#15 BANKERS ARE SCARED – ARE YOU?
Grandpa says: Nope – What, me, Worry?
I believe in looking for opportunities; not worrying. The world will go on turning long after this crisis passes. WW! & WW2, for instance, were a much worse period— a more dangerous time. 50 million People worldwide actually died then.
Mere Unemployment for even 15% or bank failures is not the end of the earth. In the Philippines unemployment always hovers around 35% – same in Ireland till the recent boom. Life went on. In 20 years the current stock market decline will just be a little blip. Like 1974 or 1987 ws/is.
What, me, Worry?
— Economics Lesson by Gary North <mailto:firstname.lastname@example.org> as reprinted in Lew Rockwell
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 more optimism.
And that, ladies and gentlemen, is how the United States Government is doing business today.
Old Friend of Gramps says:
I do not agree on this one. That is an idealized scenario, beginning with the hotel operator spending a deposit that he should not have.
Here’s another article on velocity:
Grandpa says: yes it makes perfect sense– In economics 101 you learn about the ‘velocity of money’ theory & that is why the stimulus package has worked pretty well so far & in the end, for the most part, won’t cost “future generations” anything.
In the original version, the $100 was on his counter when the tourist cancelled. but in my revised version, I had the tourist TAKE the room. When you do that & pay, the money belongs to the hotel & it was discretionary whether the hotel keeper made a refund or not.
He was a nice fellow in my fictional story so he did in this case./
Truth is, in Barcelona Spain in real life I just had a similar case with me!
-It took some 25 emails+ 2 letters and a few calls till finally 2 months later I got credit for my never used room.
But that wasn’t the point of the story. And finally, it isn’t about what U think. Maybe U think the USA shouldn’t spend the TARP money but under F D Roosevelt,”Pump-priming” as it was called Is what ended the depression by 1938.
If it works is all that matters. IMO. Maybe it will, maybe it won’t but it seems to be working so far. PTs don’t set up standards of morality for others. It is just “no force or violence” to be used by them vs others, and an avoidance of confrontations. I oughtta know- I made up the rules.
PS: Don’t print it if it upsets your sensibilities, it is your site after all & you don’t have to publish dissenting views–you can be like the Great Leader of North Korea!!!
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