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"Moe Goes from Rags to Riches" is the twelfth episode of Season 23.
Moe's beloved bar rag, loomed as an ornate medieval tapestry, recounts its millennium-spanning life story. The tapestry was woven out of demon wool, so it could tell the future. It went from being a tapestry hung up in a building to a bar rag. And when the rag goes missing, the supposedly friendless Moe realizes that he has more friends than he thought, so Santa's Little Helper gets the rag, and the rag says that it has never felt such love in its entire lifetime.
Meanwhile, Bart begs Milhouse for forgiveness after a fight ensues between them. Bart will be forgiven only if Milhouse allows a tough man to punch his best friend. Will Bart lose his fame and have to behave the same way as a loser does?
The town meeting is taking place in Moe's Tavern because the town hall is full of bedbugs. Homer explains to the town why he doesn't believe in God, even Apu, Ned and Reverend Lovejoy. Mayor Quimby tells him that he was supposed to lead them in the pledge of allegiance. By convenience, the Springfieldians enjoy the bar to hang out with their friends, until they realize that the closest thing Moe had to a friend was his Bar Rag. They start mocking Moe for that, but he throws the rag on the counter and leaves. The rag then starts to come to life and tells his story.
The rag's story begins on early medieval fronts in southern France, where a miserable family struggling to even get food, when a duke (Mr. Burns) orders the peasant's wife (Marge) to weave a tapestry with his stories on it. On the way out, he kills a herd of sheep, which made their wool possessed, and instead of weaving the duke's life, she made exactly what would happen to the carpet throughout the years. The duke got impressed by the carpet, but burned down the family house because that was not what he was expecting. On the way home, the duke's horse stumbled, making him fall down a mountain and getting hanged onto a tree by the carpet.
The tapestry was then moved to a cathedral, where he gained some popularity, but vikings invaded the cathedral and stole the carpet, which was sold to Arabians in exchange of jewels. The Arabians used it to make a tent for a young Persian king (Nelson), who demanded constant entertaining from his wives (which none of them succeeded to do), until one of them, a history teller (Lisa) manages to tell him a story each night for 1001 nights until he and his guards fall asleep. She freed his other wives, and they took revenge on him. His tent was undone and the cloth was taken to Spain, which it was used in different manners (most of them related to torture), But an artist, Michelangelo (Julio), used it to paint his masterpiece in a cathedral's ceiling. After the painting was done, the rag became useless. Later, they used the piece of cloth to make the flag of a Confederate Nation "On the wrong side of history", according to him.
He was later used as an ingredient in a soup in the great depression and some years later, as a flag of an expedition to the top of Mount Everest, which failed. The rag was then found by a Yeti and gave it to his son (Moe), who kept the rag until nowadays. The rag is sad, because after the great tasks he has done, he ended up as a bar rag, but when Moe was sleeping, a mysterious hand stole the rag from Moe. The next day, Moe gets worried about his rag and planned to ask the Simpson family for help, but he found the rag laying inside a basket full of clean clothes. Marge then explains that she realized how much Moe loved the rag and planned to wash it. Moe is happy in finding his rag, but Marge explained that everyone in their family was Moe's friend. Happy, Moe throws the rag away, but he gets "adopted" by Santa's Little Helper.
In a subplot, Milhouse gets offended at Bart because their friendship was all about Bart making jokes or pranks against him and chooses to end the friendship. Bart gets crazy and desperate for Milhouse to accept him back, even asking Lisa for help, but Milhouse accepts their friendship back after Bart accepts getting punched by Drederick Tatum.