The Cantillon Effect: How Easy Money Hurts the Working Class

Most people think inflation affects everyone equally—but that’s far from the truth. Enter the Cantillon Effect, an economic concept that shows how newly created money doesn’t flow evenly through the economy. Instead, it benefits those closest to the source—banks, corporations, and financial elites—while leaving everyday workers to bear the cost.

Here’s how it works:

When central banks print money or lower interest rates, that money doesn’t land in your pocket first. It goes to financial institutions and large borrowers. They use it to invest in assets like real estate, stocks, and commodities—driving up prices. By the time that new money filters down to the average worker, prices have already risen, meaning their wages buy less.

So while Wall Street sees record profits and asset bubbles inflate, the regular working man is stuck paying more for rent, food, and fuel without a corresponding rise in income. That’s the Cantillon Effect in action: the rich get richer, and the poor fall further behind.

In short, easy money policies may stimulate growth at the top—but they quietly tax the bottom through inflation. It’s a hidden redistribution of wealth, from wage earners to asset holders.

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