An interesting email from a friend ... The Money Cycle.
It is August. In a small town on the South Coast of France, the holiday season is in full swing, but it is raining so there is not too much business happening. Everyone is heavily in debt. Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks for a room and puts a Euro100 note on the reception counter,takes a key and goes to inspect the room located up the stairs on the third floor.
The hotel owner takes the banknote in hurry and rushes to his meat supplier to whom he owes E100. The butcher takes the money and races to his supplier to pay his debt.
The wholesaler rushes to the farmer to pay E100 for pigs he purchased sometime ago. The farmer triumphantly gives the E100 note to a local prostitute who gave him her services on credit.
The prostitute goes quickly to the hotel, as she owed the hotel for her hourly room use to entertain clients.
At that moment, the rich Russian is coming down to reception and informs thehotel owner that the proposed room is unsatisfactory and takes his E100 backand departs.
There was no profit or income. There was NO real economic activity. But everyone no longer has any debt and the small town people look optimistically towards their future.
COULD THIS BE THE SOLUTION TO THE Global Financial Crisis?