Cantillon Effect and Bitcoin

[cryptomaniac_xxx]

What is Cantillion Effect?

The Cantillon Effect refers to the change in relative prices resulting from a change in money supply. The change in relative prices occurs because the change in money supply has a specific injection point and therefore a specific flow path through the economy. The first recipient of the new supply of money is in the convenient position of being able to spend extra dollars before prices have increased. But whoever is last in line receives his share of new dollars after prices have increased. This is why when the Treasury’s deficit is monetized, inflation is referred to as a non-legislated tax. In these cases, the government has seized purchasing power (rather than physical bills) from its citizens without congressional approval.

https://www.aier.org/article/cantillon-effects-and-money-neutrality/

In short this is what we are seeing right now, governments are changing the money supply, which makes rich people richer and poor people poorer. And recently we have seen Feds printing more money resulting in wealth inequality. And so this makes Bitcoin argument more compelling as a good alternative and to tip the balance on the other side. You can invest on bitcoin today, let it sit and it will protect you from this monetary policy.

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[davis196]

Bitcoin isn't the perfect protection against inflation,because the Bitcoin price is very volatile and there's no stable and increasing BTC price pattern,following the increasing monetary supply.The 2017 ATH might never be reached.
If the Bitcoin price is increasing following this pattern during the next 5 years:
2020-$10K 2021-$12K 2022-$15K 2023-$18K  2024-$21K 2025-$24
Then,I would say that Bitcoin would be a great protection against inflation.
However,this price pattern ain't gonna happen in the real world.
The price will have it's highs and lows in the next 5 years and long term price predictions are impossible.
The "Cantillion effect" will continue until the end of the fiat financial system.

[Lucius]

Bitcoin isn't the perfect protection against inflation,because the Bitcoin price is very volatile and there's no stable and increasing BTC price pattern,following the increasing monetary supply.The 2017 ATH might never be reached.
If the Bitcoin price is increasing following this pattern during the next 5 years:
2020-$10K 2021-$12K 2022-$15K 2023-$18K  2024-$21K 2025-$24
Then,I would say that Bitcoin would be a great protection against inflation.
However,this price pattern ain't gonna happen in the real world.
The price will have it's highs and lows in the next 5 years and long term price predictions are impossible.
The "Cantillion effect" will continue until the end of the fiat financial system.

Some would disagree with your statement, because facts and numbers do not lie. It is also true that BTC is very volatile, but we have seen that this is also the case with the stock market or with crude oil. Yet I find rather ridiculous statement that the new ATH may never be reached, since price should increase only x3 to get there.

Almost all periods in the past 11 years have been successful for investment, except for the short period in late 2017 and early 2018. According to statistics from CMC, Bitcoin ROI from 2013 is 5.604,01%, and I call that excellent protection against inflation. Maybe you should listen some smart people who predict price of BTC in past very precise, but it is much easier to listen to some so-called experts who say something different every day.

[el kaka22]

Decentralization was always against things like this, bitcoin has 21 million max supply and it will always have 21 million max supply, it will never be changed, as soon as someone has enough power to change that which I doubt would ever happen, that would be the end of bitcoin as we know it and that is why nobody would even want to do it, doing it would not help them, so something that requires billions of dollars in both cash and machinery would be all for nothing and people who are powerful enough to do that wouldn't do it because they would get nothing in return.

Hence there is no printing more money, there is no government, there is no power at the center of bitcoin, we are all part of bitcoin world. This means, all of this rich get richer and poor get poorer will not happen in bitcoin.

There are more than 21 million people who are millionaires in the world, that means there will always be some millionaires without one bitcoin in the world, not all millionaires are interested right now but even if one day all of them were, there is not enough to go around, hence rich can't get richer.

[exstasie]

What is Cantillion Effect?

The Cantillon Effect refers to the change in relative prices resulting from a change in money supply. The change in relative prices occurs because the change in money supply has a specific injection point and therefore a specific flow path through the economy. The first recipient of the new supply of money is in the convenient position of being able to spend extra dollars before prices have increased. But whoever is last in line receives his share of new dollars after prices have increased. This is why when the Treasury’s deficit is monetized, inflation is referred to as a non-legislated tax. In these cases, the government has seized purchasing power (rather than physical bills) from its citizens without congressional approval.

https://www.aier.org/article/cantillon-effects-and-money-neutrality/

In short this is what we are seeing right now, governments are changing the money supply, which makes rich people richer and poor people poorer.

In a vacuum, monetary inflation means everyone who is holding the affected currency gets poorer. This analysis is tempting for Bitcoin investors who believe it will catalyze higher BTC prices. However it's not that simple.

There are two different issues at play: money supply inflation vs. economic deflation. The global economy is collapsing, running way under productive capacity with record high inventories, as job losses mount everywhere and consumer confidence plunges. This should have a significant deflationary effect on prices, causing them to fall. The economic stimulus is an attempt to hold them up.

