Cantillon

Mark Thornton uses Austrian theory to explain where money came from — Menger's bottom-up origin of money — and why gold makes for sound money and smaller government.

JP Cortez argues fiat money is a hidden theft, and that the fix is a bottom-up, state-level push to remove the taxes and rules that stop Americans from freely choosing gold and silver.

This week, Bob explains Cantillon effects: the insight that new money doesn't raise all prices equally or simultaneously, but flows through the economy in a sequence that benefits early recipients at the expense of everyone else. Then, he shows why this phenomenon is the foundation on which the entire Austrian theory of the business cycle is built.

Although Adam Smith is well-known for emphasizing division of labor, his analysis was woefully incomplete, as Dr. Mark Thornton points out.

Mainstream economists are at a loss to explain why the current regime of inflation and central bank interventions have been so economically devastating. Understanding Cantillon effects is vital to making sense of the current madness.

It‘s obvious that a new influx of money will not immediately bring about changes in enough prices to significantly alter a price index. Even so, there are immediate effects of the new money.

Although mainstream economists hold that Adam Smith is the father of modern economics, it was Richard Cantillon that recognized the centrality of entrepreneurship in economic development. 

Although mainstream economists hold that Adam Smith is the father of modern economics, it was Richard Cantillon that recognized the centrality of entrepreneurship in economic development. 

Richard Cantillon, whom Austrians consider to be the real father of modern economics, noted that new money creation has uneven effects. Jonathan Newman demonstrates how those effects take place.

The Federal Reserve has created a tsunami of new money, but a tsunami ultimately must crash, and so will the Fed's inflation scheme.