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The Rich Man's Story - Part 3 (retro)

We will take the possibilities and their impact in different sections, so that we can clearly segregate the scenarios.
Let us, in this Part see what will happen if the Rich Man's friends are successfully able to bring out a transformation and help Rich Man out of the situation.

All the Merchants who have traded with the Rich Man are trapped. They cannot sell and convert the Promissory notes into the gold because there is not enough gold in the whole village!!! [We will see how this happened later on] The value of the Notes in the eyes of the Merchant community is falling rapidly, and with it the total net worth of the Merchants to whom the Rich Man owes large sums of gold.

One of the ways of helping out the Rich Man is to continue selling to the Rich Man in exchange of Promissory notes, until the Rich Man's consumption equals or is lesser than production. In other words, the Rich Man has to maintain a position wherein his production exceeds his consumption. This is a tough and hard for both parties involved. The Rich Man, suddenly decreasing the amount of buying will leave many Merchant families idle and will decrease their wealth and happiness.

This will have a very damaging effect on the Rich Man and his family, because after years of luxury, they have to work to pay the price of that luxury. This is an interesting result because, when the Rich Man reduces the consumption and increases the production, the other parties like Poor Merchant, Albert and others will pay back the excess amounts to the Rich Man with his own Promissory note. Rich Man will now have to work hard to pay back what he owes to the society. Rich Man will have to work hard to earn back the pieces of paper he called "Promissory Notes". He has to finally fulfill his promise. This best illustrates "There is no free lunch" philosophy.

This is hard on other helping Merchants too because, they have to be patient until the Rich Man is able to take back all the notes with them or for his debt to come to manageable proportions. Until then, they also have to forgo the pleasure and wealth.

There is another method, by which the Merchants will be able to help Rich Man. That is by the simply increasing their consumption to such an extent that Rich Man inspite of his large consumption is able to produce more. It is not easy ways too; there are some problems that crop up. For that to happen there has to be a cultural change in among the merchants. For example, the hard working and thrifty Poor Merchant will have to spend lavishly on consumption. And Rich Man must also be able to increase his production capacity quickly and rapidly to fulfill the requirements. This is least hurting process among the two.

Finally, when the Rich Man is able to pay off the debt, and hopefully having learnt the lesson, things become normal again.

The points mentioned here may sound simple, with little hurt, but when taken in the context of nations, the accompanying social upheaval is enormous. The adversity faced by the people on both sides of trade is enormous. In other words, the Rich Man's actions even in its most positive light are capable of cause severe hard ships.

There are obviously many more problems and many more solutions, I have just looked two here.

:) Falkor

Rich Man's Story:http://surff.blogspot.com/2005_11_20_archive.html

First published: http://surff.blogspot.com/2005/11/rich-mans-story-part-3.html
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