here is an innovative way to stimulate the economy...

[Pargolfer]

> > Stimulus Economics
> >
> > 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 debt
> > free, and looks to the future with a lot of optimism.
> >
> > And that, ladies and gentlemen, is economic recovery stimulus!

 

[69Shooter]

Actually, the hotel proprieter is out 100 euros!

 

[Pargolfer]

69shooter,you are right..

he is out 100 Euros.Guess this stimulates the econmoy for all but him

Actually, the hotel proprieter is out 100 euros!

 

[Cycleguy007]

Exactly

he is out 100 Euros.Guess this stimulates the econmoy for all but him

Hotel proprieter= Taxpayer....

 

[Brill]

The hotel owner paid his debt with someone else's money - he didn't lose out, everyone won.

 

[Cycleguy007]

The hotel owner paid his debt with someone else's money - he didn't lose out, everyone won.

Nope... The hooker paid off her debt but the hotel guy didn't get to keep it... so he's out the 100 Euro's.

 

[69Shooter]

The hotel owner paid his debt with someone else's money - he didn't lose out, everyone won.

Yes, but he has nothing to show for the debt he was owed (and is no longer owed) as he did not get to keep the 100 euros.

 

[Brill]

He paid his debt, he got the 100 euros he was owed, he returned the loan.

Nobody is out.

 

[MissCroft]

He was able to pay his butcher a debt he owed him. But in the end everyone breaks even and nobody earns anything. But everybody's happy cause the debts were paid and the hooker will come back to the hotel.

 

[needinit]

The hotel guest didn't stay so there was no cost to the hotel owner (i.e. the room was not used).

The 100 Euro was passed around, then given back to the potential guest, no one was out of pocket!

 

[LadyTY2Uall]

Isn't that similar to what happened that caused this latest economic upheaval?

 

[landscaper]

and the merry go round continues..........

 

[69Shooter]

I have a "can't miss" investment opportunity for all of you that think everybody won in this scenario... please, without delay, pm me for the details.

 

[Yoga Face]

What happened was everyone traded debt and forgiveness was given as a result

Something is missing here it cannot be that easy to get the economy back on solid ground

 

[69Shooter]

The hotel guest didn't stay so there was no cost to the hotel owner (i.e. the room was not used).

The 100 Euro was passed around, then given back to the potential guest, no one was out of pocket!

Your logic is mind numbing... if the hotel guest had stayed the night he would have left 100 euros "poorer". As it stands the hotel keeper is out the money.

 

[someone]

What happened was everyone traded debt and forgiveness was given as a result

Something is missing here it cannot be that easy

In terms of each person’s balance sheet, nothing as really changed. Each person’s debts have gone down by $100 and their assets (what is owed to them) has gone down by $100. No net change for anyone, including the inn keeper.

 

[Capoeira]

Accounting is difficult and tricky. In this scenario, there's a bit of information missing, such as WHERE the debt originated! The problem occurs in #1.

A lot of people are assuming the Hotel magically attained a debt with the Butcher, but never received any service or product from him.



1) The Hotel BUYS $100 of meat from the Butcher
- Therefore, the Hotel has $100 of meat (let's assume he breaks even, so he has $100 cash)

2) The Hotel gives $100 credit to the Prostitute (it's easier to think of this as a cash loan)
- Therefore, the Hotel has $0

3) The Hotel borrows a $100 bill from the Tourist
- Therefore, the Hotel has $100

4) The Hotel pays back the Butcher
- Therefore, the hotel has $0

5) The Hotel, receives $100 payback from the Prostitute
- Therefore, the hotel has $100

6) The Hotel, gives the Tourist back $100
- Therefore, the hotel ends up with ZERO (i.e. breaks even)


Unless I'm missing something, I do believe the hotel actually does not lose, unless in your view, he lost a business opportunity with the Tourist who left.

 

[Brill]

Accounting is difficult and tricky. In this scenario, there's a bit of information missing, such as WHERE the debt originated! The problem occurs in #1.

A lot of people are assuming the Hotel magically attained a debt with the Butcher, but never received any service or product from him.



1) The Hotel BUYS $100 of meat from the Butcher
- Therefore, the Hotel has $100 of meat (let's assume he breaks even, so he has $100 cash)

2) The Hotel gives $100 credit to the Prostitute (it's easier to think of this as a cash loan)
- Therefore, the Hotel has $0

3) The Hotel borrows a $100 bill from the Tourist
- Therefore, the Hotel has $100

4) The Hotel pays back the Butcher
- Therefore, the hotel has $0

5) The Hotel, receives $100 payback from the Prostitute
- Therefore, the hotel has $100

6) The Hotel, gives the Tourist back $100
- Therefore, the hotel ends up with ZERO (i.e. breaks even)


Unless I'm missing something, I do believe the hotel actually does not lose, unless in your view, he lost a business opportunity with the Tourist who left.

Agreed, everyone gained a product or service - this is how money grows in value when it's circulated.

 

[69Shooter]

One last try

Okay, let's change the scenario a little... assume that the traveller dropped the bill (unknowingly) on the front steps of the hotel. The hotel owner, not knowing who dropped the money, finds it and thinks, 'God damn, this is my lucky day!' He rushes to the butcher to repay his debt. The rest of the story proceeds as before with the prostitute coming to pay off her debt to the hotel. At this point, all debts are paid in full and the hotel owner is deciding how he will spend his 100 euros.

I would maintain that the traveller is out the 100 euros that he dropped.

Now, assume that the traveller realized he was missing some money. He returns to the hotel and asks if anyone found money on the front steps. The hotel owner is an honest man so they eventually agree that the 100 euros that he found belongs to the travelling. The hotel owner does the right thing and gives the money back to the traveller. Now, tell me, that the hotel owner is not out 100 euros!

 

[moresex4me]

He's out a 100 euros. Because he lost the tourist's business, that's all. As for the rest, see below:

Here we go. At the beginning he has a balance sheet of 0 (100 debt on the debit side, 100 credit for the receivable owed to him). He borrows 100, still no net impact (assets increase 100 with corresponding debt of 100). Pays off debt, cancels out debt, but loses 100 in liquid assets. So now he still has a debt of 100 (to the tourist) and a receivable of 100 (from the SP). SP pays him, receivable is wiped, converted to liquid asset of 100, he still has debt to tourist, he pays, and ends up back to a zero balance sheet. His only loss is opportunity.