💬The Cantillon Effect

Invebit. The Cantillon Effect. How to protect yourself from it thanks to Bitcoin.

The Cantillon effect is a macroeconomic theory that describes the uneven distribution of the benefits of newly created money. It states that the first recipients of new money, such as banks and financial institutions, benefit the most, as they are able to spend it before prices have had time to adjust. Subsequent recipients benefit less and less, as prices rise in response to the increased money supply.

The Cantillon effect is named after Richard Cantillon, an 18th-century economist who wrote about it in his book "Essay on the Nature of Trade in General." Cantillon argued that the Cantillon effect can lead to inflation and economic inequality.

In today's world, the Cantillon effect is still relevant. For example, when central banks create new money through quantitative easing, the first recipients of this money, such as banks and large investors, are able to profit from it before prices have had time to rise. This can lead to asset price inflation and a widening gap between rich and poor.

The Cantillon effect is a complex topic that has a major impact on people's wealth. It is an important concept to understand, as it can help us to better understand the distribution of the benefits of monetary policy.

The Cantillon effect can have both positive and negative consequences. On the one hand, it can stimulate economic growth by encouraging businesses to invest and hire workers. On the other hand, it can lead to inflation and inequality, as the first recipients of new money benefit the most.

• Bitcoin is a limited asset and no one can increase its supply which is set at a maximum of around 21 million Bitcoins. This makes Bitcoin an asset of immense value that escapes current monetary madness and helps preserve wealth over time and for future generations.