Fable: The Lady of Conde (counterfeit money and credits)

[Christophe]

Here are some extracts from this work (I had the author's permission to publish them): https://www.econologie.com/un-regard-cit ... -2608.html

The Lady of Condé

We are in Condé-sur-Gartempe. Its train station hotel is renowned for its ortolans and its discretion ...! On a Friday afternoon, a young woman appears, seemingly suitable, although a little too cutthroat.

She reserves a room for the night and, since she has no luggage, she leaves a 100 euro banknote as a down payment. Then she goes to visit the old town.

The pastry chef who saw the scene said to the boss: "You have owed me 100 euros for six weeks for the assembled piece that I delivered on the occasion of your daughter's communion." The boss gives her the ticket good grace.
As this scene has been seen by others, it happens five more times, because the pastry chef also owed 100 euros to the miller ... who owed the same amount to the mechanic ... himself who owed this amount to the butcher. who had to pay 100 euros to the representative of the house Erlida ... who in turn had to pay for his room at the Hotel de la Gare for 100 euros.

So he gives the ticket back to the hotel manager.

Notre Dame returns from a walk. She announces that having met, she cancels her reservation. Which suits the hotelier who, in the meantime, had a request from one of his old customers. The hotelier therefore gives her back her ticket which she burns immediately.

"It was wrong," she said, smiling.

Morality of this story

Why was a counterfeit ticket able to catalyze so many exchanges?

Because a banknote is fiat money (from the Latin fiducia: confidence). It is exclusively a “value of trust” between the members of a community. In another country it would not have been accepted. A counterfeit note loses "its value" only when it turns out to be false and is no longer accepted by the person who receives it. The one who holds it last bears the loss. In this story there was no loss except for the Lady of Condé who knew anyway that it was false.

Could it be that there is a lack of purchasing power in our society?

Indeed, the Lady of Condé, by reserving her room, increased the village's money supply by 100 euros, which enabled six people to reciprocally extinguish their debt for a total amount of 600 euros. The "quality" of the currency used, good or bad, does not matter.

Troubling ... Isn't it?

[Philippe Schutt]

I would not want to play the spoilsport, but currently, we would rather have too much money in circulation. Hence financial bubbles appearing there, as for real estate currently, and raw materials it seems, although I would not call the latter a bubble.

The abundance of money due, among other things, to the indebtedness of nations has caused the income / raw materials ratio to increase, and the plunder of the planet that follows. A price increase will only restore balance, because in my opinion the real bubble is in the value that we attribute to our work.

[Christophe]

It's a fable ... a story ... it has nothing to do with the current context but it is intended to better "understand" the economy (for neophytes like me ...).

I have a score of these fables in reserve ... I will add them as I go along.

[gegyx]

Indeed, the Lady of Condé, by reserving her room, increased the village's money supply by 100 euros, which enabled six people to reciprocally extinguish their debt for a total amount of 600 euros. The "quality" of the currency used, good or bad, does not matter. [/ I]

Completely agree, whether it be a real note, monkey money, or a given word, the exchange could have been the same.
In fact there was no circulation of a value, simply upgrading of accounts payable-debtors, which were awaiting settlement….
If the accounts of the 6 protagonists had been put on the same table, to everyone's knowledge, the totals would have been canceled, at the accounting level, and no need for fiduciary transaction.
Without official money or barter, the problem could have been solved as well ...

[freddau]

And to say that if my eco teacher had explained like this, I would have had less headache.

In short, they all lived on credit, but since the hotel owner attracted money to his home, nobody is on credit anymore.

And since the eco governs the system a bit, it's better to try to understand.

[Christophe]

And since the eco governs the system a bit, it's better to try to understand.

Exactly that's why I try hard to see a little more clearly (and to make you participate obviously!).

But then for the fable: in the end when we knew it was a counterfeit note, were the debts "updated"?

[freddau]

The debts have been erased and the hotel owner has not increased its turnover.

Except that with each transaction, we must not forget the "friction" / losses.

The pastry cook had to pay a supplier for his assembled piece, which he had to pay with his money / cash.

In the end, the bank / Dame du Condé did not gain or lose anything but made it possible to reset everyone except for the suppliers if they are external to the village.

[Christine]

But why does it burn it in the end? Because thus she lost 100 €. I think it is for the purpose of the demonstration, but I do not see why. Each owner is enriched by 100 € (who pays his debts enriched) ... and she could very well have used this ticket to buy 100 € of goods? No ?

we would rather have too much money in circulation. Hence the financial bubbles that appear there, as for real estate currently

My knowledge is very limited, but it is certain that real estate is not a money supply. These bubbles are completely fictitious and that is their problem.

[Christophe]

She burns it because it was false ... the moral is that a counterfeit note made it possible to erase 600 € of debt (as it could have erased 60 000 €) ... with any impunity or rather legality for the 5 creditors ...

[Christine]

Yep, I think the author wanted to emphasize that this value was completely detached from all reality at the start.