No matter how much they inflate the money supply right now, it may not outweigh the effects of economic deflation.

[sheenshane]

IMO, Cantillion effect for me may not have had a huge effect on the economy but on the prices of the commodity, it may have a huge relation. Thinking of money supply or printing monetary bills as it was approved by the central bank to a specific country may change the price of products and services depending to whom this certain amount of money will go, let's say if the new supply of money will go to the ordinary citizen. Then he will use this to buy his necessities without s big effect on the demand for the products that he bought but if the supply of money will go to the government or to the capitalist then they will still have full control on the prices that makes rich people richer and poor ones will be poorer.

In general, since the consumer will still be on the same status when it comes to the ability to buy then the economy will not move upward or worse it may go down since no one will have a chance to rise and put up his own business. With the Cantillion effect if the supply of money will be distributed properly then prices may either go up or down depending on the consumer's will and may help the economy pump up as well.

[mu_enrico]

1. More money supply means the existing value of money will be diluted. People who have lots of cash or fiat savings will be impacted the most. Rich or poor is irrelevant.
2. Wealth inequality is not because of the changing of the money supply. It's because the economic growth cannot keep up with the population growth! Solution: click here!
3. Bitcoin is not a magic pill for the bad economy.

[Ucy]

Bitcoin price really occasionally fluctuates a bit extremely.. . But it's deflationary in the long run (without manipulations Ofcourse),which is good for keeping your funds safe from long-term inflation in current government controlled world.
I think using bitcoin more within the community/ecosystem could help improve things abit.
And the community would also need to auto regulated the price (in decentralized manner) to keep it from those extreme movements. The movements should be moderate... example: it moves 2 points up, 1 down, maybe in  8 out of 12 months

[Darker45]

The problem with central banks printing more money out of thin air is that the bulk of this will go to huge companies and other private businesses. Billions and billions are reserved for bailouts. And what little amount left from it will go to the people, to the unemployed and the poorest and the needy. Sadly, though, these people will not prioritize investment out of the little amount they received. They are not looking for ways to keep and preserve its value. They will certainly use whatever little amount they got from the government to buy their basic necessities. In the end, inequality remains.

[gaston castano]

Bitcoin isn't the perfect protection against inflation,because the Bitcoin price is very volatile and there's no stable and increasing BTC price pattern,following the increasing monetary supply.The 2017 ATH might never be reached.
If the Bitcoin price is increasing following this pattern during the next 5 years:
2020-$10K 2021-$12K 2022-$15K 2023-$18K  2024-$21K 2025-$24
Then,I would say that Bitcoin would be a great protection against inflation.
However,this price pattern ain't gonna happen in the real world.
The price will have it's highs and lows in the next 5 years and long term price predictions are impossible.
The "Cantillion effect" will continue until the end of the fiat financial system.

Some would disagree with your statement, because facts and numbers do not lie. It is also true that BTC is very volatile, but we have seen that this is also the case with the stock market or with crude oil. Yet I find rather ridiculous statement that the new ATH may never be reached, since price should increase only x3 to get there.

Almost all periods in the past 11 years have been successful for investment, except for the short period in late 2017 and early 2018. According to statistics from CMC, Bitcoin ROI from 2013 is 5.604,01%, and I call that excellent protection against inflation. Maybe you should listen some smart people who predict price of BTC in past very precise, but it is much easier to listen to some so-called experts who say something different every day.

and of course this is true, some people commented on the publication of someone who wanted to buy pizza using bitcoin in 2010, he said: WILL IT BE A MILLION DOLLARS PIZZA ?


he write it in 2010
and guess what, now the pizza price is worth $ 79 million.

[Averim]

What is Cantillion Effect?

The Cantillon Effect refers to the change in relative prices resulting from a change in money supply. The change in relative prices occurs because the change in money supply has a specific injection point and therefore a specific flow path through the economy. The first recipient of the new supply of money is in the convenient position of being able to spend extra dollars before prices have increased. But whoever is last in line receives his share of new dollars after prices have increased. This is why when the Treasury’s deficit is monetized, inflation is referred to as a non-legislated tax. In these cases, the government has seized purchasing power (rather than physical bills) from its citizens without congressional approval.

https://www.aier.org/article/cantillon-effects-and-money-neutrality/

In short this is what we are seeing right now, governments are changing the money supply, which makes rich people richer and poor people poorer. And recently we have seen Feds printing more money resulting in wealth inequality. And so this makes Bitcoin argument more compelling as a good alternative and to tip the balance on the other side. You can invest on bitcoin today, let it sit and it will protect you from this monetary policy.

This is a good solution, the supply of bitcoin is limited so there is no way to add more coins, compared to the fiat, and even so they say bitcoin is just a bubble. Thanks for the financial lesson.