This Is Why You CAN’T Win!! Cantillon Effect Explained!

Central Bankers around the world have Turned all of theirs into guinea pigs in A massive experiment in monetary policy They're manipulating the Fiat currencies That we depend on and picking winners And losers Among Us the worst part is Most of us have no idea what they're Doing or how it affects us so today We're going to break down what their Experiment is how it hurts some and Helps others and what we can do about It ah the short end of the stick why do I always feel like the economy is Handing it to me you know how it goes The price of everything is constantly Going up but your income is going Nowhere fast with every passing day your Life savings are worth a bit less you're Working hard minding your own business And you still wake up a little poorer Than you were yesterday well that's Inflation for you inflation has various Drivers but for many of us none are so Nefarious as quantitive easing AKA money Printing every so often central banks Like the Federal Reserve in the US Decide to switch on their money printers The money printer goes on and suddenly Your money is worth less okay okay it's Not like they just bust out the printer Just for fun to be precise under Quantitive eing central banks usually Print money so they can buy assets in Response to some crisis in the hope of

Stimulating the economy more on that Later but look whatever the rationale is The result is an influx of new money Into the economy it's like the dev's Increase of circula Supply while we Weren't looking and we all know what That means more inflation the currency Depreciates prices rise your purchasing Power Falls and there you go again Holding the short end of the stick it's A story that we all know far too well But how much time do we spend thinking About who is on the other end of the Stick you know the long end you see Inflation is not a rise and Tide that Simultaneously lifts all prices and Leaves everyone underwater by the same Amount in fact inflation actually Increases the purchasing power of Certain groups in society that's right It might seem counterintuitive but Inflation actually has beneficiaries While most of us end up a little poorer There are some people who get to laugh All the way to the bank when the money Supply increased this is because of Something called the Calon effect the Calon effect is a phenomenon that was First described in 1730 in an essay by The Irish French Economist Richard Calon The title of the essay is Essay Commerce general or essay of the Nature of trade in general which is Fitting because it's a complete treaties

On economics and discusses all sorts of Phenomena but canton's observations About the winners and losers of money Creation are what he's remembered for Today basically he points out that newly Created money is injected into the Economy at specific points therefore Flows through the economy through Specific channels in canton's time he Pointed to gold mines as a source of new Money flowing into the economy every day More gold would be mined increasing the Money supply this newly introduced money Would first affect the local economy Around the mine before the knock on Effects of inflation would Ripple Outwards through the rest of the economy Now money creation through quantitive Easing it's not quite the same thing as Digging up gold but the basic logic of The coun on effect still holds up Whether created by gold mining or Central banks new money doesn't suddenly Materialize in the pockets of all Market Participants at the same time there are Those who get the new money first and Then there are those who it reaches last I mean there are even those who it never Reaches at all and for Canon this Packing order determines who wins and Who loses when no money is created this Is the essence of the celon effect since Money creation is so closely associated With inflation it might seem unusual to

Think about the winners here but think About it like this if you're a person Who gets to rip off the cellophane of a A freshly printed brick of money then You have the luxury of front running the Entire economy see eventually that new Money will be digested by the economy it Will depreciate in value prices will Rise and the economy will reach Equilibrium again a higher cost of Living and decreased purchasing power Will be the experience of the general Public but not you you get to spend Those new extra dollars before prices Rise your purchasing power has increased Leaving you free to bid resources away From everyone else and the knock on Effects of inflation those are problems For people behind you to worry about it Must be like playing a game on easy mode By the way if you are enjoying the video So far go ahead and prod the like Subscribe and Bell notification buttons You'll help more people see this and Make sure you never miss another upload We interrupt this program for an Emergency crypto where the forecast get Ready for the Whirlwind of savings we're Seeing a high pressure sign up bonus System forming in the Northeast with Some exchanges offering up to $100,000 Lush in the South we'll be Seeing some heavy discounts on Hardware Wallets so watch out for those if you're

