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This feels very adjacent to the story about the whole town in debt, and the rich guy leaves a $100 bill on the table, [and so on], in a way that I can't quite p

This feels very adjacent to the story about the whole town in debt, and the rich guy leaves a $100 bill on the table, [and so on], in a way that I can't quite put my finger on.

throwaway667555 5mo ago
You can't put your finger on it because money is merely an accumulator and medium of exchange of economic performance. The performance of services in exchange for other services without money is a perfectly valid economic exchange that can and should be booked to revenue of each of the parties, if actually performed. Loans without any economic performance of services generate circular meaningless cash flows yeah, but that's not the case when services are actually performed. Loans are promises to pay. Business deals are promises to perform services or deliver goods. The difference is easily lost in the details even for accountants and economists.
- copperx 5mo ago
  That's a bit jumbled. You can gain clarity one level up the abstraction layer. Money is a note that means a debt is owed.
  - throwaway667555 5mo ago
    When comparing promises between businesses to pay versus promises between businesses to perform services, it is irrelevant that fiat currency is a federal reserve note rather than, say, bottle caps. Irrelevant.
adharmad 5mo ago
The man who saved Pumplesdrop By W. J. Turner
- hirsin 5mo ago
  Not quite. At least the one I found is some trickle down economics myth. The one op is referencing is more like the dollar is used to pay off the waitstaff, who pay their rent to the landlord, who pay their over due taxes, so that the government can issue a refund to the cafe owner. The dollar ends up back in the hands of the cafe owner, who puts it back down on the table with all the debts paid off.
joenot443 5mo ago
It's a cool little analogy, one I'd never heard of before https://www.econlib.org/archives/2012/01/an_answer_to_a.html https://www.econlib.org/archives/2012/01/an_answer_to_a.html > True, at the beginning each resident has a $100 liability. But each also has an offsetting financial asset of $100. At the end, they all have neither. So the $100 bill acts as a clearing mechanism

This feels very adjacent to the story about the whole town in debt, and the rich guy leaves a $100 bill on the table, [and so on], in a way that I can't quite put my finger on.

throwaway667555 5mo ago

You can't put your finger on it because money is merely an accumulator and medium of exchange of economic performance. The performance of services in exchange for other services without money is a perfectly valid economic exchange that can and should be booked to revenue of each of the parties, if actually performed. Loans without any economic performance of services generate circular meaningless cash flows yeah, but that's not the case when services are actually performed. Loans are promises to pay. Business deals are promises to perform services or deliver goods. The difference is easily lost in the details even for accountants and economists.

copperx 5mo ago
That's a bit jumbled. You can gain clarity one level up the abstraction layer. Money is a note that means a debt is owed.
- throwaway667555 5mo ago
  When comparing promises between businesses to pay versus promises between businesses to perform services, it is irrelevant that fiat currency is a federal reserve note rather than, say, bottle caps. Irrelevant.

adharmad 5mo ago

The man who saved Pumplesdrop By W. J. Turner

hirsin 5mo ago
Not quite. At least the one I found is some trickle down economics myth. The one op is referencing is more like the dollar is used to pay off the waitstaff, who pay their rent to the landlord, who pay their over due taxes, so that the government can issue a refund to the cafe owner. The dollar ends up back in the hands of the cafe owner, who puts it back down on the table with all the debts paid off.

joenot443 5mo ago

It's a cool little analogy, one I'd never heard of before https://www.econlib.org/archives/2012/01/an_answer_to_a.html https://www.econlib.org/archives/2012/01/an_answer_to_a.html > True, at the beginning each resident has a $100 liability. But each also has an offsetting financial asset of $100. At the end, they all have neither. So the $100 bill acts as a clearing mechanism