texasSlick
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- Jan 2, 2013
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There is a little fable that well explains the effect of devaluation of currency.
There once was a little kingdom where the king needed money to build weapons so he could make war on his neighbor....... must have been an European kingdom. The king did not want to raise taxes and he hit upon a plan, he called in the Royal Treasurer and Royal Minter.
The king ordered the Treasurer to send all precious metal coins coming into the treasury, over to the minter, and ordered him to melt them down and restrike them 5% thinner. And told Treasurer and Minter they would lose their heads if they breathed a word of this.
After the coins of the realm had circulated once thru the treasury, the king had 5% more money to build his weapons. The plan worked so well the king got greedy and told the Treasurer and Minter to do it again.....another 5%. No one noticed the coins were thinner, until the Butcher, Baker, Candlestick Maker, and Miller were having their usual Saturday night poker game.
It was a bad night for the Baker, and he was busted. Then he remembered the coins he and his wife had been squirrelling away in the cupboard. He emptied his stash and got back in the game with his New Old Stock coins.
Poker players like to stack their coins, and the Butcher said "Hey! Wot's this! I have 10 coins on this stack and 10 on the other, but if I add one coin to the low stack, it becomes the high stack!
Well, it did not take long for them to figure out the NOS coins were 10% thicker than the newly minted coins.
Next day, the Baker went to the mill, flipped a new coin on the table and ordered his usual 10 sacks of flour. The Miller looked the coin over and said "I'll give you 9 sacks of flour for that coin".
The Baker said, "When did you raise your prices?" The Miller said "When you offered me cheaper money!"
After that, the price of bread, meat, and candles increased 10% in the .little village.
Slick
There once was a little kingdom where the king needed money to build weapons so he could make war on his neighbor....... must have been an European kingdom. The king did not want to raise taxes and he hit upon a plan, he called in the Royal Treasurer and Royal Minter.
The king ordered the Treasurer to send all precious metal coins coming into the treasury, over to the minter, and ordered him to melt them down and restrike them 5% thinner. And told Treasurer and Minter they would lose their heads if they breathed a word of this.
After the coins of the realm had circulated once thru the treasury, the king had 5% more money to build his weapons. The plan worked so well the king got greedy and told the Treasurer and Minter to do it again.....another 5%. No one noticed the coins were thinner, until the Butcher, Baker, Candlestick Maker, and Miller were having their usual Saturday night poker game.
It was a bad night for the Baker, and he was busted. Then he remembered the coins he and his wife had been squirrelling away in the cupboard. He emptied his stash and got back in the game with his New Old Stock coins.
Poker players like to stack their coins, and the Butcher said "Hey! Wot's this! I have 10 coins on this stack and 10 on the other, but if I add one coin to the low stack, it becomes the high stack!
Well, it did not take long for them to figure out the NOS coins were 10% thicker than the newly minted coins.
Next day, the Baker went to the mill, flipped a new coin on the table and ordered his usual 10 sacks of flour. The Miller looked the coin over and said "I'll give you 9 sacks of flour for that coin".
The Baker said, "When did you raise your prices?" The Miller said "When you offered me cheaper money!"
After that, the price of bread, meat, and candles increased 10% in the .little village.
Slick
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