How Much Money Circulation is Important

How important is the circulation of currency and how much timing plays a role in it, I had heard an example that I am sharing with you, from this example you will be able to know very well that if the money is in banks or houses, means if it is stocked, what can be its disadvantages and if the same money is circulating in the society, what can be its benefits.

• What happens is that a tourist enters a hotel with the intention of staying and goes to the reception counter where the owner of the hotel is present, tourist asks the hotel owner how many rooms are currently available in your hotel, the tourist is told that the hotel has twenty rooms available and the room rent is thirty dollars, the tourist places a hundred dollar currency note on the counter and says I will look at all the rooms, if I like the room, fine, otherwise I will get my money back.

• The tourist leaves the hundred dollars on the counter and leaves with the waiter to see the rooms, and in the meantime an interesting story begins.
• As soon as the tourist leaves, the butcher who supplies meat to the hotel comes to the counter, he comes to the hotel owner to collect his dues, and the owner gives him a hundred dollar note of the same tourist, because he was very sure that the tourist will like the room.
• When the butcher arrives back at his shop with the money, he sees that the merchant who supplied him with the animals is there to take his money. The butcher gives the same hundred dollars to the trader who takes it directly to the animal fodder vendor and gives the same hundred dollars to the vendor.
• Hence the vendor takes the animal's feed from the farmer, so he gives that hundred dollar currency note to farmer, and the farmer has to pay the merchant who supplies fertilizer for his crops. He gives this hundred dollars to the merchant.
• The food at the merchant's shop comes from the same hotel where the tourist is inspecting the rooms for staying. He reaches the hotel and clears his account by paying a hundred dollar note to the hotel owner.
• Meanwhile the tourist finishes looking at the room and comes to the counter. Tourist says he didn't like the room and leaves with his hundred dollars.
• In this example, the importance of circulation of wealth can be estimated, a hundred dollars note does not stop with anyone and everyone's arrears are also paid. If it had been stopped by any one, for example farmer does not pay the merchant for fertilizer or he holds the money for few hours, the outcome of the story would have been different. That is, circulation of wealth is important but it is directly related to timing.