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This is the Human Action Podcast, where we debunk the economic, political, and even cultural myths of the days.
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Here's your host, Dr. Bob Murphy, everybody. Welcome back to the Human Action Podcast. Today I am going to cover what are called Cantillon Effects, or actually, sometimes they're called Cantillon Effects, named after the brilliant early economist Richard Cantillon, or Cantillon, as you may prefer, who is credited, certainly by Murray Rothbard, but also William Stanley Jevons, who's kind of credited with rediscovering his work, being perhaps like, the first true or the founder of political economy, you might use that kind of terminology. So specifically, it's his essay Sur la nature du commerce en general. Right. Butchering that. It took many years of French essay on the general nature of commerce. Okay, and that came out. When was that book? Okay, so it was written in 1730, and it wasn't published until 1755. And there's an interesting story. We're not going to get into it here, like some disgruntled former employee burned down the guy's house and, like, that was the only manuscript that survived. So arguably, Cantelon had more work there that we just lost. And let me just mention the issue with his pronunciation. So my understanding is he was actually born in Ireland, but then he moved to France. And so it's like his name. If you want to do the Anglicized version, it's Cantillon. But if you want to sound sophisticated, you say Cantillon. Okay. So anyway, I'll go with Cantillon to not be putting on airs in case it's wrong. So in any event, Cantillon effects are very near and dear to the Austrian school. And there's two main reasons that Austrians stress this. So there's. The general reason is that what it has to do with is when new money enters the economy, it doesn't raise all prices proportionally and at the same time. Right? So in general, if we're like, somebody says, hey, how come? Why doesn't the government just print more money? You know, like a very naive thing. Couldn't everybody just be a billionaire if the government just printed a billion dollars and gave it to each person? And the obvious answer to that is, well, no, because if they just did that, prices would go up. And so you might say something like, hey, if they doubled the money supply and everyone just woke up tomorrow and had twice as much money, you know, in your wallet or purse or like, on your checking account balance as you did the night before, you might feel like you were really rich, but basically prices would just double. And so you'd realize, oh, no, you're kind of where you were, that what cost, you know. Yeah. Instead of having $100 in your wallet, now you have 200. But things that cost $100 yesterday now cost 200. So see, it's not making us. It's not creating more real resources, not more factories, there's not more cars, there's not more houses. So it can't possibly be that if we gave everyone a bunch of money that all of a sudden they could all go buy mansions. Because you haven't increased the number of actual mansions just by printing up dollar bills. Right. So that's the standard way to just kind of, on a first pass, get someone to realize why a very naive inflationist view of the world is incorrect. Okay? But the Austrians, primarily because of, you know, the emphasis Louis von Mises placed on this stress that it's even though. Yeah. To say to the naive night inflationist, if you double the money supply, prices would double. Duh. In reality, that's not true. And it's important to know that it's not true. Right. That just to dig deeper into the analysis, you realize that, oh, when new money enters the economy, it's not first of all magically that everybody's quantity all increases proportionally. But no, the money enters into the economy through specific mechanisms. And so some people get access to that money sooner than others do. And then that not only is interesting to know and think through as a, you know, an observing economist or analyst, but also once you realize that, it starts to explain why some vested interests might like a system where new money is regularly flowing in through certain channels, and they might, you know, want that to be justified. And maybe they'll give donations to academics and so forth that will write papers and books and so forth, talking about why this is a perfectly straightforward system. It's good for everybody. Okay, so that's one reason that the Austrians stress this, is that as is their want, Austrians often, you know, engage in product differentiation by saying, oh, the mainstream makes a lot of simplifying assumptions. Here's a more accurate way of looking at it. And then also notice this more accurate view sheds light on some of the politics involved. Okay? But more specifically than that, the reason Cantillon effects are so critical to an Austrian economist is that once you understand what they're saying, what they mean, the standard Austrian theory of the business cycle is actually just a particular application of this more general phenomenon. Okay, so let me just hammer that Point for a second, I. By the way, because I had asked, when I was getting ready to do this episode, I was going to make that claim. And then it occurred to me, wait a minute. You know, is that a standard thing among Austrians to say that the, you know, the Mises Hayek theory of the business cycle is just an application of Cantillon effects to a particular setting? And I wondered, is that just something I made up, or is that standard? So I ran it by Joe Salerno, and he said, yeah, that's standard. He, in fact, reminded me, because I knew this, and I just forgot that in Hayek's famous Prices in Production, these lectures that he gave at the LSC in the 30s, lecture one starts out with the title is Theories of the Influence of Money on Prices. And Hayek leads