Richard Cantillon, The Most Important Economist You’ve Never Heard Of

Richard Cantillon is the most important economist you’ve never heard of.

Born in Ireland sometime in the mid- to late-1600s, Richard Cantillon’s contributions to economics are found in his major work, Essai sur la Nature du Commerce en General ( Essay on the Nature of Commerce in General).

In 1734, Cantillon was mysteriously murdered by a disgruntled former employee, and his home was set ablaze. Essai, which survived the fire, was published in 1755.

Cantillon’s work went on to influence Adam Smith and other well-known economists. Essai included his observations on production and consumption, money and interest, international trade and business cycles, and inflation.

We have a basic understanding of inflation and its effects. Put simply, inflation is an increase in the money supply.

An increase in the supply of money that isn’t met with an increase in the demand for money necessarily leads to price inflation, ceteris paribus. Said another way, prices rise as new money is introduced, all other things being equal.

However, this cursory understanding of inflation only paints half the picture. A less discussed aspect of this process is not only that the monetary supply has increased, but how. The entry point of new money into the economy has profound implications.

The effects of inflation are not uniform throughout the economy.

Cantillon writes, “I conclude … that by doubling the quantity of money in a state, the prices of products and merchandise are not always doubled. The river, which runs and winds about in its bed, will not flow with double the speed when the amount of water is doubled.” Monetary inflation does not affect prices proportionally or simultaneously, to the benefit of some and to the detriment of others.

In a central-bank directed economy, the entry point of money is via large commercial banks. Unelected bureaucrats, bankers, and other members of the deep state are the first to enjoy this “new money.”

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Gary Anderson 10 months ago Contributor's comment

Or direct the fake money, as you call it, to Helicopter drops to the regular folks. But not continually, like UBI.