I’ve never formally investigated/learned economics, mostly because I’m philosophically opposed to the axiom set. Nonetheless, I’ve observed the Cantillon Effect. Having a name for it will certainly make it easier to discuss. Thanks for educating us!
I learned about this general concept reading about the Nationalist Chinese during the Japanese occupation of China. As a government-in-exile with little access to real goods, they indulged in the printing press. The result was a system where those closest to government would have their salary earmarked to the very latest inflation values and everyone else sunk deeper into poverty.
I guess the question for today though is what happens when the money spigot gets turned off after more than a decade of full blast. Last time they reined things in a bit it didn't go so well. So many of those close to the Empire Node that look like genius trading firm masters of the of the universe are in actuality just beneficiaries of this Cantillon Effect. They can't survive without it.
We haven't even considered the effects of money creation through credit here which I imagine amplifies this effect immensely. I also believe it will amplify the destructive effect of turning off the money spigot.
Brilliant post!!! Thank you for writing it. I would like to point out how well the Cantillon Effect ties in with the idea of intra-elite competition. For me, as I was trying to figure out the mindset of friends and acquaintances who could be labeled "elites", I've been confused by the illogic of following an ideology (in this case, post-modern derived "woke" ideology) that seems likely to lead to harm for themselves or their families. As a woman with two daughters, I think the clearest example of the potential for harm comes in the form of transgender ideology. As soon as I heard someone describe the term "intra-elite competition", a lightbulb went off in my head. At a subconscious level, I think that elites who are one or two degrees of separation from the "Empire Node", recognize that something is off and have (again subconsciously) gone into an aggressive position where they're trampling over each other to try and escape harm from the predators.
A man goes on vacation to an island. He pays with checks for food, hotel, snorkeling etc & bc he looks wealthy, islanders accept his checks. After 3 weeks he leaves. The islanders do not cash the checks but continue to use his checks as currency on the island. They continue to do so till today. Who exactly now paid for the man's vacation?
New information for me, but VERY well communicated, and intuitively correct. Beneath the YouTube video, I posted a somewhat snarky comment recommending 'The Glass-Seagall Act' as an innovative solution. But then, continuing on with your post, I spied new edges of an emergent mandelbrot set, and a MUCH better description of how the plandemic has further separated the haves from the have-nots. Much better than a Gini coefficient, which as far as I know, is a grossly simple, static statistic. Not dynamic.
"It is often easiest to hold two (or just one) variable constant at a time when thinking through the Equation of Exchange..."
One example of simplifying for the numerically challenged and it's wonderful thank you;, by illustrating the concepts and stepping through it slowly the complex confusion becomes clear.
You are a gifted teacher and that's incredibly valuable to all the struggling students of modern madness. With appreciation for adding Cantillion Effect to my monetary education here's my favorite earlier explanation of how fractional reserve system screws us. :~)
The American Dream - Understanding Money and the Banking System
I was familiar with the concept that the Fed is a profoundly unfair money spigot thanks to Nick Szabo’s twitter and blog (https://unenumerated.blogspot.com/) over the years, but still appreciate this piece.
I love the myriad internal links in your posts. Seeing prior pieces within current context sometimes leads me to “oof, of course!” moments akin to realizing I missed the man in the gorilla suit on the 1st viewing. And I find lines that resonate even in the absence of oof/aha moments: “Part of the problem with the pandemic is that it trains people into poor problem and question formation. Or maybe that was already the norm, so it was easier than usual to organize the process.”
Also, that rt segment was fascinating. Along with the internal links, your posts often lead me down oddly amazing rabbit holes.
Jul 19, 2022·edited Jul 19, 2022Liked by Mathew Crawford
This puts a lot of really important ideas into perspective.
One of the things I haven't seen people bring up much these days is the quote "First by inflation, then by *deflation*.. the banks will deprive the people of all property..." Many people now understand how inflation robs other participants, but they still don't see how cycles of money creation and destruction rig the game because the "empire node(s)" keep increasing their share cycle after cycle.
It's why Joe Rogan wasn't wrong to call Canada communist. Just because we have vestiges of a market economy doesn't mean we're not a hop-skip away from a total command economy.
Jul 19, 2022·edited Jul 19, 2022Liked by Mathew Crawford
Excellent, thank you!
