Originally posted by bajamigo
Quote: | Originally posted by bajajudy
I think I read that Slim generated 8% of the gnp(different initials in Mexico). |
And therein lies the problem. Slim and his gato gordo friends absorb a disproportionate share of earnings in this country, but either don't understand
or don't care about the concept of the velocity of money.
For example, during a year, a particular $10 bill might have been used as follows: a baker, Juan, pays the $10 to a tomato farmer, Jorge. The tomato
farmer uses the $10 bill to buy potatoes from Chuy, who uses the $10 bill to buy sugar from Tomas. The $10 here served in three transactions. This
means that the $10 bill was used three times during the year; its velocity is therefore 3.
In short, a $10 bill, circulating with a velocity of "3," financed $30 worth of transactions in that year. In Mexico, the velocity of money in recent
years has approached MINUS .5
These guys sit on on their dough or park it in Switzerland or the Caymans, and they probably even stuff their mattresses with it. And they sure as
hell don't give it away.
Thus, everyone down the food chain never sees the money, and poverty results. In the meantime, their compadres are up in the States creating enough
value to send money home. Good for the folks in the short run, but whatever value they're creating up north is in a country that isn't Mexico.
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