Going to be out and about and then over In central areas there's a high chance Of trading fee discounts which should be Seten in later on up to 70% off there Amazing for a more comprehensive Forecast visit the coin buo deals page Using the link in the description these Deals are red hot so make sure to take All necessary Precautions that's all for the forecast Now back to our scheduled program so That's the theory of the Cel on effect But in practice who are the winners and Who are the losers well interestingly One of those questions is much easier to Answer than the other let's start with The winners the winners are whoever is Able to control the money creation Process for their own benefit the Specific interest groups involved may Vary from country to country but Generally they're not too hard to Identify just look at the channels Through which new money is injected into The economy and you'll find the winners They know who they are and they know What they want from monetary policy as a Result they are able to organize around Their interests and try to influence Policy decisions naturally they will Fight tur and nail to continue to occupy Those channels so that they can get Their hands on the newly printed money First the example per Excellence was the

2008 financial crisis when central banks Printed enormous sums of money to bail Out financial institutions and certain Enterprises in the housing market and Then there was the sequel which came With the pandemic let's recap how the Financial crisis went down in the United States mortgage Securities were downg Graded and major financial institutions Were stuck back holding a liquid risky Mortgage back Securities that were Dumping hard luckily for them the Federal Reserve turned them into winners By printing new money and using it to Buy these bags the FED provided failing Financial institutions with trillions of Dollars in liquidity and in return Transferred their risky liquid assets to Their own balance sheet the largest of The fed's asset purchase programs was The mortgage backed security purchase Program between January 2009 and March 2010 the FED bought $1.25 trillion worth Of toxic assets from major financial Institutions including Barkley's BMP Peribus City Group credit Swiss deuts Bank Goldman Sachs Morgan sty the list Really does go on these institutions Plus Bank of America Countrywide lemon Brothers and Marl Lynch were also the Beneficiaries of The Fez term security Landing facility under this program the FED swapped more than $2 trillion dollar Worth of liquid relatively safe treasury

Securities for wall Street's junk assets Between March 2008 and July 2009 between 2008 and 2010 the FED gave out $929 billion in loans to major Banks 92% Of whom were primary dealers meaning the Fed's own trading counterparties and by The third round of quantitive easing in 2012 the Fed was buying $40 billion Worth of mortgage back securities every Month at the outset of the crisis the Fed's balance sheet showed assets of Around $900 billion but by 2014 this had Increased fivefold to $4.5 trillion Altogether the quantitative easing Measures had amounted to a massive Allocation of credit by the FED whose Discretion over which assets to buy and From whom necessarily meant picking Winners and losers as The Economist Lawrence white puts it in 2009 and I Quote the FED took on the new role of Selectively channeling Credit in favored Directions Richard celon wouldn't have Thought very much of this back in 1730 He argued that credit expansion policies And I quote open the door to making Great fortunes are rarely managed for The sole benefit of the state and those Who operate them are often Corrupted on that note a 2011 report by The US government accountability office Expressed concerns about the connections Between the banks receiving credit and The directors of the Federal Reserve it

Said and I quote some of the Institutions that borrowed from the Emergency programs had senior Executives And stockholders that served on the Reserve bank's board of directors we Identified at least 18 former and Current Class A B and C directors from Nine Reserve Banks who were affiliated With institutions that used at least one Emergency program having the class A Directors who represent member banks and The class B directors who are elected by Member banks creates an appear of a Conflict of interest this is because Class A or B directors might own a stock In Banks or Class A directors might work For banks that are supervised by The Reserve Bank while also overseeing Aspects of the reserve bank's operations So as you can see the financial Institutions who have a hand in Directing the Federal Reserve have the Best seats in the house when the money Printers are switched on the banks are The most widely represented group among The directors of The Reserve Bank Branches as such they are well Positioned to communicate their concerns Through organs like the federal advisory Council for example and just in case Central Bankers needed another reason to Listen to the demands of large financial Institutions there's always the good old Revolving door if you don't know what