So, should I imagine the concept of the Empire Node as the central bank authority massive node, or is it really a distributed node, like the central bank and all of the other banks as "creators" of the money supply as explained in the video? Does the Empire "print" the money and distribute it to the lesser nodes, does it just authorize it's lesser nodes to "create" or both operate as they will?
Frighteningly, is there a Moloch and his demons, or a Jabba the Hut Moloch, or both?
If I understood that properly, I might know where to look for the chinks in the armor, so to speak.
Thanks Mathew for this most excellent essay. May it become required reading for all.
It is not surprising that Cantillon has suffered “cancellation” given his precision insight into the great fiat scam. John Butler’s The Golden Revolution has a nice chapter with plenty of extra colour on his life.
This is the origin of the situation in which we find ourselves today, in which the black magick of compound interest has created an absurd predicament in which the total amount of debt on the books is far greater than the total amount of "currency" on Earth, yet there is no mechanism by which the impossible, unpayable debts can be forgiven.
In ancient Mesopotamia, kings would simply jubilee such debt and start over. The bankers know this of course and they know it is a problem. I suspect this is one of the reasons they are so desperate to set up a world government RIGHT NOW. Only a world government would have the power to jubilee debt in any significant way.
Appreciate the lesson, thank you very much. Being a Gen X gal, I had visions of post revolution and the sequel Empire Strikes Back, how many episodes before we know who really is at the top of the Empire Node? Key up the Stars Wars theme song! https://youtu.be/_D0ZQPqeJkk.
The Cantillon Effect is Currency Slavery
I’ve never formally investigated/learned economics, mostly because I’m philosophically opposed to the axiom set. Nonetheless, I’ve observed the Cantillon Effect. Having a name for it will certainly make it easier to discuss. Thanks for educating us!
I learned about this general concept reading about the Nationalist Chinese during the Japanese occupation of China. As a government-in-exile with little access to real goods, they indulged in the printing press. The result was a system where those closest to government would have their salary earmarked to the very latest inflation values and everyone else sunk deeper into poverty.
I guess the question for today though is what happens when the money spigot gets turned off after more than a decade of full blast. Last time they reined things in a bit it didn't go so well. So many of those close to the Empire Node that look like genius trading firm masters of the of the universe are in actuality just beneficiaries of this Cantillon Effect. They can't survive without it.
We haven't even considered the effects of money creation through credit here which I imagine amplifies this effect immensely. I also believe it will amplify the destructive effect of turning off the money spigot.
Brilliant post!!! Thank you for writing it. I would like to point out how well the Cantillon Effect ties in with the idea of intra-elite competition. For me, as I was trying to figure out the mindset of friends and acquaintances who could be labeled "elites", I've been confused by the illogic of following an ideology (in this case, post-modern derived "woke" ideology) that seems likely to lead to harm for themselves or their families. As a woman with two daughters, I think the clearest example of the potential for harm comes in the form of transgender ideology. As soon as I heard someone describe the term "intra-elite competition", a lightbulb went off in my head. At a subconscious level, I think that elites who are one or two degrees of separation from the "Empire Node", recognize that something is off and have (again subconsciously) gone into an aggressive position where they're trampling over each other to try and escape harm from the predators.
B"H" Thanks for this Mathew
This effect answers a vexing question from the B-school corporate finance class I took in 1998 / 1999 (the intro version for PhD students / non-B schoolers of http://mba.tuck.dartmouth.edu/pages/faculty/espen.eckbo/docs/Course%20Syllabus/ACF/ACF13-S0-Outline.pdf w HBS case studies, reading analyzing the P/L balance sheet statements etc)
A man goes on vacation to an island. He pays with checks for food, hotel, snorkeling etc & bc he looks wealthy, islanders accept his checks. After 3 weeks he leaves. The islanders do not cash the checks but continue to use his checks as currency on the island. They continue to do so till today. Who exactly now paid for the man's vacation?
New information for me, but VERY well communicated, and intuitively correct. Beneath the YouTube video, I posted a somewhat snarky comment recommending 'The Glass-Seagall Act' as an innovative solution. But then, continuing on with your post, I spied new edges of an emergent mandelbrot set, and a MUCH better description of how the plandemic has further separated the haves from the have-nots. Much better than a Gini coefficient, which as far as I know, is a grossly simple, static statistic. Not dynamic.