the, you know, the chapter with this quote from Richard Cantelon. He realized, well, that the abundance of money makes everything dear. So he's talking there about, I think, probably petty that Cantillon is. So he's going to say, like, what this guy's strength is, but then say what he overlooked. He realized, well, that the abundance of money makes everything dear. But he did not analyze how that takes place. The great difficulty of this analysis consists in, in discovering by what path and in what proportion the increase of money raises the price of things. Okay, so Cantillon himself was saying, we've known here in this tradition of what, you know, later would be called political economy, that, yeah, if there's more money, prices are higher, or in his terminology, things are more dear, like, things become more expensive when there's more money. But he's saying it's not enough just to say that we can go further. And let's, let's look at the exact mechanism of, like, how does it come to be, for example, if new, you know, mines are discovered, that kind of thing. Okay, and so then again, Hayek is, in Hayek's series of lectures on the Austrian, what we could now call the Austrian business psychothery. He's starting out, and he's kind of giving a quick tour of the history of economic thought to say there are a lot of people over the decades who have talked about how does the injection of new money cause disturbances in the system of prices. And then Hayek's going to go on in these lectures to give his particular spin, which just elaborates on the theory of the business cycle that Mises developed. Okay, so again, I'm just trying to get you to understand why is it that Austrian economists. And then, like, you Know, the, the online fans of the Austrian school will often talk about Cantillon effects, whereas you don't typically hear other economists talking about that much. And so here I'm trying to get you to see why the Austrians think this is so special. And again, I alluded to in the beginning, but this Cantillon's book, or like, long essay, whatever you want to call it, is, people have pointed to that and said, yeah, if you want to talk about like the founding of modern political economy, like that, that's arguably it. Okay. Rothbard also thinks very highly of Turgot. What Turgot came after. Okay, let me just read you a little excerpt from Cantillon's work and then I'll go ahead and, you know, put it in more standard language for us nowadays. And then where I'm going with this is I'm going to explain what it is, and then I'm going to answer a typical objection that you'll get from people saying, oh, you know, you Austrians are making a bigger deal out of this with modern financial markets. And, you know, people understand what's going on and people take the, take inflation into account when they set the nominal interest rate on a loan contract. And people aren't taking their, their pay and just putting it under their mattress. Come on. So people try to argue that Cantalon effects, their, their impact is overblown. And the reason I'm doing this episode now, folks, just is recently this came up again and even George Seljan was weighing in and arguing that the business cycle need have nothing to do with Cantillon effects, that, you know, they're two separate things and take it or leave it. So that's why I thought it's good to jump in this. Cause I see this stuff happen over and over. And I think there's a fundamental confusion in the response that, oh, as long as it's anticipated, these things all get, you know, priced out of the market and it's a wash. No, it isn't. But let me first, before I handle the objection, make sure you understand what was Cantelon talking about and then put it in, you know, modern terms. So here, this is a. An excerpt from Cantillon himself. If the increase in actual mut. So he's going through and he's making observations about things in the circulation of the money stock and what does it do to prices. And you know, some of it's kind of dated like he. The way they used to think about things like they thought of the landowners versus the workers and the Capitalists and stuff like that. But in any event, I'll just jump right in here and give you a quick excerpt that gives the flavor of what he wrote about. If the increase in actual money comes from a state's gold and silver mines, the mine's owner, the entrepreneurs, the smelters, the refiners, and generally all those who work in them will increase their expenditure in line with their gains at home. They will consume more meat and wine or beer than they used to. And they will become accustomed to having better clothes, finer linen, and more ornate houses and other sought after commodities. Consequently, they will give employment to some craftsmen who hitherto had not as much work and who for the same reason will increase their expenditure. All of this increased expenditure on meat, wine, wool and the like will necessarily reduce the share of other people in the state who are not the initial beneficiaries from the wealth of the mines in question. The bargaining in the market with the demand for meat, wine, wool and the like being stronger than usual with, will not fail to increase their prices. These high prices will encourage farmers to employ more land to produce them. In another year, these same farmers will profit from this price increase and will, like the others, increase their family's expenditure as a consequence. Those who suffer first from this dearness in the increase in consumption will be the landlords during the term of their leases, then their servants and all the workers or people on fixed wages on which their families depend. All of them will have to reduce their expenditure in proportion to the new consumption, which will force a large number of them to leave the state to earn their living elsewhere. That, that. Okay, so that lines up very nicely with the sort of modern exposition. Like if I