This essay attempts to explain the The Cantillon effect and how the natural unfairness of all previous money has always created a world where the not-for-profit could benefit from the privileged few. We explore how bitcoin, as the world’s fairest currency, eases the prevalence of the Cantillon Effect and creates a fairer, fairer and more prosperous world for all.
What Is The Impact Of Cantillon?
“The Cantillon Effect refers to the change in relative prices as a result of a change in the money supply. The change in relative prices occurs because the change in the money supply has a certain injection point and thus a certain flow path through the economy. The first recipient of the new money supply is in the convenient position of being able to spend extra dollars before prices increase. But whoever is last in line receives his share of new dollars after prices increase. ”
Nicolás Cachanosky, American Institute of Economic Research (AIER)
We saw the Cantillon Impact in 2008 and 2020 when banks and other companies were leveraged to avoid bankruptcy. These are practical case studies that demonstrate the effectiveness of having direct links with Wall Street and the Federal Reserve. Only those closest to the individuals in control of the money supply were able to benefit greatly from each recession, while many in the middle and lower classes did not.
Today, this can easily be observed in the recent stimulus package being discussed in the United States. While parliamentarians squared off for months over how much money citizens would receive, nothing but a bipolar, silent consensus on the billions of dollars in fresh money is going to support massive organizations and benefits outside the direct stated purposes of the bill.
The Cantillon Effect runs the world.
Money has never been fair
Lack of currency neutrality means that money is not created and distributed among a population equally or fairly. There is an inherent unfairness to making money and the easier it is to create money, the more unfair it is for the unauthorized and the access to some contacts.
In fact, moving on in life can be achieved by catalyzing by approaching the silver printer. When people talk about organization, what they really refer to are the rules for getting closer to the money printer today.
To the untrained eye, America looks like a boom country, but once the blinds are erected, reality shows that it is only the land closest to the silver printer.
If you zoom even more, it becomes clear that everyone who lives in the US, and receives US dollars directly, essentially lives in a privileged position by comparison with anyone else in a similar situation, but not directly receiving USD. This scales toward the elites, who are really close to the printer, and down to the poor.
The Cantillon Effect is not just true of fiat but it is also true of precious metals as well.
Precious metals (mainly gold and silver) have historically been the best available financial goods that humanity could harness. Unfortunately, the mining, custody and verification processes needed for a properly run precious metals economy created a weakness for opportunistic central operators to benefit from a privileged job.
The Spanish Price Revolution caused by new gold and silver mining in America wrecked havoc across Europe and arguably brought about the unprecedented growth of the Renaissance. Spanish royalty benefited from the new found specie while people across Europe found the purchasing power of their gold and silver eroding.
History is rife with controversy, coin tipping and other violations of the fairness of a precious metal system. The failures of precious metals in graduating to a digital world, together with the inability to defend against centralization, seizures and new supply, have ultimately led to the introduction of the far more unfair fiat financial systems we live in with them today.
On January 3, 2009, Satoshi Nakomoto excavated the very first block of the Bitcoin blockchain with the message “Chancellor of the Times 03 / Jan / 2009 about to get second hand for banks” – the caption of The Times the London newspaper that morning. This was just a message from Nakamoto about their intentions to create a fairer currency, but it effectively timed and tested the fair launch of the bitcoin currency.
Due to Nakamoto’s deliberate actions and the free, loose and open-source nature of Bitcoin, bitcoin is the first truly neutral currency. Bitcoin eliminates the inherent unfairness that comes with all previous currencies as well as any need to trust a third party in order to use Bitcoin.
Bitcoin Aligns Incentives
Cantillon Effect 2.0 is introduced to the world by Bitcoin. In a Bitcoin world, instead of being rewarded for privilege, status and geography, only those who live closer to the truth can benefit from value creation.
“The only way to get bitcoin is to acquire it from someone else, you can’t steal bitcoin to a large extent, you have to provide something of value and someone else has to get involved with its bitcoin. I think the intensity of that cannot be overstated. There is no other way to extract value from the global markets than to be productive and I think this is a huge change for society ”
Gigi, Engineer at Bitcoin Swan (Bitcoin’s Nature, “Bitcoin Magazine Podcast”).
