How to Understand the Current World Financial Problems

If you have difficulty in understanding the current world financial situation, the following should help. It has been simplified.

Once upon a time in a village in India , a man announced to the villagers that he would buy monkeys for $10 each. The villagers seeing there were many monkeys around, went out to the forest and started catching them.

The man bought thousands at $10 each, but, as the supply started to diminish, the villagers stopped their efforts.

The man further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going  back to their farms. The offer rate increased to $25 and the supply  of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his  assistant would now act as buyer, on his behalf.

In the absence of the man, the assistant told the villagers: “Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when he returns from the city, you can sell them back to him for $50.”

The villagers squeezed together their savings and bought all the monkeys.

Then they never saw the man or his assistant again, only monkeys everywhere!

Welcome to WALL STREET. (also explains the real estate debacle)

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3 Responses

  1. I’m sorry, how does this make sense now? You lost me at monkey.

  2. synthmon—the man bought monkeys at $10 and $20 dollars —he may have bought a few at $25 —but he sold them back to the villagers at $35 —making a nice profit!!! —-and left the villagers hanging. Markets run on “supply and demand” —however, when the “demand” is artificial it screws up the system. An artificial demand is created by speculation (with greed as the motivating factor).

  3. thanks very much i have realy gets it

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