were teaching this to an undergrad class and, you know, I had to just summarize Cantillon effects. Putting it my own words, I would just say something like, say that in some country that the monarch needs to pay the soldiers, right? Because he has a big standing army and it has to be ready to put the people down if they revolt and whatever. But that's, it's a very onerous burden. And he can't tax the people more and he can't borrow more just from conventional saving. And so he turns to the printing press and they just print up more notes of whatever the, you know, the currency is in that country. And, and that's how he pays the soldiers. And so what effect will that have? So one general thing you can say is, oh, that's going to cause price inflation, right? Over time things will get more expensive in that country, because the king is paying the soldiers just by printing money. Okay? But then when you just say, okay, but break it down like walk me through it, step by step in the old school, like the way Cantilon did there, and the way you would present it to someone who's never heard of this before is you do it in a very, some might say, naive, step by step fashion. You say, okay, right now, prices and wages and everything are what they are. New money gets printed up, handed to the soldiers. What do they do with it? Well, they go out to the bars and the restaurants and they spend it on that. You know, they go gambling, whatever they're going to do. And so now, and they, of course, are spending and enjoying more things than they would if they hadn't gotten the new money, right? If the king just hadn't paid them, they wouldn't be going out to the bars and gambling and eating gluttonous meals and whatnot, because they wouldn't have any money, right? So clearly they're benefiting from the printing press. If you looked at like, you know, two timelines and said in timeline one, the king doesn't run the printing press, and in timeline two, he does. Clearly the soldiers who got this pay prefer, you know, in terms of their direct enjoyment. Maybe they have principled objections to inflation, but you get what I mean. Their lifestyle is higher in timeline one, where they get the access to that money rather than timeline, too. Okay, but again, just going back to our earlier point about printing money per se doesn't cause there to be more restaurants. It doesn't cause there to be more mutton available, more beers, right? So how could it be that the soldiers have a higher standard of living now? There must be other people who are losers, right? Because it's not that true. Genuine real economic output is higher just because the king runs the printing press. All right, so if the soldiers are consuming more, enjoying more, siphoning off more of the fruits of the economic system because of running that printing press, there must be other people who are consuming less, who have a lower standard of living, right? And so that's what Cantelon's trying to explain. And so I'm saying, again, if I were just explaining this for the first time to an undergrad class, I would say, all right, so you see how the soldiers benefit and what happens, the prices at those restaurants and. Or if they go and they buy, you know, a mink coat for their girlfriend back home or something, the soldiers armed with this new newly printed money in their pockets, go out in the community and they push up prices with their spending. The merchants who are the immediate recipients of the new spending end up raising their prices. All right? And then those merchants also, who are like second in line, feel wealthier. They're benefiting too, from the, the monetary inflation that the king engaged in. And so then they have higher dividends and, you know, sales and blah, blah, blah. And so they, their lifestyle's better than it would have been in the alternate timeline where there was no monetary inflation. Okay? And so you can just keep going step by step. And the point is, every time that money is then, you know, the money that newly came into the economy via the king's printing press and into the soldiers pockets, and then they go and spend it, now it's found its way into other people's pockets and so on. With each new wave of spending, the idea is more and more prices in the economy get pushed up then so you can imagine like somebody who is just a pensioner, right? Like they, you know, they're 70 years old, they're retired, and they just get a fixed dollar amount every month because that's what their company set up for them, or they get Social Security, whatever, and assume there's no cost of living adjustments. Just to keep things real simple, there's getting a fixed dollar amount or whatever the currency is in this country, they're clearly losing because as time goes on and more and more people are the recipients of that ever expanding circle of payments, like it's like a drop in a pond or a rock into a pond, and you see the concentric circles rippling out. The idea is that new money is coming in the economy in certain choke points and then just starts spreading around and pushing up prices in its wake, if you want to think of it that way. So if you're some guy in the economy that just has a fixed dollar income or fixed money income, everything that you buy starts getting more and more expensive. Not all in one fell swoop. Like some things go up first, then other things, but things just gradually, you looking around every time you go out in the marketplace, more and more things are more and more expensive than they were originally. And yet the amount of money that you have every month is the same. So you're getting progressively poorer in real terms. Okay? And so then the idea is, it's this interplay of it. What, at what point do you get access to that new money? And so if you're relatively early in the process, where you're getting the money before prices in general have risen Very much. Then you're a net beneficiary. Then you can