Imagine a situation where Canada and the USA are embroiled in a trade dispute. T
ID: 3146702 • Letter: I
Question
Imagine a situation where Canada and the USA are embroiled in a trade dispute. The USA passes a law saying that a Canadian dollar is worth only 50 cents in the USA, and in retaliation Canada passes a law saying that an American dollar is worth only 50 cents in the Canada.
While this is going on, a citizen of Tswwassen, BC, walks across the border to Point Roberts, WA, goes into a bar, orders a $5 beer, pays for it with an American ten dollar bill, and receives a Canadian ten dollar bill in change. He then walks back to Tsawwassen, goes into a bar, orders $5 beer, pays for it with the Canadian ten dollar dollar bill, and receives an American ten dollar bill in change.
He quickly realizes he’s on to a good thing, and repeats the process several times per day for the next few months, until the bars run out of foreign ten dollar bills. At the end of the time, he still has his $10 in American money. The barkeepers were paid in full for each transaction. Who paid for the drinks?
Explanation / Answer
Tswwassen, BC is in Canada and Point Roberts, WA is in USA.
Now, a person goes to Point Roberts and pays with US money of $10 for $5 beer, so he should receive back $5 for his beer, now instead he receives $10 canadian money, this is valid since in USA $10 canadian money is worth 0.5 cents so he is actually getting the same worth as $5 dollars USA money.
Now, he goes to canadian side and pays for $5 beer with canadian money $10, so he should receive back $5 canadian money, but instead he receives $10 american money. This is also valid since in canada american money is 0.5 cents. Hence again, he receives the same worth as $5 canadian money as $10 american money.
This goes on, and the person pays for his beer in full everytime while maintaining his actually money. The guy paid for the drinks everytime but due the currency value he always had the same amount.