Hi,

A nice one. Unfortunately the telling of the problem is a bit fuzzy, which lead to several explanations above. So, let me restate as I read it:


A Polythene citizen visits a bar on HIS SIDE OF the border & buys a drink for 5 cents. He pays with a poly note of his own country, and receives in change a Polydor poly note, worth 95 cents in Polythene. He then crosses the border to another bar a few metres the other side, NOW IN POLYDOR buys a 5 cent drink, & pays with the Polydor poly note he has just received in change in Polythene, receiving a Polythene poly note as change. He CROSSES BACK TO HIS OWN COUNTRY AND THEN repeats this ENTIRE process, until, after a while, he sinks insensate right on the border.

You may notice that I'm stressing the country he is in. The reason for this is that he always receives a note issued in the country he is not in. For each of those notes, someone must have received that note in the country it was issued, and paid 100 cent for it, crossed the border, and then spent the note for 95 cents. It's those 5 cents that the travellers gains by going the other way: Receiving the note for 95 and spending it for 100.

Though the story has a ring of infinite money to it, in reality the money is limited: The whole adventure can only continue as long as there are foreign notes available; notes that someone else paid 5 cents more for than they are worth in their current location. It's those 5 cents that pay the traveller's drinks after he takes the note across the border, so it's the exporters of the notes who in advance paid his drinks for him.

(And, indeed, those two barkeeps should have made it a habit to always meet-up after hours to move any foreign notes in their possession back to the issuing side of the border. There would be 5 cent per note in it for them.)

Bye,
                                                               Mysha