go out and spend, and you're on better, you know, on a better footing than you would have been in the alternate timeline. But then there have to be people with a mirror image. They're going out, and by the time their income goes up, they've already been paying higher prices for a while. And that could include, like, factory workers that maybe every year they go and renegotiate with their boss or something, but in the meantime, stuff at the grocery store has gotten more expensive. Okay, so that's the general idea. That's kind of the. The quick explanation of Cantillon effects. All right, so now let me just briefly show how does that apply to or intersect with standard Austrian business cycle theory? Because there, the idea is what happens when new money enters the economy, not just because the government prints it up and spends it on certain things, or certainly not because there's a, quote, helicopter drop, if you're familiar with that term, but rather, what if it's banks who engage in what's called fractional reserve banking, and they, in a sense, create money out of thin air by just granting credit to people and making loans that don't correspond to new savings that have been brought in and deposited? Right. And so that there's a genuine sense in which the banks in a fractional reserve system can expand the quantity of money just by granting loans. And so that's the sense in which you can say, oh, it's. It's not just the king running the printing press, or in Cantillon's exposition, you know, the miners getting more gold out in the mine, then walking into town armed with more gold coins, you know, they can go to a mint and get stamped into gold coins. And now they're coming in, spending at the saloon and whatever and pushing up the price of beer and whatnot, measured in gold grains. And that would hurt people who, you know, their wages paid in gold grains or gold coins don't respond originally. Right. So it's not merely about fiat money. It could also even be with gold and silver. In fact, cancel on that was his original exposition, because back then, that was the money. Okay, so my point is, once you see that this is a general phenomenon, and whatever the money is in a community, if. If the way new money comes in is not just every cash balance proportionally increases, but instead it comes in through certain entry points, then you get Cantillon effects. Okay, so I'm saying in the Austrian theory of the business cycle, one way of Viewing that is, oh, there's a sense in which the commercial banks create new money that enters the economy via the loan market. And so specifically, just like if the, the owners of the gold mines get loaded up with coins and they walk in and they, the first thing they do is they go to the saloon. And so you'd say, oh, so the first prices to rise are the prices of beer and liquor, and then the next prices that rise are whatever the saloon owner wants to spend his profits on and so on. Likewise with, if the way the new money enters the economy is banks create unbacked credit and lend it out, well, then what prices respond originally? And you could say, oh, bonds. Right. If you want to think of it that way, like a sense, like banks are buying bonds. They could be literally buying bonds, but also, just figuratively speaking, buying IOUs from people in the community. That's what it means to make a loan. And so it's like the bankers are coming in. The bankers are the ones that are armed with the new money originally and they're going and buying debt instruments from the community. And so the price of those instruments gets bid up. And what does that mean? That's the same thing as saying the interest rate drops. All right, so to say artificial credit or fraction reserve banking credit expansion pushes down interest rates. That is an example of Cantillon effects. It's just saying the price of the bond goes up is the same thing as saying the yield on it goes down. Okay, so that's just a particular application. So anyway, that's what I'm saying. The general framework, the phenomenon of cancel on effects includes as a special case or a particular case, the Austrian theory of the boom bust cycle. Okay, so now that I've kind of spelled all that out, let me just take some time to explain what a standard objection to that whole train of thought is and then to give my response. All right, so the, the objection runs like this. That, sure. You know, back in the day when Richard Cantelon himself was writing on this stuff, people weren't aware of these patterns. That was the whole point of the early writers in political economy is they were, you know, people in the marketplace started noticing patterns. And then these guys came along to try to make sense of it, to explain it, and they used various. And over the, you know, over the years we refined the analysis such that today we've got great people on podcasts connected to mises.org right. So fair enough, but the I. The argument goes or the objection goes, once people catch on to this, the Effects get bit away, right? That for example, in the standard telling, people are very naive and short sighted and you know, the, the restaurant owner who's 10 steps away just sits there and says, well, I'm not going to raise my prices until my customers come in and start spending more than they did before and then I'll raise my prices. And so like I'm 10th in line. But the idea is if you see that, oh wait a minute, there's more money entering the economy right now, then why wouldn't you respond to that? You know what's coming. So wouldn't you raise your prices early? Right, that's, that's the idea. Or wouldn't you, instead of being stuck getting this, you know, nominal income, wouldn't you adjust your affairs so that your income responded more rapidly and you weren't stuck? Or for sure, instead of you holding cash as an asset, once you learn the news and come to believe that, oh wait, they're going to start pumping in more money