The Stimulus Model

[Ben Derecki]

:laugh:

The little resort town was in despair. It was raining and the streets were totally deserted. The residents were in debt and everybody lived on credit. It was tough times.

Suddenly, a tourist came to town. He entered the only hotel, laid a 100 dollar bill on the reception counter as a deposit and went off to inspect the rooms upstairs in order to choose one. When he left, the hotel proprietor took the 100 dollar bill and ran off to pay his debt to the butcher.

The butcher took the 100 dollar bill to the farmer to pay for the cow he had bought the day before.

The farmer headed off to pay his 100 dollar debt to his accountant.

The accountant went straight to the hotel and paid his 100 dollar debt to the hotel proprietor for rooms he had used to entertain clients.

The hotel proprietor put the 100 dollar bill back on the counter and waited for the tourist to come back to the reception.

Two minutes later, the tourist came back after inspecting the rooms, picked up his 100 dollar bill, saying that he did not like any of the rooms and that he would be leaving town.

In the process, no one produced anything. However, the residents are now 100 dollars better off, even though nothing has really changed.

And that is how the Australian Government is doing business today.

[planetfonz]

that is so twisted .. makes one think!

[Feral]

Ha - no its not, that $100 would have only been a 20 by the time it came back around with GST and income tax applying to each transaction! THATS how the Australian Govt is doing business!

[Terry H]

Realistically, no one is better off. Everyone had equal debtors and creditors which put their financial position at $0 basically.

Now they don't have them, so they're at $0 anyway.

Sorry for the party pooping :laugh:

[waldo]

Funny as it might seem there are benifits in that scenario.

Yes the majority of recipients positions haven't truly changed but there mindset may well have.

Think about it this way, you owe a $100 and someone owes you $100 theroetically (and practically for accounting sake) they cancel one another out. The thing is a debt is something that will be pursued and owed money could always remain just that owed but never recieved and become a bad debt.

In tough times "a bird in the hand is worth two in the bush" works wonders for the head. No wondering about whether you will be paid the hunny owed because it now has been and no wondering about where you are going to get the hunny to pay your own debt because you have now paid it.

Two major worries have been solved in one blow and you can now focus on productive things that may actually create real income. If $100 had been your credit limit you have now cleared the debt and can borrow again. The actual cash flow even it it comes in and passes out again can also be seen as a positive.

Having your head in the right place can be a very powerful thing.