Capitalism Explained With A $100 Bill
Money is always there but the pockets change; it is not in the same pockets after a change, and that is all there is to say about money. Gertrude Stein, American novelist, poet, and playwright.
This story explains how the economy of a small town can be improved by a single $100 bill.
Our story takes place in "Outback" Texas, a tiny Route 66 Pan Handle town that Interstate 40 by-passed long ago.
The sun is blistering hot on main street. Business is dead... as usual... Everyone in town is living on the local credit of each other. The future of Outback looks bad.
On one notable Friday afternoon, a weary traveler stops in at the Outback Motel... and his visit will change the fortunes of the tiny community in ways no one could have imagined.
The traveler wants the best room possible so he puts a $100 bill on the counter and asks the clerk for a quick tour before agreeing to stay the night.
As the clerk and traveler leave the lobby, the owner of the motel grabs the Hundred Dollar bill and runs next door to pay his debt to the local grocer who supplies the motel with food and toiletries.
The grocer owes a Hundred Dollars to a local potato farmer who just happens to be across the street at the feed store so the grocer walks across the street and pays the farmer.
The farmer owes the feed store a hundred dollars so he immediately pays his bill. The owner of the feed store uses the Hundred dollars to pay his part time employee who was just leaving for the day.
The employee takes the Hundred Dollars back across the street to the motel where he has a rendezvous scheduled with the local prostitute.
The owner of the motel takes the $100 from the feed store employee just as the weary traveler gets back to the lobby. The traveler sees the prostitute in the motel and decides not to stay so he gets his Hundred Dollars back and leaves.
In this scenario, the good people of Outback Texas used One Hundred Dollars of new money to reduce their debt by $700.00 and improve their fortunes.
No one borrowed money from a bank or paid any interest.
This is the true miracle of our private enterprise system.
It's how a market economy is designed to work.
The bankers understand it.
You should too.