The Cantillon Effect: A Driving Force Behind the Bitcoin Revolution

坎蒂隆效应：比特币革命的推动力量

Hiệu ứng Cantillon: Động lực đằng sau cuộc cách mạng Bitcoin

تأثير كانتيلون هو القوة الدافعة وراء ثورة البيتكوين

<h2>Introduction </h2>
<p>The Cantillon effect, originally coined by 18th-century French banker and philosopher Richard Cantillon, refers to the change in relative prices resulting from an expansion in the money supply. It is the uneven expansion of the amount of money.</p>
<p>Since new fiat money is injected into an economy at specific points, its effects are felt by different people and industries at different times. This causes a distortion in relative prices and benefits certain parties while disadvantaging others.</p>
<p>The term was first coined by an 18th-century French banker and philosopher named Richard Cantillon in his book, “Essai sur la Nature du Commerce en Général” (Essay on the Nature of Trade in General) — also referred to as (An Essay on Economic Theory). Cantillon preceded Adam Smith by a generation.</p>
<p>Since the 2000s, the world’s largest central banks started to run out of policy tools (lowering interest rates) and many are aggressively creating new money during each major financial crisis. The current U.S. economy has faced record-high inflation and although this has been tamed slightly recently, the Federal Reserve still has a long way to go in a bid to bring inflation back to its target of <strong><em>2 percent.</em></strong></p>
<p>With the creation of the U.S. Federal Reserve and the U.S. exiting the gold standard during the Nixon era, the Cantillon effect has favored investors and owners over workers (wage-earners) in the aggregate.<br></p><h2>The Weight of Inequality</h2>
<p>Cantillon theorized that those close to the king and the wealthy would benefit most from the state's currency distribution choices. In the modern era, Keynesian-style central banks and monetary authorities have taken over, utilizing increased money supply to stabilize markets and prevent bank closures during crises. However, this often leads to major banks, private equity firms, and corporations with plenty of investors benefiting disproportionately from any quantitative easing (QE), while individual savers and consumers experience inflationary pressures before receiving any of the newly created money.</p>
<p>However, policymakers frequently overlook these effects in their attempts to control the economy, failing to fully consider the repercussions of their actions. Often, they rationalize unexpected inflation by asserting that it will benefit the less fortunate. Nevertheless, any monetary policy regime that relies on inflation is inevitably subject to the consequences of the Cantillon Effect.</p><h2>Bitcoin: Empowering Individuals for a Transparent Future</h2>
<p>Bitcoin presents a potential solution to the Cantillon effect. Unprecedented actions by central banks and governments tend to enrich the wealthy while further impoverishing the poor. By contrast, Bitcoin's issuance and allocation differ significantly from fiat currencies. Fiat currency primarily goes to banks and governments, who determine the secondary beneficiaries. Lobbying and influence within the financial elite play a significant role in securing advantages from the Cantillon effect.</p>
<p>Bitcoin eliminates lobbyist influence and unequal privileges, leveling the playing field for everyone. Miners, who contribute to the security of the Bitcoin network, have an equal chance of winning newly produced BTC every ten minutes. This egalitarian approach contrasts with the current system where lobbying and connections determine who benefits.</p>
<p>While policymakers can influence the Cantillon effect by adjusting how new money enters the system, the underlying issue remains: someone benefits at the expense of others. Bitcoin offers a transparent future where individuals bear accountability, empowering them rather than relying on institutions or distant bureaucrats.</p><figure><img src="https://blog-cms.maskex.com/assets/img/posts/download-1.jpg" data-image="2403"></figure>
<p>Bitcoin's emergence over the past 14 years has exposed more people to the flaws of the existing monetary system and raised awareness about its impact on daily life. In a Bitcoin-based world, value accrues to those creating value and being closer to the truth, rather than those with social positioning and leverage. Such a transparent future would foster more opportunities, dismantling the incorporated privilege that exists in our current monetary system.</p>

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The Cantillon Effect: A Driving Force Behind the Bitcoin Revolution | MaskEX Blog