Cantillon effect

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Concept.png Cantillon effect
(Economic research,  Money/Fractional-reserve_banking)Rdf-entity.pngRdf-icon.png
explains the natural unfairness of previous monetary systems

The Cantillon Effect explains how the natural unfairness of previous monetary systems tend to create a world in which the privileged few could take advantage of the unprivileged many.

Scientific definition

The Cantillon Effect refers to the change in relative prices resulting from a change in money supply. The change in relative prices occurs because the change in money supply has a specific injection point and therefore a specific flow path through the economy. The first recipient of the new supply of money is in the convenient position of being able to spend extra dollars before prices have increased. But whoever is last in line receives his share of new dollars after prices have increased.”
Nicolás Cachanosky, American Institute For Economic Research (AIER) 


We saw the Cantillon Effect in 2008 and 2020 when banks and other companies were given bailouts to avoid bankruptcy. These are practical case studies that demonstrate the effectiveness of having direct connections to Wall Street and the Federal Reserve. Only those closest to the individuals controlling the money supply were able to greatly benefit from each recession, while many in the middle and lower classes did not.

Today, this can be easily observed in the recent stimulus package being debated in the United States. While senators squabbled for months over the amount of money citizens would receive, there is nothing but bipartisan, silent consensus on the billions of dollars in fresh money going to support massive organizations and interests outside of the direct stated purposes of the bill.

The Cantillon Effect runs the world

Money Has Never Been Fair

Non-neutrality of money means that money is not created and distributed among a population evenly or fairly. There is an inherent unfairness to Money/Creation and the easier the money is to create, the more unfair it is for those without authority and access to certain connections.

To put it frankly, getting ahead in life can be catalyzed by getting closer to the money printer. When people talk about institutionalization, what they are really referring to are the rules for getting closer to the money printer today.

To the untrained eye, America looks like the land of prosperity, but once the blinders have been lifted, reality shows that it is just the land closest to the money printer.

If you zoom out even more, it becomes clear that everyone living in the U.S., and receiving U.S. dollars directly, is inherently living in a privileged position compared to anyone else in a similar position, but not receiving USD directly. This scales up toward the elites, who are truly close to the printer, and down to the poor.[1]

Coin debasement in the middle ages

The Cantillon Effect is not just true for fiat but it is also true for precious metals as well.

Precious metals (mainly gold and silver) historically have been the best available monetary goods humanity could harness. Unfortunately, the mining, custody and validation processes needed for a properly-running precious metals economy created weakness for opportunistic central operators to benefit from a privileged position.

The Spanish Price Revolution caused by the mining of newfound gold and silver in America wreaked havoc across Europe and arguably ended the unprecedented growth of the Renaissance. Spanish royalty reaped the benefits from the new found specie while people across Europe found the buying power of their gold and silver eroding.

History is riddled with cases of debasements, coin clipping and other violations of the fairness of a precious metal system. Ultimately, the failures of precious metals in scaling to a digital global world, as well as the inability to defend against centralization, confiscation and newfound supply, has led to the introduction of the far more unfair fiat monetary systems that we live with today.


Ibrahim Oweiss had similar concerns about the petrodollar recycling scheme.[2]



Page nameDescription
Federal Reserve ActThe 1913 law which secured operational control of the US dollar for the US Deep state up to the present day.
Money/Fractional-reserve bankinga legal pyramid scheme
PetrodollarThe selling of the world's oil in U.S. dollars has been the backbone of U.S. dollar hegemony since the U.S. unilaterally terminated the rights of foreign central banks to convert dollars to gold in 1971.


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  2. Oweiss, Ibrahim M. (1974) Petrodollars: Problems and Prospects, Address before the Conference on The World Monetary Crisis, Arden House, Harriman Campus, Columbia University

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