tag:blogger.com,1999:blog-9124539381685751273.post5970486090294178157..comments2023-06-19T04:35:06.263-07:00Comments on Skeptic's Play: Currencies + alcohol = Profit?!millerhttp://www.blogger.com/profile/05990852054891771988noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-9124539381685751273.post-38207925947517377492008-03-03T10:33:00.000-08:002008-03-03T10:33:00.000-08:00I'm going to have to play with it for a while. Eco...I'm going to have to play with it for a while. Economics has never been a strong point for me. I will say I don't think this is a good idea in real life!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9124539381685751273.post-60023515922937179002008-03-02T07:23:00.000-08:002008-03-02T07:23:00.000-08:00I think there are further possibilities if you thi...I think there are further possibilities if you think of it more as a real world problem. How would the economy react?millerhttps://www.blogger.com/profile/05990852054891771988noreply@blogger.comtag:blogger.com,1999:blog-9124539381685751273.post-62929454606726514172008-02-29T19:19:00.000-08:002008-02-29T19:19:00.000-08:00Let's see…well, the bartenders are not losing dire...Let's see…well, the bartenders are not losing directly, since they're still getting the correct price of $1 (in their own currency) for each $1 beer they sell. Could they be losing for a different reason, though?<BR/><BR/>Since the situation is symmetric, I'll focus on the US side of things. The US bartender has Canadian currency in his register, which he might have gotten by charging someone $1.11 in Canadian dollars for a drink. That transaction doesn't cost him anything. On the other hand, he might have gotten the Canadian currency from an exchanger like a bank. <BR/><BR/>Usually, a foreign exchange will take a small percentage of the total amount as a fee, but let's assume they don't just to make the problem simpler. If the bartender's wise he'll do it in the US where he can give only $9US to get $10 Canadian. This equivalent to giving Charlie $9 change in US currency, so the bartender still isn't losing. If he were to do the exchange in Canada, he'd have to pay $11.11US to get $10 Canadian, so he would be losing.<BR/><BR/>This is the key, I think. At some point in the process, someone is going to have to exchange US money for Canadian in Canada, and Canadian money for US in the United States. What Charlie is doing is equivalent to the process of buying Canadian money cheap in the US, selling it for more in Canada, and so on, which is why he makes a profit. If he didn't drink the profit each time, he would multiply his money by a factor of 1.11 each time he crossed the border. But somebody is therefore selling Canadian money cheap in the US and buying it for more in Canada, whether it be the currency exchange, the bartenders, other customers, etc.Anonymousnoreply@blogger.com