Image by Gerd Altmann from Pixabay
Does money have any real intrinsic value in America? We’re always talking about dollars not buying what they used to.
We have the highest inflation in 40 years, gas prices passing all-time highs combined with shortages of some of our most basic necessities.
Does money have any real value even if you have some?
How Does Money Circulate?
Here’s a very simplistic example of how the circulation of money works.
“A rich tourist comes to town and is looking for a hotel room. He leaves a $100 bill as a deposit with the hotel owner and goes upstairs to inspect the rooms.
The hotel owner takes the $100 and runs down the street to pay the butcher, who takes it to pay the pig farmer, who gives it to the feed store owner, who then gives it to the local prostitute, who gives it back to the hotel owner to pay for the room she rented.
The hotel owner lays the money back on the counter. The rich tourist comes back down scoops up the $100 bill and says the rooms won’t do and leaves. The entire town debt free with all debts paid.”.
Now, the question is, did anyone make any money? Did anyone lose money?
The hotel owner lost $100 because he was last in line and not paid.
Or was he? He got his hundred but didn’t get to keep it.
All the others in line put the $100 in their till then took it out again to pay the next person.
Yet the lady of the evening did give him $100 bucks so she’s home free.
Is the hotel guy out $100 — you make the call.
Money Is A “Clearing Tool”
As money moves through society it clears things out. It pays a debt and moves on to pay another, and another, and so on.
A profit is made if there are additional monies left behind after the $100 bill leaves.
In the example above everyone who marked up his or her products or services received a profit, but that profit left when the next bill was paid because none of the $100 dollars remained behind.
But each person was ahead $100 dollars in profit until they paid the next person.
The debt for each business was removed but there was nothing left for each business owner in the way of profit.
Not too confusing, is it?
Money Is Fluid
Whether it’s the Donald Trump, George Soros or Joe Sixpack living in suburbia, money performs the same function for all parties.
One might be on a larger scale then the other, but they are nevertheless the same.
Money is always moving in some fashion.
It might be earning interest in an employee 401(k) or being used to improve one’s personal standard of living.
It’s said that a single dollar bill will pass through seven hands before leaving the community.
Some Final Thoughts
The next time you take that dollar bill out to pay for something take a good look at it.
Chances are it’s been around. It might have been in a church collection plate or a strip club G-string.
It might have bought a Big Mac or a Big Screen TV. But somehow it found its way to you.
The point is money doesn’t just buy — things.
It buys feelings. It buys experiences. It pays salaries, relieves stress, and yes, some people accumulate more of it than others.
How much you keep depends on how much goes out — and for what. It’s your choice.
You can pay me now; or pay me later.
You might want to keep a few pennies on hand just in case no rich tourist shows up.
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