With which liquidity injected into the financial institutions does not flow to the economy as it should. Finally, I’ll give you an example that I have received by mail, and that in a humorous tone explains the subject of the banking multiplier, and why the fluidity of money can fix the economy. It is August, a small coast town, in full season; falls a torrential rain several days ago, the city appears deserted. The owner of the hotel, the butcher, farmer, merchant and up the prostitute have debts and live thanks to the credit. Fortunately, a sheathed Russian arrives and enters a small hotel with charm. Ask for a room. It puts a $ 200 ticket at the Receptionist desk and goes to see the rooms.
The head of the hotel grabs the ticket and runs off to pay his debts with the butcher. This picks up the ticket and runs to pay his debt with breeder pigs. In turn this gives haste to pay what they owe to the suppliers of animal feed of animal feed picks up the ticket to flight and runs to settle its debt with the prostitute that long ago that you don’t pay. In times of crisis, until she offers services on credit. The prostitute pick up the ticket and leaves for the small hotel where had brought to its clients the latest times and which had not yet paid. At this low point Russian, that you just take a look at the rooms, says that he convinces him none, picks up the ticket and leaves the city. Nobody has won a hard, but now the entire city lives without debt and look at the future with confidence. Note: In this history the Russian makes the role of banker, providing credit.