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TMAC, very clever. If I counted right the $100 changed hands seven times. If the recepients were honest and reported that income for tax purposes, then the government is the clear beneficiary.
Lets say the IRS gets to squeeze 30% from each 'participant"...so the gov't nets $30 X 7 = $210 in tax revenue from a $100 transaction repeated seven times during the same day.
There is a legal phrase called "unjust enrichment". Seems like a perfect description of what the government does, (unjustly enriching themselves) millions of times per day, every day, non-stop, to feed its insatiable need to confiscate other peoples money. And then squander it.
Vicente
2012 Feb 11, 3:20pm
No one produced anything..... No one earned anything.....
Nicely CONTRIVED example.
Tangentially, this reminds me of my brother RANTING & RAVING about how the unproductive people shouldn't drag down the productive people. I didn't have the heart to point out he worked in a SERVICE job and had never produced an original product in his life.
Yes there's a lot of changing hands of money in an economy. It's startling how much "production" is vaguely lauded and how everyone defines it. To a SALESMAN they are the money-making organ of the enterprise and everyone else is a parasite or a drone. Everyone is the hero of their own fantasy. Another relative is into "investing" in what I call "dustables". Did the person who made detailed ceramic lighthouses or the various middlemen "produce" anything that added to the wealth of my species? Not in my opinion. YMMV.
There is one small problem.
Chinese will take this $100 and put in the bank.
This motel owner will be $100 short.
Vicente
2012 Feb 12, 7:47am
Interesting to look at the mutation of some of these re-circulated items. This "Stimulus Package" thing for instance has circulated before, but was set in Saskatchewan province:
http://www.scam.com/showthread.php?t=132616
Earliest reference I could locate was here, part of a JOKE thread:
http://www.flickr.com/groups/norestrictions/discuss/72157622173262316/page2/
TMAC should have posted this in Humor forum.
Dan8267
2012 Feb 13, 5:23am
What if the traveler comes back before the $100 bill comes back to the hotel?
TMAC54
2012 Feb 13, 11:52am
What if the traveler comes back before the $100 bill comes back to the hotel?
Are you Kidding ? Hasn't anyone ever told you "The check is in the mail " ?
freak80
2012 Feb 17, 6:35am
The real lesson of this story is that injecting liquidity into a currency-starved system can restore balance and facilitate the exchange of goods and services. I doubt that TMAC set out to tell a story that advocates the use of the stimulus packages during times of low currency velocity, but he did so quite beautifully.
Good point! If an economy depends on currency for basic transactions, the economy can "shut down" even if all of the resources (people, materials, energy, etc) are there.
The sad thing is, I never learned about the "velocity" of money in the economics class I took in college. It would seem that "velocity" of money is a concept that any educated person should understand.
TMAC54
2012 Feb 17, 1:40pm
It would seem that "velocity" of money is a concept that any educated person should understand.
Just ordered John Taylor's book "First Principles"
I Was listening to this Economics Professor on NPR the other day. He makes a lot of sense. Maybe Velocity of money will be covered in his book. I agree with him on everything discussed, Banks should have been allowed to fold. We are worse off. Gubmint knows it can not FIX real Estate prices.
Does anyone think gubmint can fix Real Property values ?
John Taylor often takes his Grandchildren to class with him to show his students another damaged generation. Damage caused by the EGO of one mans attempt to get reelected.
http://www.cbsnews.com/video/watch/?id=7371392n
America's leader, will cow to entities that fund his election while stroking the NEW HOMELESS CHILDREN & families with a one time payment of $1500.
It is a slow day in the small Alberta town of Pumphandle, and
streets are deserted. Times are tough, everybody is in debt, and
everybody is living on credit.
A tourist visiting the area drives through town, stops at the hotel,
and lays a $100 bill on the desk, saying he wants to inspect the rooms
upstairs to pick one for the night.
As soon as he walks upstairs, the hotel 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 to his supplier, the Co-op.
The guy at the 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
traveler will not suspect anything.
At that moment the traveler comes down the stairs, states that the
rooms are not satisfactory, picks up the $100 bill and leaves.
No one produced anything..... No one earned anything.....
However, the whole town is now out of debt and everyone is
looking to the future with a lot more optimism!
And that, ladies and gentlemen, is how a Stimulus Package works.