even if they haven't started it yet, wouldn't you want to get out of cash and get into something else that's going to respond better in an inflationary environment? Okay. And so whether they literally say this or just suggest it, but you get the idea from some of these people that yeah, cantilon effects can largely be canceled out or mitigated at least so long as everybody understands what's going on. All right. And I want to say, number one, that's not true unless the current, you know, unless the currency just collapses. Like people still get paid in wages and for a lot of jobs, like there's a fixed wage involved. It's not just that it, you know, is adjustable every day. In fact, for some people that having the, the certainty of what their pay is going to be, you know, for the next year helps them plan. Just like they want to lock in their rent, they, they wouldn't want their landlord changing the rent on them every day. You'd be hard to live like that, right? So there's a lot of quote, sticky prices in an economy. And far from being example of market failure, that's how people can make long run plans and decide, do I want to take this job, you know, do I want to move to this city, take this job, buy a house? Well, you would be less likely to do that if you couldn't count on what your salary was going to be and you couldn't get lock in your mortgage payment and stuff like that. Right? There's a, there's a reason some types of prices are quote sticky, whereas others aren't. Right. It's not just arbitrary. It has partly to do with the institutional factors and what the people involved are trying to do with these transactions. Okay, so there's that element. But then even beyond that, it's clearly not a wash because it matters who gets that money. Right? So again, just go back to the, you know, the standard story. The, the Monarch runs the printing press. So who's the primary beneficiary? That some people might have said, oh, the soldiers, because they're the first recipients. I say, no, the primary beneficiary, the first one is the Monarch. He gets all the soldier services by just printing up money. Right. The soldiers are in a sense the second in line. It's like the Monarch is actually the first in line if you think of it that way. Okay, okay. So even so though, let's just assume this has been going on year after year. Everyone kind of gets the deal. Let's even suppose there's transparency and people know ahead of time what the, how much the Monarch is going to print. Right? Like they publish that schedule. You know, maybe Ben Bernanke has advised the Monarch and says, you got to give forward guidance and so forth to minimize the economic volatility in your society. Okay, great, we'll do that. And so they truthfully report years ahead of time every month. This is how much new money in this, you know, this country we're going to print up and give as pay to the, to the soldiers. Okay? So everyone sees it come, everyone can adjust, they can write their long term contracts and all that stuff. And I want to say, okay, still in that new equilibrium, are you telling me that is the Monarch set up? You know what, actually, let's, let's, let's, let's think about this for a second. What if instead of doing that, what if instead we just didn't print any money? Like how do you, how do you people feel about that? And are you telling me the soldiers would be indifferent? Because they say, oh, either way it's a wash and assume that like the soldiers, I probably should have specified this, right? Somebody like Steve Landsberg would get real anal with me and say, well, if there's free entry into soldiering and people enter that occupation, so long as the pay is higher than the risk involved and on the margin, you're just indifferent between getting the new money from the King and getting killed by, you know, an insurrectionist or, you know, getting deployed to a foreign war that the King starts with his rival and then actually Maybe you would be indifferent. But in a situation where, let's just say that no, they hire certain able bodied men and they're going to be soldiers and they're just getting paid more or less, then I'm saying in that framework, are you saying you're indifferent? And I think the answer is clearly no. That the soldiers, other things equal, would say, yeah, we'd rather live in the world where the King does print up money every month and gives it to us that, yep, in general prices are going to keep going up over time. We're going to remember, oh yeah, 10 years ago it was easier to get apples at the grocery store than it is now. But since they've been the ones who, every time new money gets injected are the second recipients, if you want to think of it that way, they're always, they're in a much better position to, than somebody who isn't a soldier and somebody who's not even the grocery store owner, somebody who's tenth in the sequence. Okay. And so I just, I must say like that you can't, if you don't see that you could flip it to another way and just say, what if they just change the identity? And so the King says, all right, so you know, we could, we could pay the soldiers that way or, or do nothing. Or a third option is instead of paying the soldiers, how about we just give the new money every month to people who have red hair. That's the way the new money will enter the system. We'll still print the same new quantity of money each month according to this schedule we've had posted here. But instead of paying the soldiers, I'm not going to pay them, instead I'll pay the people with red hair. All right, so there, I mean clearly probably fewer people are going to go into becoming soldiers, right? Can we all agree on that? And the people who are the, the red hair and assume like it's genetic, like, and you, you can't fake it, right? So there's no way that people can, more people can become redheaded to take advantage of the subsidy. Like, it's just not. That is what it