Where's the flaw?

[Hermione]

Went to the races at Alex Park last night, had a great night as usual. Was having a chat with a friend and the conversation drifted somehow to Bill Gates and his obscene fortune. Subjective I know, but we surmised he must have screwed people along the way to get where he is. My dearly beloved was listening quietly (his beloved talking and he knows his place ) and said there is a village in Ireland that got itself out of debt and proceeded with his shaggy dog story which I will abbreviate!

A Yank enters a pub in rural Ireland and slaps a $100 bill on the counter.
"I want to book a room, but need to view first, here is my deposit."
Hotellier is delighted, gives the Yank the whole bundle of keys and told him to check out all the rooms.
He's looking at the $100 bill and thinks "I owe the grocer $100, I'll take this down to him and pay off my debt." Off he goes.
Grocer is duly paid, looks at the $100 bill and thinks "I owe the farmer $100 for beef, I'll pay him off" and off he goes.
Farmer looks at the money and thinks "I owe local prostitute $100, better get her sorted" and off he goes.
Prostitute takes the money and thinks "I owe hotellier $100 for room rent, better get him sorted" and off she goes and pays hotellier.
Yank comes down the stairs and says "None of the rooms are suitable, I'll go elsewhere" and picks up his $100 bill.

Now village is out of debt, no-one has any money and the original $100 is gone. WTF happened? And, moreover, how can we apply to the world to sort out it's woes? What actually happened?

[Danno]

Emma......how is the yank getting his $100 back if the publican paid the grocer with it?.

[Hermione]

Grocer passed it on to farmer, farmer passed it to prostitute, prostitute passed it back to Hotellier, Yank puts it in his pocket and walks out???

[Toohard]

Hey Emma. I think thats called 'Economics'. Something not thought about (but re-inforced by ones wife) by those trying to get the fast one!!

[Triple V]

There's an addendum to that joke Emma.
A Labor Government's in power so as he walks out the door Wayne Swan picks the $100 from the bloke's pocket & gives it to Kevin Rudd so he can tour the world redistributing the wealth by giving it away to some useless pack of shitbags in some other arsehole of a country populated by those who wouldn't pee on us if we were on fire but will gladly take the handouts. The moral to the story is that socialism never works because in the end they'll always run out of other people's money.

[Hermione]

It seems so simple it's scary Tried to apply the theory to say the Spanish debt problem, Gates gives the money to Spanish authorities, Spaniards do the honourable thing and give it to the bank to pay off debt and bank gives it back to Gates, hey presto, one European economy off the hook? A friend says the main flaw is along the chain someone decides to buy whizz bang TV instead of passing money along and reducing debt