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How our #financial #system works and the #redistribution …

An investor suddenly appeared in a small Spanish town and rented a huge warehouse. He then announced that he would pay €10 for every cat that was brought to him. The inhabitants could hardly believe their ears, as the town was full of wild cats, but some went on the hunt and brought cats. They received their money. Word spread quickly and the warehouse was half full of cats. After a while, there were hardly any cats left in the village. Then the investor announced that from now on he would pay €20 per every additional cat. People hunted in the surrounding area and in neighboring villages and they received their money. There were hardly any cats left in the whole area except in the warehouse, which was well stocked. Now the investor has announced that each additional cat would be worth €50 to him from now on. However, he would now travel to the capital for his business and his managing director would look after the warehouse. When he returned in a week’s time, he would pay for all the cats. No sooner said than done. As soon as the investor had left, the manager told the people that they could buy cats from the warehouse for €45. They could then sell them back to the investor later for €50. People scraped together all their savings and some even went into debt. Everyone bought as many cats as they could. The more cats you owned, the higher the expected profit. Within a few days, the warehouse was completely empty and the managing director had made a handsome sum. Now everyone was waiting for the investor to return. But he never came and the managing director had also disappeared. You will have guessed it by now, the investor never returned and the entire region had to suffer under a heavy burden of debt from then on.

This is exactly how the #stock #market works.

#money #economy #capitalism #profit #wisdom #story #problem #future #fail