The Cantillon effect: who gets new money first

Cantillon's Essai

Richard Cantillon, an Irish-born banker in France, wrote the *Essai sur la Nature du Commerce en Général*, published in 1755 after his death; Jevons called it "the cradle of political economy" (Mises Institute translation). In it he traced how an increase in money spreads through the economy, raising prices first where it is first spent.

Who gets new money first

Today new money enters mostly through banks, financial markets and government spending. When central banks buy assets, the first effect is on asset prices. The Bank of England found that its asset purchases pushed up asset prices, and that the top 5% of households held 40% of the financial assets (outside pensions) that benefited (Bank of England, 2012).

Evidence and debate

• For a strong effect: Austrians argue that every injection redistributes wealth to early receivers and distorts relative prices (Econlib: Austrian School).
• Against a strong effect: Ben Bernanke argued that monetary policy's effects on inequality are "almost certainly modest and transient" compared with long-term forces, and that lower unemployment and cheaper debts help poorer households (Brookings, 2015).
• Common ground: Bernanke also writes that monetary policy "certainly affects the distribution of income and wealth"; the dispute is over net size and direction (Brookings).

Bitcoin perspective

This section is perspective, not neutral analysis.

Bitcoin has no first receivers in the Cantillon sense: new coins go to miners who compete openly for them, on a public schedule falling toward zero (supply schedule; MAX_MONEY). Critics note that early adopters gained hugely, which is a different kind of distribution question.