Here are the alternatives mentioned in the puzzle, with an explanation for each of why it is right or wrong. The text of the original puzzle is reprinted at the end.

• The logger. WRONG. The logger ends his day with as much money as he started and loses nothing else (except maybe consciousness and/or his lunch).

• The bartenders, or the bars. WRONG. The bartenders/bars get value for each beer they sell. It doesn't matter that they are dealing in U.S. and Canadian dollars; they could be exchanging beaver pelts or cowrie shells; the fact remains that for each beer they sell, they take in something with a certain value to them and give back something of lesser value. Some people say that the bartenders pay for the beers in that they let the logger do what they could do: take the foreign currency across the border and get more value for it. This is an opportunity cost, however, not a real cost. If I walk past a hundred dollar bill on the street and decline to pick it up, am I $100 poorer? No, I'm $100 poorer than I might have been. I'm ignoring the opportunity to get richer, but it doesn't make me poorer. Think of it as if there were two stacks of dimes sitting on the two barrooms' floors, dimes left by some previous, absent-minded patrons. The logger walks into one bar, picks up a dime, pays for the beer, crosses over to the other bar, picks up a dime there, pays for the beer, crosses back, etc. The bartender has lost an opportunity to get the dimes for himself, but the fact remains that s/he got value for the beer.

• The townspeople. WRONG. If the bartenders/bars aren't paying for the beer, then how can the townspeople be? An even stronger argument is that there need not be any townspeople at all; we could just have two bars facing each other across the border.

• The United States and Canada; the federal treasuries of each country. WRONG. The decisive argument is that the two bars need not be operating within an established government at all; they could each be issuing scrip that the other bar accepts (albeit at a discounted rate). Let me note that answers like this are simple lazy, hazy thinking. "If it isn't anything obvious, then it must be the government." As if there were only two alternatives.

• The banks. WRONG. What banks? None of this involves banks or requires banks to work. More lazy thinking.

• The exchange rate, or the difference in currency rates. WRONG. Still more lazy thinking. The exchange rates? Even if the beer purchases did affect the exchange rates, this doesn't specify who therefore lost money (so that the loss pays for the beer).

• Everyone. WRONG. Everyone equally? Some but not others? - and if so, who and how?

• No one. WRONG. The beers didn't materialize by magic; someone had to make them, and they had to either get paid for them or take the loss themselves.

• Someone or something else. RIGHT, namely: the people who brought the foreign currency into the country in the first place. Say I'm a U.S. citizen with U.S. $1 in my pocket. I could buy ten beers with that. If I go to Canada, the same dollar will buy me only nine beers. For each dollar I take across the border, I lose a beer. When the logger takes that dollar back to its country of origin, he is drinking that beer I lost.
• A MORE GENERAL ANSWER is that the beer was paid for by whoever was holding the dollars when they were devalued from $1.00 to $.90.  If the bills are devalued by crossing the border, then the above answer is certainly correct.  But this second, more general formulation also covers the case where the dollars were simply devalued suddenly, creating a loss for each person holding the "wrong" country's dollar.  [I am indebted to Saul Wax for this answer -- the first substantive improvement on the puzzle I've encountered.]

Around 1900, back when you could still buy a ten-cent beer, a small logging town on the U.S.-Canadian border was experiencing a strange currency exchange situation. On the Canadian side of the border, a U.S. dollar was only worth ninety Canadian cents, while on the U.S. side, a Canadian dollar was only worth ninety U.S. cents. (In other words, the citizens of both countries discounted the other country's currency by ten percent.)

In this particular town, the international border ran right down the center of the main street, and there were bars on both sides catering to loggers from the surrounding area. One Saturday, an American logger rolled into town with little money (only U.S. $1.00) but lots of financial cunning. He stopped at the first bar he found on the U.S. side of the street, ordered himself a ten-cent beer, paid with his U.S. dollar, and asked for a Canadian dollar in change (worth only U.S. $.90, remember). After finishing his beer, he walked across the street to a Canadian bar, ordered another ten-cent beer, paid with the Canadian dollar, and asked for a U.S. dollar in change (there, worth only Canadian $.90). Back he went to the American side for another beer, then back across to the Canadian side -- and so on all afternoon and evening, finally staggering back to his camp after a final drink from a Canadian bar and a U.S. one-dollar bill in change -- just as he had started out with.

But what his fellow loggers could never figure out was, who paid for the beer?