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This is Steve and this is Steve's uncle
and Steve is in a bit of a bind.
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Not only does he not have any money
but he also owes Michael,
-
who is not depicted here.
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He owes Michael $3. So he actually
has a negative net worth.
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Steve has a net worth of -3.
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Steve's uncle cares about Steve
and feels bad that he doesn't even have
-
a 0 net worth;
he has a negative net worth!
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And so Steve's uncle wants to at least
take away some of this pain.
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He at least wants to get Steve back
to a neutral net worth, a 0 net worth.
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So he decides to take away
Steve's negative net worth.
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He wants to take away that -3.
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What happens if you take away that -3?
Well, that should get you back to 0.
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If you take away anything...
if you have something
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and you take it away,
it should go back to 0.
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Similarly if you owe people things
and that owing people things
-
is taken away, it also gets back to 0.
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And another way to think about it is
how Steve's uncle would actually
-
take that liability,
take that debt away from Steve.
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Well, the easiest way he could do it
if Steve is starting at -3 net worth
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is for his uncle to give Steve $3,
so that he(Steve) can get back
-
to a net worth of 0.
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So hopefully, that makes it
a little bit clearer,
-
that this and this
are intuitively equivalent.
