Comments on: The Government in action perhaps, or the velocity of money equation.

By: What goes around, comes around « King Valley Online

What goes around, comes around « King Valley Online — Thu, 18 Jun 2009 08:11:17 +0000

[...] a comment » The following story appeared on South of the Border (syndicated from Thoughts on Freedom) and is a pretty good description of the Global Economic crisis. I guess I am guilty of the same [...]

By: nicholas gray

nicholas gray — Thu, 18 Jun 2009 05:57:00 +0000

First, you need someone outside to bring money in, and the prostitute should probably also be billed for laundry costs, as it would have been her ‘work’ practices that rendered the rooms unsuitable. And how come no-one thought to invest the cash in an account? At the rate this town moves, some interest would have accrued from somewhere, and brought more paper money into the local economy.
Why don’t people just leave for better places?

By: Damian

Damian — Thu, 18 Jun 2009 04:22:05 +0000

EDIT:

Unfortunately a mass re-accounting and re-evaluation of nominal price levels now needs to take place in order to get a closer mental subjective approximation of the ’stuff for stuff’ world.

By: Damian

Damian — Thu, 18 Jun 2009 04:19:25 +0000

“Damian:

That’s correct, however how is that different from the economy at large. Borrowing and lending equal? Odd no”

Obviously if you theoretically peel away the monetary world, if you get to the real issue of inter chronological trading of real stuff for stuff, this is 100% correct.

The monetary world is constantly being forced into disharmony from the ’stuff for stuff’ world way way more than otherwise would be possible in markets clearing freely (ie. no CB or state intervention, legally sound money and contract).

Unfortunately a mass re-accounting and re-evaluation of nominal price levels now needs to take place in order to get closer to the ’stuff for stuff’ world.

By: jc

jc — Thu, 18 Jun 2009 03:58:09 +0000

Damian:

That’s correct, however how is that different from the economy at large. Borrowing and lending equal? Odd no

By: Damian

Damian — Thu, 18 Jun 2009 03:43:07 +0000

Sounds like something kindergarten simplistic Paul Krugman or any other idiotic ‘economist’ would push.

Troy @ comment 3 obviously has more than 2 brain cells to rub together and correctly states the individual net position of each economic actor here.

By: Troy

Troy — Thu, 18 Jun 2009 01:43:53 +0000

But every one in the town that had borrowed $100 from someone else also had $100 owed to them —> net position = O. The US gov just owes money without anyone owing money to them (unless you count taxpayers as the governments debtors).

By: Dave

Dave — Thu, 18 Jun 2009 00:07:46 +0000

Very amusing and it does get you thinking. I don’t know if it really explains much though. In the story everyone has extended credit without interest and the original credit provider, the tourist, didn’t even agree (or know) to his money being used as credit.

Or is this is analogy?? The government is extended credit without tax payers agreeing to it??

By: TerjeP (say tay-a)

TerjeP (say tay-a) — Wed, 17 Jun 2009 22:33:11 +0000

If nothing else it is an amusing story. Clearly an honourable town (except perhaps for the dodgy inn keeper) given everybodies willingness to extend credit to others and their determination to repay their own debts at the first opportunity. Does it matter if the tourist is peddling counterfeit notes?