How money really works. What goes around, comes around.
Last Friday morning, George was in the bar of his small hotel polishing wine glasses. He was preparing 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, and he was hoping to make some extra money which would allow him to finish sprucing up the bedrooms. More attractive rooms meant 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. Thirty years ago, long before George bought the place, they had stayed in that same hotel, 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 in a hell of a mess. It’s being redecorated.”
True, the leaking roof had been repaired, but Charlie, the local decorator, hadn’t been able to start work because, after settling the roofer’s bill, George didn’t have 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, at least for a few minutes. 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 finally 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.”
“Sir?”
“£200 in cash. Right now,” the gentleman interrupted. “Knock it off the final bill when we do come to stay if you like, but I won’t make a reservation if I can’t see it now, today.”
George began to shake his head, thinking all the while. He desperately needed the cash but, more importantly, he needed the booking. Perhaps the gentleman wouldn’t mind the mess. But what if he does and cancels? Damn it! A rock and a hard place, he thought. Finally George shrugged. In the end, he had no choice but to accept.
Smiling broadly, the gentleman counted out the notes which George immediately stuffed into the pocket of his jeans. “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 the window an inch for fresh air to help clear the smell of damp plaster and quickly swept the litter of 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 said.
“Thank you. Black is fine.” The gentleman took hold of the mug and followed George up the stairs.
A few minutes later, George was striding down the High Street to the Hardware Store, where he handed over £200 to pay for paint, wallpaper and other materials so Charlie could finish decorating the best room in the hotel.
Only minutes after that, Harry, owner of the Hardware Store, gave the same £200 to the local Mechanic to pay for repairs on his truck. Harry would now be able to deliver the decorating supplies to George.
Barry, the Mechanic, gave £200 to the local Butcher for all the pies eaten by his apprentices.
Stella, the Butcher, passed on the £200 to Arthur, the local Dressmaker, to settle the bill for her daughter’s wedding dress.
Arthur, the Dressmaker, returned the same £200 in cash to George to pay for the fashion show he had recently put on at the hotel to promote his skills.
After an hour or so, the gentleman finally came downstairs and returned to the bar, pensive but obviously happy. George took his booking for the best room in the hotel for one week in the middle of May. The gentleman insisted he keep the £200 as a deposit and, with it, George paid Charlie, the local decorator, for his labour.
Cheerful Charlie celebrated by spending some of the cash at the hotel bar that very evening.
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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 or “created” by the gentleman. He could represent a sovereign country, all of which, in the real world, have the ability to print their 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)
© Rod McRiven 2024
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