Re: The three checks problem


agudbuk (remove MY GARMENTS for correct address) wrote:
"Aik" <aikko@xxxxxxxxxxx> wrote in message
news:1152364417.310670.104200@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Aik wrote:
agudbuk (remove MY GARMENTS for correct address) wrote:
"Aik" <aikko@xxxxxxxxxxx> wrote in message
news:1152171512.266805.110030@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
There are three men: A, B and C. A buys meat from B and gives B $100
personal check. B buys fish from C and gives C $100

personal check. And C buys pork from A and gives A $100 personal
check. If you clear these checks throught banks, they will

be automaticly cleared. But these checks already clear themselves.
The purpose of this example is to show that, in many

situations, currency doesn't need to be involved in trades or barters
even in complicate transactions. It is the subject that many

people know but I just want to write about it.
Aik


I have a brilliant idea.

Wy not make spe3cial cheques that can be passed from one person to
another.
Lets see what could we call it?
How about MONEY.

Agudbuk

Of course it's money but in this case it's still IOU and if people
don't accept it, you still can't buy things with your money. I can't
say much here because I still depend on it.
Aik

Correcting my response. You have to be careful for passing spe3cial
cheques with no limits. Otherwise, you may have to use your cigaretes
as your money or use your money as your cigaretes like what happened in
Germany in 1930s (or something). Using personal checks creates more
circulation volume than using currency alone. The other that should be
good is credit union/venture capital combination.
Aik

So you want to increase the amount of money in circulation.

When governments do that by printing more money the general result is
rampant inflation

BTW a $100 note is not worth anything, like a personal cheque it's just an
IOU but supposedly backed by the government. What it's an IOU for is another
question. At on time it would have been against a set weight of gold. Now?

Agudbuk

IOU is promise to pay, like contract. That's why they call it Note,
like promisary note. When X passes note to Y, Y lends merchandise to X
and gets promise from X that X will pay back with merchandise of equal
or negotiated value. When Y passes note to Z, Z pays Y with
merchandise in place of X and gets note (promise or contract) from Y
that someone who receives that note will pay him with merchandise. If
the note is pegging to gold, it promises that the government will pay
the note bearer at the end of the line with gold. Like you wrote, $100
note is not worth anything but it is a legal contract promissing to pay
just like any legal paper. IOU is for I owe you, the one who gives you
note owes you something.

Increasing volume of circulation does not always cause inflation if it
is needed to match demand and supply. In US, food stamps matches
surplus produce with people who need to buy food. Do you think food
stamps cause inflation?

Printing money is not the only way to increase circulation and is not
quick to shrink and expand. If you have a credit card with line of
credit, you don't need to use more than you need and when you need
more, you can use more. That will control appropriate volume. If you
are in Co-op community with credit union (I'm mentioning about
Thailand). Some of circulation will be closed circuit. If they use
checks within community with a good clearing system, circulation will
increase without much currency.

Aik

.

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