Note that Prof Werner refers to the ‘City of London’, not London the city.
https://en.wikipedia.org/wiki/City_of_London
"It is often easiest to hold two (or just one) variable constant at a time when thinking through the Equation of Exchange..."
One example of simplifying for the numerically challenged and it's wonderful thank you;, by illustrating the concepts and stepping through it slowly the complex confusion becomes clear.
You are a gifted teacher and that's incredibly valuable to all the struggling students of modern madness. With appreciation for adding Cantillion Effect to my monetary education here's my favorite earlier explanation of how fractional reserve system screws us. :~)
The American Dream - Understanding Money and the Banking System
https://www.youtube.com/watch?v=k6zpfE7WjHI
Thank you for your writing Mathew.
I was familiar with the concept that the Fed is a profoundly unfair money spigot thanks to Nick Szabo’s twitter and blog (https://unenumerated.blogspot.com/) over the years, but still appreciate this piece.
I love the myriad internal links in your posts. Seeing prior pieces within current context sometimes leads me to “oof, of course!” moments akin to realizing I missed the man in the gorilla suit on the 1st viewing. And I find lines that resonate even in the absence of oof/aha moments: “Part of the problem with the pandemic is that it trains people into poor problem and question formation. Or maybe that was already the norm, so it was easier than usual to organize the process.”
Also, that rt segment was fascinating. Along with the internal links, your posts often lead me down oddly amazing rabbit holes.
Thanks for what you do.
This puts a lot of really important ideas into perspective.
One of the things I haven't seen people bring up much these days is the quote "First by inflation, then by *deflation*.. the banks will deprive the people of all property..." Many people now understand how inflation robs other participants, but they still don't see how cycles of money creation and destruction rig the game because the "empire node(s)" keep increasing their share cycle after cycle.
It's why Joe Rogan wasn't wrong to call Canada communist. Just because we have vestiges of a market economy doesn't mean we're not a hop-skip away from a total command economy.
Excellent, thank you!
So, should I imagine the concept of the Empire Node as the central bank authority massive node, or is it really a distributed node, like the central bank and all of the other banks as "creators" of the money supply as explained in the video? Does the Empire "print" the money and distribute it to the lesser nodes, does it just authorize it's lesser nodes to "create" or both operate as they will?
Frighteningly, is there a Moloch and his demons, or a Jabba the Hut Moloch, or both?
If I understood that properly, I might know where to look for the chinks in the armor, so to speak.
Thanks Mathew for this most excellent essay. May it become required reading for all.
It is not surprising that Cantillon has suffered “cancellation” given his precision insight into the great fiat scam. John Butler’s The Golden Revolution has a nice chapter with plenty of extra colour on his life.
This is the origin of the situation in which we find ourselves today, in which the black magick of compound interest has created an absurd predicament in which the total amount of debt on the books is far greater than the total amount of "currency" on Earth, yet there is no mechanism by which the impossible, unpayable debts can be forgiven.
In ancient Mesopotamia, kings would simply jubilee such debt and start over. The bankers know this of course and they know it is a problem. I suspect this is one of the reasons they are so desperate to set up a world government RIGHT NOW. Only a world government would have the power to jubilee debt in any significant way.
Great article. That's why they will underplay Bitcoin and only individual action to adopt it could unslave the world.
Appreciate the lesson, thank you very much. Being a Gen X gal, I had visions of post revolution and the sequel Empire Strikes Back, how many episodes before we know who really is at the top of the Empire Node? Key up the Stars Wars theme song! https://youtu.be/_D0ZQPqeJkk.
BTC is the Force! Lets GO! #MayTheForceBeWithYou.
B"H" Cantillon 1755 "Essai sur la nature du commerce en general" in English https://la.utexas.edu/users/hcleaver/368/368cantillonessaytable.pdf
As an aside anent network cascade effects wrt supply /debt
Brummitt 2015 "Cascades in multiplex financial networks with debts of different seniority" https://web.archive.org/web/20210624191334/https://twitter.com/daniel_bilar/status/624302186319773698
paper https://journals.aps.org/pre/abstract/10.1103/PhysRevE.91.062813
I'm surprised you have so much faith in Bitcoin.
Which of your posts would best describe why that is the case?
Thanks for communicating the Cantillon phenomenon so clearly.