Cute paradox
Seen on Quora....

There is a very poor quaint little town where everyone is in a huge debt with someone but with no money to pay for it. There is a hotel which is hardly seeing any business anymore. They are to soon shut it down. One day a very wealthy American guest shows up and he wants to spend a night there. However before he confirms he asks for a tour of the hotel. The receptionist asks for a security deposit which the American can take back in case he an take back in case he doesn’t like the rooms. The guest obliges.

It turns out by matter of luck this is the exact amount that the hotel owed to the chef as salary for three months which they hadn’t been able to pay. They gave the cash to the chef.

The chef saw that this was the exact amount of cash he owed the grocer for months of groceries he hadn’t been able to pay for. He paid the grocer.

The grocer realized it was the exact amount he owed the doctor for treating his wife’s arthritis.

The nurse was new to the town so she had been staying in the hotel for a few days before she found a house to rent. She too was poor and couldn’t pay the hotel at that time. The money she received from the doctor was exactly what she owed the hotel so she paid.

Now the hotel had got back the exact amount it had paid the chef. Now the guest has finished his tour of the rooms. Turns out he doesn’t like it. He takes back his security deposit from the hotel and leaves, never to be seen again.

So everyone's debt has been paid, but nothing is different from before.

No one has earned anything. But now everyone is happy.

Did the debt really exist at all?

A well-written story and a clever paradox.

This took some thinking.

At one level it's just wildly unlikely. In a small town you could have a closed loop of payments, but there's zero probability that all payments are the same amount.

Wildly unlikely isn't the real problem.

In real life the loop fails for the same reason that perpetual motion machines fail.

Every transaction has friction.

If the scene is old-fashioned, all the payments are made by gold, delivered on foot. Each payer has used some of his time and food energy and shoe leather, and risked being hit by a buggy or robbed by a pickpocket. Those losses and risks aren't recirculated or regained.

If the scene is modern, the payments are made by check or debit card or Paypal. Each payment incurs a fee by the bank or Paypal. After all the payments are made, each of the payers has lost about 5% of the amount, and this loss is not recirculated or regained.

So, after each complete loop everyone is poorer than before and MORE IN DEBT than before.

= = = = =

Later thought: Every living thing and every economy needs an input, an increase of value at some point in the loop, to overbalance the inevitable friction. For small towns the input was usually the annual growth of crops and livestock, or a specialized industry that sold high value products (wine, cheese, silverware) to the outside world. Before globalism, tiny towns could survive with a smaller amount of external input and a larger amount of internal looping, because the friction was paid to the local bank. When you're paying check fees or loan interest to the city bank, the friction losses DO recirculate. The banking side of Deepstate has been steadily eroding local banks since 1929, and the newer digital payment schemes are the final hammerblow.

More trust also means less friction. In a tight ethnic community with strong family ties, payment can be more abstract, requiring less transfer of gold or paper, less action by the bank. You can run up a tab in most stores and pay when your crop comes in. Deepstate has been obliterating trust since 1946.

Labels: Answered better than asked, skill-estate

  ¶ 9:41 AM