Can we see the inflation tax in a different way?

We can see the hidden tax of inflation in an entertaining way by tackling an extremely clever
PhD exam question that was asked at the University of Chicago. The question goes like this:

There once was an upright and very proper Englishman who regularly took his
summer vacation on a tiny, agreeable, Aegean island. The Englishman had returned
to the island so many times that his credit worthiness had been established beyond
any possible doubt. There was absolutely no chance that this Englishman’s bank
would fail to honoured his cheques and, indeed, all of them had always been
honoured promptly.

Since the Englishman’s credit was so sound, the islanders were totally happy to allow
him to pay by cheques, with the certain totally happy to allow him to pay by cheque,
with the certain knowledge that they were good cheques. Indeed, so well known and
trusted was the Englishman on this tiny island that the islanders were happy to
accept the Englishman’s cheques from each other. For example, if the restaurateur
wished to pay the grocer partly with a cheque he had received in payment for a meal,
the grocer was happy to accept the cheque. The grocer was then able to buy beer
with the cheque, and the Englishman’s cheques circulated in this way around the
island. Indeed, the cheques were never returned to the Englishman’s London bank
for collection.

The University of Chicago exam question then read: “ Who paid for the Englishman’s
holiday?” Well, who did?