is. Right? So I think clearly, why wouldn't you rather be someone with red hair in that scenario? And wouldn't the people who don't have red hair if they were, if the King put it up to a referendum, wouldn't they say, no, I don't want to do that system, right? So I'm saying, and these, these statements are all true, even if the deal is, nobody's taken by surprise. Once they decide on the system, the king really does follow the, the schedule and doesn't deviate from it. So it's not that people are ever caught off guard. They know how it works. And I'm saying clearly, even so, you're better off in your terms of your narrow economic interest if you're the one who gets the money first. All right, so last thing I'll say on this, if you're trying to just reconcile stuff, if this seems like there's a contradiction or paradox, it's not. It's, it's true. If you're the redhead and you're in a system where redheads get the new money, you would probably benefit the most. If it were in a system where nobody else knew about cantalon effects and they didn't really understand why prices went rose, you'd probably be better off there. That'd be the best of all possible worlds for you. But I'm saying, even if everyone's adjusting and even though people are keeping their cash balances to a minimum, still, unless this program is so devastating that it causes the currency to collapse, still, if people are using, if the way goods and services are bought in this country is on every side of a transaction is this money and you are the, you know, you and your redheaded friends are the, the sole recipients of the new money as it enters in, in the first wave, you're clearly better off. Right? Yes. If, if the, put it this way, just in general, the king comes up and he makes a surprise announcement. He says, next month I'm going to print up, I'm going to double the money supply, but next month. And when I do so, I'm going to give it to this guy Jim over here who's got red hair, Jim's getting it all. So, yes, the announcement, if it catches people by surprise, is going to actually. Cause at that moment, once the news breaks, it will cause a redistribution of real wealth. The people who happen to be cash heavy at that point are going to get hurt. And the people who own stocks and real estate and gold coins and stuff like that are going to benefit. Right? Because everybody, upon hearing that announcement who's sitting on cash is going to try to get rid of their cash. But when I say get rid of it, I don't mean they're going to burn it. That doesn't help you. They're going to try to buy stuff with it. Right? So every piece of money at any moment in time is going to be owned by someone. So when I say everyone's going to try to get rid of their cash. That means they're going to try to find somebody who will accept that cash in exchange for something else. So, you know, they're gonna try to go. Oh, they would try to go buy gold or real estate or even, you know, a new refrigerator or something. You know, if they've been thinking about getting a new fridge, they're gonna go do it right now. And so in so doing, they're gonna push up prices immediately. All right, so the beneficiaries just from the announcement are gonna be the people sitting on the real assets that are not denominated in the currency. The losers are gonna be the people holding the cash who. Who have checking account balances or who have bonds that are denominated in the currency. Like, so what people owe them is the same number of money units, regardless of its purchasing power. Those people lose, too. And you say, oh, they could sell the bond. Yeah, they could, but interest rates are going to go up. Right. The price of the bond is going to drop. Okay, so. Having said all that stuff, in that environment, then still. Okay, prices adjust and everything, just from the King's announcement. And then next month comes around, and the King does print up, you know, doubling the money supply. You know, he prints up enough new money to equal the outstanding stock, even though, you know, it's been rearranged or in light of his announcement. And then he gives it to Jim the redhead. Is anyone denying that Jim the Redhead benefits from having all this new money just handed over to him? Of course he does. It's true. The money he's receiving has less purchasing power than it would have in a world where nobody understood how this stuff worked. Or if the King kept it secret and printed up quietly and just gave it to Jim with nobody knowing. But nonetheless, even taking into account, everyone responds optimally and readjust their portfolios. And Jim still benefits by being the early recipient. Okay, so, you know, to our modern times. The fact, like some of the wealth, you know, the wealthiest zip code, I think, is, like, around D.C. and stuff like that. And you could just tell a story. Yep, the Fed is the engine of monetary inflation, and the defense contractors get it, and then their employees and. And I'm saying that is all true. Even if people are fed watchers, and even if you subscribe to a hard money newsletter and you know, the rounds of QE are gonna do this and this to gold price. Yes, you're better off knowing things than not knowing things. But still, that doesn't change the fact that if there is a machine that prints up money, the people who have access to it benefit from it. That's why the powers that be fight tooth and nail against somebody like Ron Paul for trying to explain how this stuff works. They shut up, all right? We don't want to end the Fed. That's why they fight against this stuff, because it's valuable to them. All right, well, that's a good place to wrap up. I hope I shed some light on these important matters. Thanks for your attention, everybody. See you next time.
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Check back next week for a new episode of the Human Action Podcast. In the meantime, you can find more content like this on nieces.org.