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Yes, Fabbro, the total amount lent is equal to the total amount owed.
But there are people with a positive balance (lending more than owing)
and others with a negative balance (owing more than lending). In other
words some are creditors and others are debtors. So no compensation
can cancel the balance of every one of them.
Peter
----- Original Message -----From: fabbro jSent: Saturday, July 04, 2009 10:29 PMSubject: Re: [Behavioral-Finance] The debt related logical fallacy
Peter, good catch. but doesn't the total (principal) amount owed always equal the total amount lent on a global basis, sans accounting irregularities and currency exchange wobbles? The difference is in timing preferences and risk evaluation(what happens if one resident refuses to pay after collecting).
--- On Sat, 7/4/09, pgreenfinch <pgreenfinch@orange.fr > wrote:
From: pgreenfinch <pgreenfinch@orange.fr>
Subject: [Behavioral-Finance] The debt related logical fallacy
To: Behavioral-Finance@yahoogroups. com
Date: Saturday, July 4, 2009, 5:56 AM
This fable seems to be the craze
http://scienceblogs .com/evolutionbl og/2009/06/ an_amusing_ brainteaser. php
Of course, the trick is that it is assumed that
from the start everybody has zero net debt (equal
amount owed and amount lended.
So obviously a compensation that would cancel all
debts can take place even without the tourist and
its magical 100 $ bill.
The hotel owner could have used one of its room
as a discreet clearing house ;-)
But that outrageous fable seems to persist, and even
bring macroecpnomic interpretations by self appointed
pundits.
Peter
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