Your Chances in Life Are Determined by Your Banking System – The Cantillon Effect

The structure resembles an onion. Central banks or the Federal Reserve in the case of U.S. position as the core.

As one single human being, you would experience how your life has to be relatively tied to one or a few of those layers depending on how well you are connected to the machines that print money and to the people who run those machines. One tends to feel trapped into one’s layers. Liberty will not be totally unknown to us, though. During our life, we may enjoy some asymptotic freedom in direct relation to how much access we have to the public resources – financial fuel – produced by the core.

FINANCIAL EDUCATION IS INFINITELY BISED IN FAVOR OF THE MONEY-ISSUING SYSTEM

In order to understand this well, one needs to reflect on the very nature of our financial education and learnt predispositions. The following is the kind of rules of the game we call “Life” that most of us learn around the globe, independently of the country we live in, our culture or beliefs: money is given to good people in exchange for their sacred contribution to the world. Therefore, people who own money have earned it. They deserve it. That’s all you need to know.

These highly biased teachings about life and econonomy, are very similar to a trap. In some cases, almost like a scam. Countless are the reasons. In the first place, society does not reveal to us, through these teachings, the secret of who invents and prints the money that I receive as a supposed reward for being a good child and working hard for someone else.

Equally worrying is that these traditional teachings lead me to believe strongly – another bias, even if I don’t believe it completely – that hard work is the predominant method that everyone is using in order to obtain money, including the people who hire me, including all institutions, including the rich and the entire political class. This is one of the worst biases!

THE CANTILLON EFFECT: “WHO ISSUES OUR MONEY?” AND “TO WHOM DOES THIS ISSUER GIVES IT?”

The main problem begins precisely with questions that we’ve learnt not to make to ourselves and not to do research on, like “who creates and distributes money?” Around the world, in each of most modern countries, there is an institution responsible for printing money and inventing the criteria for distributing money to people: central banks. In the case of the United States, the central bank is called the Federal Reserve.

The complex socio-economic effect that occurs as a result of the distribution of lots of money, as it is carried out by modern money issuers has been called, in Economic Sciences, “The Cantillon Effect” by Mark Blaug based on the Franco-Irish economist Richard Cantillon. Cantillon lived under the effects of heavy inflation – a steady increase – of the total suppy of fiat currency, or the John Law paper money system at the beginning of the 18th century.

Cantillon studied and explained the problem of the constant issuance of currency based on an observable and unavoidable social-damage process: people or institutions that are closer to the issuer of the currency see how their income increases, however, those who are last to receive the new money that is created – those in the furthest layers – see their purchasing power decrease as consumer price inflation occurs.

Your social position determines your future according to Cantillon. This is the basis of our socio-economic structure. The more access you have to the core of the economic system, your future will be more and more secure. In our days only the largest and most powerful banks have direct access to the central banks – the money issuers -. By the Cantillon Effect, then, these big banks will be the greatest beneficiaries.

THE CANTILLON EFFECT BENEFITS ONLY THOSE WHO RECEIVE THE MONEY DIRECTLY FROM THE ISSUER; THE REST PAY THESE BENEFITS

One of the most valuable lessons we learn through the discovery of Cantillon effect, is that money does not have the same value for everyone. JP Morgan’s $1 is more valuable than your $1. Money devaluates constantly because of exacerbated inflation. So those who are closer to the issuer, can use the money while it carries more purchasing power. It also goes without saying that all those who are not part of the financial system – and who don’t have a position in the credit ranking – are not even considered as people within the system.

Your local bank – the one where your salary is deposited – is probably far away from those big banks. Your bank is in a forgotten layer far away from the core, probably. And, you, as a person, are in a worse position. You are a tiny particle for your bank. You are subject of credit only if you are good kid and if you make a lot of money in a regular basis. In general, you don’t count too much for your bank or for the rest of the piramid, as a person. The social commitment of the banking system is a myth.

What about the half of the human beings on the planet who cannot even have a bank account, or who do not even appear within a distant layer of the financial system? They do not count at all. They aren’t even particles. The system is not for them. And, according to scientist Cantillon, they are the ones that pay the devaluation of money inherent to the economic system of the central banks which is based on constant emission of currency – inflation.

MAKING THE RICH RICHER WHILE IMPOVERISHING THE MASSES

From now on, every time you go to a bank or whenever you need a loan, remember that, the closer you are to the giant banks that are plugged into your country’s fiat issuers, you will receive faster the recently printed money before this money is devalued. Also remember that the money you are receiving is usually created for you. And that, if you are in a very distant unprivileged layer, like most of the people, then, you are probably receiving very devalued money that is worth much less and that will help you to impoverish.