How money Really Works
George’s Hotel
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How Money Really Works
THE MONEY GO-ROUND
Last Friday morning, George stood in the bar of his small hotel, polishing wine glasses in preparation for a big event. Every year, the town hosts a festival, and he was expecting a busy weekend serving food and drink to the usual locals as well as crowds of visiting revellers.
Lately, business had been slow, so he was hoping to make some extra money to finish sprucing up the bedrooms. A sound investment, he thought, because attractive rooms mean more guests. At least, that was the plan.
Just as George was finishing his chores, a tall, well-dressed gentleman strolled into the bar and asked to see the best room in the house. He explained that he was planning to surprise his wife for their anniversary. They had been married thirty years ago, and had stayed in that particular room for their honeymoon. “It’ll make her day!” he said.
“I would love to show you the room,” George replied, “the trouble is it’s being redecorated, and not exactly presentable.”
George had scraped the cash together for repairs to the leaking roof, but Charlie, the local decorator, had been put on hold until George had enough to pay for the paint and wallpaper. “How about taking a look at our second-best room? It’s been done up very nicely,” he said.
The gentleman’s shoulders sagged a little. “Thank you, but no. It has to be that room. Please let me see it. I don’t care what state it’s in.”
“I’m very sorry, sir.”
The gentleman hesitated a moment, mulling things over, and was about to leave when an idea took shape. He looked directly at George and said, “I’ll tell you what, let me give you, say, £200 now, as a deposit, and you allow me an hour or two just sitting there in that room, remembering one of the happiest times of my life.”
George was taken aback. “It really means a lot to you, doesn’t it?”
“It certainly does. Go on, how about it? £200 in cash. Right now.” The gentleman was very persuasive.
George began to shake his head, his mind racing. The gentleman watched him intently, expectantly. I could really do with the cash, George thought, but more importantly, I need his booking. Perhaps the gentleman won’t mind the mess. But what if he does and cancels? Damn it! A rock and a hard place.
Finally, George shrugged, “Nothing ventured, nothing gained, I suppose. But remember it’s in a hell of a mess.”
The gentleman smiled broadly as he counted out the notes, which George quickly stuffed into his pocket. “Wait here, just one minute. I’ll be right back,” he called over his shoulder as he dashed upstairs.
George pulled a comfortable chair from the passageway into the bedroom. He opened all the windows an inch to let in fresh air to help clear the smell of damp plaster and quickly swept the floor, littered with dust and stripped wallpaper, into a pile by the fireplace. The room was only slightly more presentable, but he hoped it would be enough. Back in the bar, he found his prospective guest sitting on a stool, long legs stretched to the floor.
“Coffee? It’s the least I can do.” George asked, slightly out of breath.
“Thank you. Black will be grand.” The gentleman took hold of the mug and followed George up the stairs.
A few minutes later, George went striding down the High Street to the Hardware Store, where he handed over £200 in cash to pay for paint, wallpaper, and other materials so Charlie could start decorating the best room in the hotel.
Only a few minutes later, Harry, owner of the Hardware Store, gave the same £200 cash to the local Mechanic to pay for repairs on his truck. Harry would now be able to deliver the decorating supplies to George’s hotel.
Barry, the Mechanic, gave £200 to the local Butcher for all the pork pies eaten by his ever-ravenous apprentices.
Stella, the Butcher, gave £200 to Arthur, the local Dressmaker, to settle the bill for her daughter’s gorgeous wedding dress.
Arthur, the Dressmaker, slipped out of his shop and ran over to George’s hotel, where he handed over the same £200 cash to George to pay for the fashion show Arthur had recently put on at the hotel.
After an hour or so, the gentleman descended the stairs and returned to the bar, pensive but obviously happy. He booked the best room in the hotel for one week in the middle of May, insisting that George keep the £200 as a deposit.
After the gentleman left with a spring in his step, George paid Charlie, the local decorator, £200 cash for his labour in decorating the bedroom, which George decided to rename “The Honeymoon Suite”.
Cheerful Charlie celebrated by spending some of the cash at the hotel bar that very evening.
Contributory thinking: A chain of financial transactions amounting to £1200 of goods and services paid for with £200 of currency brought into that community from the outside by the gentleman.
Note: The £200 was introduced by the gentleman. He could represent a sovereign country that, in the real world, can print its own fiat currency.
Note: No banking fees or interest charges were involved in any of the transactions, essentially bypassing the established financial system.
Understanding: Currency Barter System: Circular economy in the real world: Modern Monetary Theory.
Further reading: Tax Research Organisation: Investopedia: What monkeys can teach us about money: How currency works
Pictures: Rod McRiven (digital)
mcriven.com 