The shift towards the Bitcoin Standard is an awakening of truth and reality.
Bitcoin eliminates the ability for organizations to go against the market because one cannot create bitcoin out of thin air without an unreasonable amount of energy to mine. Creating more than 21 million bitcoin is impossible because the 21 million supply cap is enforced by a distributed network of independent nodes. For the first time in history, Bitcoin allows individuals to calculate economically accurately.
Bitcoin makes the use of violence to extract value far less scalable.
Because Bitcoin enables easy retention and validation of bitcoin, Bitcoin users no longer need to rely on centralized organizations to hold their wealth. Due to this distribution of keys and the fact that there is no way to move coins without having control of Bitcoin’s private key (spending key), sensors or thieves must now go from key-holder to key-holder and distort all keys individual.
We see technology moving the logic of violence at a fundamental level. Gone are the days when a government can simply freeze someone’s bank account. This rising cost of extortion and population wealth management is a fundamental change in the way the world is currently organized.
The protection that bitcoin gives to individuals and companies alike has been discussed in detail in recent times Bitcoin Magazine article “Sovereign Company Thesis.”
Transparent Futures Allows More Opportunity
We are all very aware of what a closed and centralized financial system leads to because we live through it every day. Centralization certainly has its use cases but not when there is a lack of accountability for weakening an individual’s labor. Making money from nothing continues to ruin an individual’s productivity and ability to get on in life.
With Bitcoin, the accountability is placed on the individual rather than an organization or on self-appointed bureaucrats who are too far removed from the reality of most people’s situations. Few people understand how money is created and how governors within Federal Reserve branches determine “acceptable” inflation rates. How much is too much inflation versus how little is too little? Fiat is becoming more like improvised theater than real science. Rules are broken when they are deemed necessary by those in power while citizens of nations have no say in what is best for their financial interests.
By contrast, Bitcoin consensus rules are unchanged and its code is being upgraded very slowly with state-of-the-art peer review. Unlike your iPhone, which breaks down if not upgraded, Bitcoin upgrades are optional and users voluntarily opt-in. Bitcoin network consensus is purer than democracy. It does not seek to detract from the productive in order to support the rent-seeking or the parasitic. It continues to incentivize the best results for all participants, especially when it involves forcing individuals to be more productive in order to acquire more bitcoin.
In the last 12 years of Bitcoin’s existence, one would push hard to find someone who has not yet heard of the digital currency. However, up to this point, it has taken a great deal of curiosity to discover what money really is, how it was created, how it has been used throughout history and what makes a currency or store of value versus what it does not. Today, Bitcoin is the viral orange pill that awakens the world to what our current financial system is and how it affects our daily lives.
In a Bitcoin-based world, rather than a world where benefits are unfairly accrued to those with the right social position and leverage, the value is accumulated by those creates value; those closest to the truth.
Ultimately, Bitcoin enables individuals to opt out and build outside of existing control syntaxes. These benefits are not equally tested. The earlier an adopter is, the more he is rewarded, as he should be within a truly fair system. Bitcoin rewards the curious.
We all find Bitcoin at the time we deserve it most. There are those who held bitcoin very early on but are no longer involved in space. Some people have to travel the more daunting journey of finding Bitcoin very early, to just cash out of their site before a huge value is unlocked – not just with the price of Bitcoin, but in unlocking it the true potential of productive individuals who are not the most ideal. situations. Bitcoin is changing that by being accessible to anyone with an internet connection. With the introduction of the internet and access to information, Bitcoin will play a similar role in continuing to expose the opaque practices of central banking networks.
A transparent future allows more opportunity. What happens to the world when money that really comes with no privilege is baked?
Welcome to the Bitcoin Renaissance!
Special thanks to Gigi for the inspiration and thoughtful editing.
This is a guest post by Christian Keroles and Deniz Saat. The views expressed are entirely of their own opinion and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.