This perfect explanation of the current financial situation is equally applicable to the U.S. as well as Europe. It's taken from Zerohedge - a fantastic financial blog. http://www.zerohedge.com/news/expla...nd-economics-using-booze-and-broke-alcoholics
HAHAHAHAHA this is the best post of the decade As a bar owner myself, I can testify that nothing describes our situation better then this post. I only wish Ron Paul would recite this on the media my god.
This is a horrible analogy and this is where it breaks down... Helga doesn't have any sales volume because she is giving away free alcohol, since no one has any money. In the real world, when we take out a loan to purchase a good or service, that money exists and it is now used to purchase other goods and services. Helga hasn't done anything except gave away free alcohol, which is not how our system works.
What money did Helga give them? Helga dollars? And I am always going to laugh at Ron Paul and his cult followers. Because they come up with stupid stuff like Helga giving away free alcohol.
Actually this is a very good analogy. Giving a housing loan to people, who obviously cannot afford it, is no different than crediting booze to people you know can't afford it. Both inflate prices. Inflation creates a bubble. When the bubble bursts, prices fall, and the resulting credit is unlikely to be recovered. The goods purchased are worth far less than what is owed on the initial loan.
No it is nothing like that. There is someone who sells the house, receives the money and then uses it to make purchases of goods and services they want. There is no sellers in this analogy. The money doesn't disappear unlike the alcohol. Once again, this is an abysmal analogy
