The Cantillon Effect (And The Inevitable Demise of Financials) - Hedge Fund Alpha (formerly ValueWalk Premium)

The Cantillon Effect (And The Inevitable Demise of Financials)

In a pertinent observation, Ludwig von Mises, a philosopher, Austrian School economist, sociologist, and liberal says: ‘Inflation and credit expansion, the preferred methods of present day government open-handedness, do not add anything to the amount of resources available. They make some people more prosperous, but only to the extent that they make others poorer.’ In fact, indiscriminate additions to money supply have a negative fallout – the Cantillon Effect. Newly created money takes its time to percolate through the economy, and worse, its reach is unequal. Since new money inevitably raises prices through an inflationary effect, those that are the...

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