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All Posts Tagged With: "Economy"

The economic theory of the velocity of money

We received this email today which you may find interesting.

It was a slow day in a little East Texas town. The sun was beating down, and the streets were deserted. Times were tough, everybody was in debt, and everybody lived on credit…..

On this particular day a rich tourist from back east drove through town. He stopped at the motel and laid a $100 bill on the desk and said he wanted to inspect the rooms upstairs in order to pick one to spend the night.

As soon as the man walked upstairs, the owner grabbed the bill and ran next door to pay his debt to the butcher.

The butcher took the $100 and ran down the street to retire his debt to the pig farmer. The pig farmer took the $100 and headed off to pay his bill at the supplier of feed and fuel.

The guy at the Farmer’s Co-op took the $100 and hurried to pay his debt to the local prostitute, who had also been facing hard times and had to offer her “services” on credit. The hooker rushed to the hotel to pay her room bill with the hotel owner.

The hotel proprietor then placed the $100 back on the counter so the rich traveler would not suspect anything.

At that moment the traveler came down the stairs, picked up the $100 bill, stated that the rooms were not satisfactory, pocketed the money, and promptly left town.

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 United States Government is conducting business today.