Sunday, February 13, 2011

The Stimulus Package demystified

Economics 101:

It is a slow day in the Waithaka suburb and the streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.

A mzungu tourist visiting the area stops at a B&B and lays a 1,000 bob bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.
As soon as he walks upstairs, the receptionist grabs the bill and runs next door to pay his debt to the butcher. The butcher takes the 1,000 bob and runs down the street to retire his debt to the slaughter house supervisor, who takes the 1,000 bob and heads off to pay his bill to his supplier, the Co-op.
The guy at the Co-op takes the 1,000 bob and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer services on credit.  The hooker rushes to the hotel and pays off her room bill with the receptionist. The receptionist then places the 1,000 bob back on the counter so the tourist will not suspect anything.
At that moment the mzungu comes down the stairs, states that the rooms are not satisfactory, picks up the 1,000 bob bill and leaves.
1. No one produced anything.
2. No one earned anything.
However, the whole town is now out of debt and now looks to the future with a lot more optimism.  And that, ladies and gentlemen, is how a "stimulus package" works.

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