt, but neither is he still owed £50 by the butcher so he's no better off or worse off than when he started!

It's all sleight of hand, no-one is any better off when it's over than before the £50 started circulating"


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## Hobbyfan (Jul 3, 2010)

parkmoy said:


> > He was owed £50 in the beginning by the tart but he's lost that debt and cannot now claim it from her in the future,
> 
> 
> Why would he want to? She's paid it already, no different to her coming to him one day and giving him £50 which he then has to pay out to the butcher :?


??? What's that got to do with anything? The point I made is that he is no different at the end of these transactions than he was at the beginning.

Once again - he was owed £50 by the tart. He owed £50 to the butcher. So his assets were nothing. He was owed £50 but he himself owed fifty pounds.

So the tart pays him, he pays the butcher and he's still not got any assets! He's no better and no worse off!

Not one person has benefited from this series of transactions. They've all written off a debt but they've also written off money that was owed to them.

Sleight of hand!


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## locovan (Oct 17, 2007)

At the end of the day no money passes hands its just a bit of paper.

I once asked a banker where my money is and he said there is no money its all promises.
If everyone went to the bank today and drew out their money they wouldn't have enough money to pay it out.


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## Glandwr (Jun 12, 2006)

Thanks for that HF I see it all now. It's a very clever illustration of the paradox of thrift isn't it? If the Hotelier or in fact anyone else in the chain had been squirreling away, some one is going to be worse off aren’t they?

So back to the OP it’s NOT what the government is doing at the moment. They are in fact are taking lubrication out of the system through the cuts.

Dick


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## parkmoy (Jul 4, 2007)

> ?? What's that got to do with anything? The point I made is that he is no different at the end of these transactions than he was at the beginning.
> 
> Once again - he was owed £50 by the tart. He owed £50 to the butcher. So his assets were nothing. He was owed £50 but he himself owed fifty pounds.
> 
> ...


Isn't it better for him not to be in debt to the butcher?

The butcher will now regard him as solvent and a good payer and sell him more meat which he might not have been prepared to do when he was owed £50. So in that respect he is better off. He has a good credit rating.

Of course it's sleight of hand but so is all economics. Money is only a facilitator.


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