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Economics - can you Explain
Posted on 7/12/20 at 9:10 pm
Posted on 7/12/20 at 9:10 pm
A man goes to a Hotel and asks for a suite. The hotel owner says he has a suite for $200 per night. The potential guest asks to look at the suite before deciding. The hotel owner agrees, but asks for a $200 deposit to hold the room. The potential guest agrees, gives the owner $200 and goes to view the room.
The hotel owner then goes to his meat supplier and gives him the $200 to pay off an old bill for steaks served in the hotel restaurant.
The meat supplier goes to his butcher, gives him the $200 to satisfy his past due bill for the meat he bought to sell to the hotel.
The butcher goes to his mistress to giver her the $200 he was supposed to pay her for her services she provided the prior evening.
The mistress then goes to the same hotel referred to before and pays the owner $200 for the use of the suite the prior night, where she provided her services.
Meanwhile, the prospective guest goes back to the hotel lobby and informs the hotel owner he changed his mind and asked for his $200 deposit back. The hotel owner gives it to him, using the money the woman just gave him.
The potential guest has his $200, the meat man has his $200, the butcher has his $200, the mistress has her $200 and the hotel owner has his $200.
How did this happen?
The hotel owner then goes to his meat supplier and gives him the $200 to pay off an old bill for steaks served in the hotel restaurant.
The meat supplier goes to his butcher, gives him the $200 to satisfy his past due bill for the meat he bought to sell to the hotel.
The butcher goes to his mistress to giver her the $200 he was supposed to pay her for her services she provided the prior evening.
The mistress then goes to the same hotel referred to before and pays the owner $200 for the use of the suite the prior night, where she provided her services.
Meanwhile, the prospective guest goes back to the hotel lobby and informs the hotel owner he changed his mind and asked for his $200 deposit back. The hotel owner gives it to him, using the money the woman just gave him.
The potential guest has his $200, the meat man has his $200, the butcher has his $200, the mistress has her $200 and the hotel owner has his $200.
How did this happen?
9
Posted on 7/12/20 at 9:24 pm to Ricky1962
The owner extended credit to the lady for the night before. He received payment for the previous nights bill which facilitated his payment, not the funds for the current night.
Posted on 7/12/20 at 9:51 pm to Ricky1962
quote:
and the hotel owner has his $200.
incorrect
the hotel owner is even, not +200
Posted on 7/12/20 at 11:35 pm to Ricky1962
Come on man
Posted on 7/13/20 at 7:11 am to Ricky1962
This is called the velocity of money. Many do not not comprehend. Money must flow in a vibrant economy; not be hoarded.
Now, what you've omitted is that income tax is to be owed to the government on every one of those transactions. Thus the flaw of the example. The government always takes a bite.
Now, what you've omitted is that income tax is to be owed to the government on every one of those transactions. Thus the flaw of the example. The government always takes a bite.
Posted on 7/13/20 at 11:28 am to Ricky1962
quote:
How did this happen?
Here's another one.
People lose their jobs because the government shuts businesses down. So, government has to print 3 trillion bucks to pump into the economy. But, that money didn't replace anything. We just added 3 billion in cash. The total amount of money in US currency just increased by 3 trillion. We just created money out of thin air.
If we didn't close the economy, all these workers still would have gotten paid, as money moves through the economy. The closure of businesses didn't remove $3 trillion from the economy. It didn't just vanish into thin air.
This post was edited on 7/13/20 at 11:36 am
Posted on 7/13/20 at 1:53 pm to BestBanker
quote:
This is called the velocity of money. Many do not not comprehend. Money must flow in a vibrant economy; not be hoarded.
I told him that on page two of the other thread on the OT. Nobody gets it or is willing to google and learn.
This is why Rockefeller had to be broken up. He had so much wealth that it limited the money supply that was moving through the economy.
Posted on 7/13/20 at 1:56 pm to Ricky1962
This sounds alot more like a cash flow conundrum rather than a macro/micro economic issue....
Posted on 7/14/20 at 10:23 am to Ricky1962
quote:
How did this happen?
Soros.
Or tax cuts.
Whichever you prefer.
Posted on 7/14/20 at 11:09 am to LSUFanHouston
quote:
People lose their jobs because the government shuts businesses down.
This continues to piss me off to no end. Can't wait for massive government layoffs.
Posted on 7/14/20 at 11:56 am to Ricky1962
quote:
- can you Explain
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