Money, money, and more money. It’s all we hear about during this election cycle. Who’s raising it; who’s not raising it.

How Does Money Work?

Can you make money without making money? Consider this old canard that’s been around for years.

“A rich tourist comes to town and is looking for a hotel room. He leaves a $100 bill as a deposit with the hotel owner and goes upstairs to inspect the rooms.

The hotel owner takes the $100 and runs down the street to pay the butcher, who takes it to pay the pig farmer, who gives it to the feed store owner, who then gives it to the local prostitute, who gives it back to the hotel owner to pay for the room she rented.

The hotel owner lays the money back on the counter. The rich tourist comes back down scoops up the $100 bill and says the rooms won’t do and leaves the entire town debt free with all debts paid.”

Now, the questions is, did anyone make any money?

Money Is A “Clearing Tool”

As money moves through society it clears things out. It pays a debt and moves on to pay another, and another, and so on.

A profit is made if there is additional monies left behind after the $100 bill leaves. In the example above everyone who marked up his or her products or services received a profit but that profit left when the next bill was paid because none of the $100 dollars remained behind.

But each person was ahead $100 dollars in profit until they paid the next person.

The debt for each business was removed but there was nothing left for each business owner in the way of profit.

Not too confusing is it?

Money Is Fluid

Whether it’s the Koch Brothers, or Joe Sixpack living in suburbia, money performs the same function for both parties. One might be on a larger scale then the other but they are nevertheless the same.

Money is always moving in some fashion. It’s might be earning interest in an employee 401(k) or being used to improve ones personal standard of living.

It is said that a single dollar bill will pass through seven hands before leaving the community.

Some Final Thoughts

The next time you take that dollar bill out to pay for something take a good look at it. Chances are it’s been around. It might have been in a church collection plate or a strip club G-string.

It might have bought a Big Mac or a Big Screen TV. But somehow it found its way to you.

The point is money doesn’t just buy things. It buys feelings. It buys experiences. It pays salaries, relieves stress, and yes some people accumulate more of it than others.

How much you keep depends on how much goes out — and for what. It’s your choice. You can pay me now; or pay me later.

You might want to keep a few pennies on hand just in case no rich tourist shows up.

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