It is a slow day in the small Saskatchewan town of Pumphandle, and streets are deserted.

Times are tough, everybody is in debt and everybody is living on credit.

A tourist visiting the area drives through town, shops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.

As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.

The guy at the Co-op takes the $100 and runs to pay the debt to the local prostitute, who has also been facing hard times and has had to offer her ’services’ on credit.

The hooker rushes to the hotel and pays off her room bill with the hotel owner.

The local proprietor then places the $100 back on the counter so the traveler will not suspect anything.

At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.

No one produced anything. No one earned anything.

However, the whole town is now out of debt and now looks to the future with a lot more optimism.

And that is how a stimulus package works…


P/S   A good and simple analogy of economy stimulus package however it will only work well when everyone is spending all monies back to the society.  In the real world,  some people may earn more than other and some put extra cash in idle and not productive, in a long run it will caused imbalance of cash flow circulate in the market unless the Reserve bank and government step in to rescue the market and verse versa.