Re: econ #1

On Wed, Dec 15, 2010 at 12:02 PM, Karl <[email protected]> wrote:
> No one produced anything.  No one earned anything.

Yes they did... in the past.  That's the whole point of spending on credit.

> However, the whole town
> is now out of debt and looks to the future with a lot more optimism.

And anyway, that sounds like a valuable service to me.  In a sense,
this is also one of the valuable services of Visa, Mastercard, etc.  I
only need a single creditor, who keeps an account with Visa, who keeps
accounts with millions of merchants around the world.  If the people
of this fable had all used credit cards, no one would have still been
in debt when the tourist arrived (although they may have had to pay
the various additional fees to the Visa and their bank).  On the other
hand, the prostitute might have had difficulty obtaining a merchant
account.  ;-)

But as Bruce hinted, most people's debts are not cyclical.  Most of us
owe *far* more than is owed to us.  Most businesses do have accounts
due and accounts payable, and it mostly isn't a big deal.

-- 
Nick

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