The owner of the local hank found a $50 bill lying in the gutter; he picked it up and made a note of its serial number. Later that day his wife mentioned that they owed the butcher $50. so the banker used the bill he’d found to settle up with the butcher. The butcher used it to pay a farmer; the farmer, in turn, used it to pay his feedstock supplier; and the feedstock supplier used it to pay his laundry bill. The laundryman used it to pay off his $50 overdraft at the local bank. The banker recognized the bill as being the one he had found in the gutter but also noticed. on closer examination. that it was a fake. By now, it had been used to settle $250 worth of debts.
What was lost as a result of this series of transactions, and by whom?
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Since the counterfeit note was used in every transaction, they are all invalid. Therefore, everybody stands in the same position to his/her creditor as before the banker picked up the counterfeit note.