It’s one of those wonderful explanatory ideas that is obscure in that very few people know what it is but outlandishly obvious and essentially undeniable once you hear it. When you’re going to print money to fund the sort of massive structural deficit currently prevailing in the UK, it becomes a very, very, big deal. The Cantillon Effect is the path to popular penury. It’s also a massive wealth enhancer for the state and the cronies close to it. This is going to be a pivotal topic in the coming years, & one you’ll really, really want to understand.
Ultimately, it’s very, very simple:
- Those who print new money benefit most from it.
- Those who get this new money from them fastest benefit nearly as much.
- Those who get it last are the ones most harmed.
Yup. That’s it.
S’obvious, really : When you spend newly created money, you get to buy at the prices from yesterday. You are the new demand and the new spending. You are what starts to cause inflation – but you won’t face it like others will. You’re the one driving up the prices for the next guy. He pays for your profligacy, and this not only causes all manner up of upward pointing wealth redistribution based on proximity to the money hose, it destroys the fundamental aspects of price and markets that make them free and useful allocators of scarce resources. And this is why we must speak of the Cantillon Effect (*) which, like so many pre-revolutionary French economic ideas, holds powerful currency today owing to the surprising similarity in situation, as once more a self proclaimed “aristocratic” ascendency approaches its culmination.

(*) Richard Cantillon was a lesser known (but highly insightful) 18th century French-Irish economist, philosopher, and banker.
And this has lots of other nasty knock on effects because, of course, if whoever gets the money – before you do – is a smart guy and sees what’s coming, he’s now going to spend that money as fast as he can before someone else does. This is why, in the short run, it can look like stimulus. Everyone sees the impending wave of demand driven price rise coming and wants to get in front of it. This becomes a race to turn cash into inflation advantaged assets as rapidly as possible.
It permeates equity markets, debt markets, real estate, art, every asset class you can think of right down to basic commodities like oil. Taken far enough, you get stories like “workers demanding to be paid 3 times a day and running out on lunch breaks to buy any physical goods they can lay hands upon to try to protect the value of their earnings.” You get the double whammy of more money supply AND higher velocity of money. Inflation goes hyper, Weimar, Zimbabwe, Venezeula, Argentina hyper………… And so perhaps it is fitting that newly elected Argentine President Milei, who has such strong Austrian economic grounding, should rise as a sort of populist standard bearer to make this clear. Despite his frequent “hot” outbursts and seeming over-simplification and emotive expressions, Milei is actually quite a smart and thoughtful guy. He understands this stuff. and he’s able to explain it in a way that non-economists can understand. Perhaps this is the Argentine “great communicator” for our age……..

Now ask yourself the real question: Why was it seemingly impossible for the US (& the UK for that matter) to produce in 2025 a candidate for top political office with any remotely plausible chance of victory that even seemed to understand the Cantillon Effect, much less possesses the ability (or perhaps the willingness) to communicate it? Why instead are we being deluged with absolute apologist idiocy like this?
The Atlantic’s claims about “high prices” are exactly economically wrong. When the expectation is for a rise in price, the cost of keeping cash increases. So no one does. You spend first and push ahead in the Cantillon line. It’s the rational response to holding a debasing asset that would get 0.02% in a savings account and accordingly gets rodgered bigly by price inflation. Buy now. Get the asset. The MSM seem to be either deeply illiterate on incentives or just happy to project the message passed down from on high by the Inflationistas. And they are far from alone. Why must we tolerate leaders whose grasp of these ideas is so unsound or startlingly dishonest as to amount to actual factual fabrication?
Yes, this is real. OK it’s official now that Brandon is more than a few fries short of a happy meal these days, but there’s no way he writes these tweets either. So…………. White House officials must have met to discuss and test the messaging they want to push. This is not an accident, it’s a choice – and at a certain point, credulity on “could you really be this economically ignorant?” snaps and one can only conclude that this is deliberate mendacity deployed for political gain and crony coddling.
The evolution of justification is always the same:
- deny
- minimize/claim this was the plan
- claim this is a good thing
- blame it on you once it was obviously bad
Once more the lockstep media-politico talking point complex (they can’t all be teenage scribblers) are literally inverting both causality and ethics by telling the people and the companies trying to survive the Cantillon calamity of the completely out of control monetary policy of the last 25 years that this is all their fault. But it’s not. This was directly caused by massive surges in money supply having the effect such surges generally have (once the world returned to a more normal production footing post Convid and Chyyyynese overcapacity was not there to keep inflation out of goods pricing.) This sort of profligacy creates perverse incentives for everyone. It breaks everything.
But it also makes those close to the money printer incredibly rich and this is why politicians and their well connected corporate cronies love this. For them, it’s Christmas every day. For the rank and file worker, it’s hammered wages & an endless cycle of economic insecurity. This is a truly epic scam and one which, once taken past a point, is near impossible to derail or even slow. Massive deficits beget massive debts which beget massive money printing to extend and service them. Government is locked into this. The media that carries water for it is captured. The banks are dependent upon it. So are the investment firms that need to keep the bubbles in assets markets going. All these interests are powerful, vested, widely aligned & combine to deliver a perfect storm of penury for the everyday worker.
It is not “happening.”
This is being done to us. Until we break the ability to do so by – for example – ending Central banks as Milei proposes – (an idea that’s not nearly as radical as it sounds and that makes more and more sense the more one looks at it) or even extends it to ideas like “It’s time to take provision and control of currencies away from governments who clearly cannot be trusted with them” we’re going to make no progress here. If you think come next Jan 20th the new guy in the oval office, 2Tier, or FondofLying will make a whit of difference here, I fear you’re fooling yourself. This has become structural. A system this powerful, this profitable, this entrenched, and this beholden cannot be fixed. It’s not malfunctioning – it’s working just as was intended.
Not for you. The insiders close to it benefit and have every incentive to hide the nature of this arrangement, but this will not stop them from blaming you for it.
Time to wake up and smell what’s being dumped …………..
© DJM 2025