How the Economy Works.....

[Brian]

Quantative Easing Explained - How the Economy Works.....

 

 

It is the month of August on the shores of the Black Sea. It is raining and the little town looks totally deserted...

 

These are 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 prostitute that in these hard times, gave her services to him 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 of optimism.

 

And that, ladies and Gentlemen, is how the United States, United Kingdom & Australian Governments are doing business today.

 

 

[djredrupp]

cheers for that! i may aswell stop the economics degree now!

it doesnt really explain the self-purchasing of government bonds though, and the difference between us and Zimbabwe...

 

Dan