A Leverage Story

A while ago I read a story about leverage that gave birth in me to a series of philosophical thoughts on the subject of debt. I will today offer you a story I wrote on leverage inspired in that other story I was once read of. This is my version.

Once, when travelling around China, I decided to head for a quiet place looking for some rest. I chose the city of Pingyao. When I reached this walled city I registered in an inn where I was asked to leave 200 RMB as a deposit guarantee. Once the 200 RMB note handed in I headed for the shower where I found nothing but cold water. I waited for a while. When it became clear that hot water would not be coming out the shower head I gathered my courage and prepared for a cold shower (I know this kind of bath is a very healthy habit, but it sure is difficult!). I nevertheless did it, and after that I lied down for a nap.

I woke up and went to the inn's reception. I explained to the clerk that I wished to make an experiment. I was interested in observing what would happen with the 200 RMB I had left as guarantee. I wished to know the way in which money circulated by following it (an ideal experiment for the economics' students that study speed in the money flow).

To my big surprise I found out that money flows faster than my cold water shower and my nap. The clerk tells me he has already given the 200 RMB note to the inn's young assistant for him to cancel the debt the inn had with the store in the corner for some cleaning products.

So I go to the store in the corner. On my way I bump into the assistant, who tells me he has already given the note. When I get there I explain the person in charge the experiment I am carrying out and ask him if the note was still in the store. He tells me he has given the 200 RMB to the locksmith on the other side of the street to cancel a debt the store had with him. I cross the street, I meet the locksmith, I tell him the same story and he answers back that he has already given the 200 RMB to the supplier of master keys for the cancelling of a debt. The supplier just left in his motorbike.

Out to the street and I see the supplier in the distance. I run after him, but I can not reach him. I nevertheless keep on walking following his trail. After a few hours I find myself in a service station where I see the bike parked. Inside the bar is the supplier. I go in and explain to him my story. He tells me he has given the 200 RMB to the station worker a while ago. He points him out for me.

So there I go towards the gas distributor and explain the situation to him. The man tells me he has used the 200 RMB to cancel a debt he had with the prostitute of the neighbourhood. He shows me the address a few blocks away and I head on there.

On arriving I knock the door and she shows me in. I explain the whole story to her and ask if she is still in possession of the 200 RMB. She shakes her head. She has given them to the sergeant that has passed by just a moment ago. She explains to me where the police station is.

So I head for the police station. Once there I look for the sergeant and address him, I explain the situation. He tells me he has given the money to his son, who should be playing in the park.

I go to the park and find the kid. I ask him if he has the 200 RMB. He says he does not. He has given the money to the ice-cream man to cancel a debt built on the ice-creams he had been eating.

When I reach the ice-cream parlour I find the “closed” sign hanging from the door.

Back to my inn. When I get there I find the ice-cream man chatting with the clerk. I smile to myself and tell the story to the ice-cream man. I ask him if he has the 200 RMB. He does not. His wife threw him out of home some days ago and has been staying in the inn since. He has just spent the 200 RMB in cancelling his debt with the inn for the days of accommodation.

I smiled and understood everything that had just happened with all that debt. Some days after the clerk handed me back the deposit and I went to Beijing.

Reading what occurred I realize that all the debtors ceased being it along the note's route.

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