A bit confusing but what I mean by this is say, a guy writes a 1000 dollar check (made out to cash)to buy a quad. The guy receiving the check, instead of cashing it out, uses the original check to then go buy his own quad and so on.
In: Economics
Checks are basically just notes from your bank saying “don’t worry, they have it, we promise”
So Sam using one to pay Taylor is Sam’s bank telling Taylor that they have the $1000. Taylor using that same check to pay Joe is Taylor, giving Joe a note from Sam’s bank, saying that Sam has the money. Joe isnt doing business with Sam, and Sam has no obligation to pay Joe. If that check bounces, Sam is on the hook because it’s his check, but Sam didn’t do business with Joe, so why should Sam pay Joe??? Too complicated, and that’s if the price of all these transactions is exactly 1000. Imagine someone paying with someone else’s check and expecting change back.
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