I'm talking about let's take a look at The career trajectories of a few of the Central Bankers who shape are monetary Policy take mvin King for for example While serving as the governor of the Bank of England he publicly called Bankers and I quote incompetent and Greedy but after his term ended he Quietly took up a senior advisory role At City Group where he has now been Collecting a paycheck for the last eight Years more recently there was the case Of yan isan smid leading Economist Working on the monetary policy strategy At the European Central Bank after 14 Years at the ECB he jumped ship and Almost immediately started a new job at Morgan Stanley heading up the coverage Of European economics then there was Axel Weber the former Chief of Germany's Central Bank who subsequently chaired UBS and who could forget Ben Bern an the Former Federal Reserve chairman himself Serving on the board of Pimco alongside Jeanclaude trette his former count apart At the European Central Bank anyway that Was the world we ended up in after the 2008 financial crisis but when the Pandemic hit the Federal Reserve really Did say run it back turbo and crank that Money printer all the way up to 11 as a Result the amount of money circulating In the US doubled in 2 years rising from 3.2 trillion in September 2019 to $6.4

Trillion in September 20 21 the large Scale asset purchases returned with Gusto and between March and April 2020 The FED bought two trillion doll worth Of bonds and mortgage back Securities in January 2020 the fed's balance sheet Showed assets worth 4 trillion but by March 2022 this had more than doubled to Almost reaching $9 trillion this means That since 2008 quantitive easing Policies literally 10x the Fed Portfolios this was great news for Everyone who got to sell their bags to The Federal Reserve much of the proceeds Went into the stock market and in the 12 Months leading up to May 2021 the amount Of the wealth owned by the wills Billionaires Rose from 5 trillion to $12 Trillion in what has been called the Largest transfer of wealth in history And like after the 2008 financial crisis There was some grumbling from the naying Taxpayers who now have to bear the risk And front any losses from the FED Hodling trillions of dollars worth of a Liquid and risky assets there's just no Pleasing some People now all of this money Printing And asset buying sounds like the same Playbook as the financial crisis however Now that the financial crisis exists as A historical precedent everyone knows The FED is willing to Aid certain groups In times of Crisis this means that the

Benefits of lobbying the FED for credit Access and financial support were Substantially higher than they were in 2008 and this time around the FED Dramatically widen the range of groups It was willing to support as part of its Pandemic response the FED actually began Lending directly to State and Municipal Governments this was done through the Municipal liquidity facility through Which the FED actually committed to buy Up up to $500 billion do in notes from Local governments that are tied to to Future tax revenues as one 2020 study Puts it and I quote the FED policy has Opened the door for private and state Organizations to plead their case as to Why they are most in need to receive Benefits from the central banks Q Policies we could keep going but well You get the idea monetary policy in the United States is now in Uncharted Territory and organized interest groups In the private and public sectors are Waiting like vultures for the next time The money printer is wheeled out now we Have all seen what this thing can do Everyone wants to be the next contr Trillionaire the Cel on effect tells us That money printing benefits certain Groups and imposes losses on others as We've seen the biggest winners are Usually quite obvious they know who they Are they know what they want from

Monetary policy and they can and will Organize and excert influence over the Central Bank unfortunately when it comes To the losers it's not so Straightforward the losses are dispersed And can be difficult to identify and This doesn't buod well for said losers In this equation it's not easy to Identify who the late receivers of newly Created money are because well we Haven't managed to put the economy on The blockchain just yet no seriously in The real world we can observe positions In a chain of Transactions so how would we know who The last person to touch the new money Is plus as money is one side of every Exchange the impacts of changes in the Money supply are very broad once the Effects of inflation have set in trying To trace the origin of your financial Wes back to specific Central Bank Policies would be like trying to untie a Massive knot and if you can't identify Monetary policy as something that has Harmed you then you're unlikely to play Role in its formation like the winners Of the counter on effect do as a counter On effect loser organizing Collective Action and pressuring the government Requires more information than is Available to us and it's this Informational asymmetry between the Winners and the losers that enables this

Cycle to continue as infin item now all Of this might sound a little pedantic Andure to identify who loses when new Money is created perhaps we don't need To literally find the the last person Who gets to touch it instead maybe we Can just look at wealth inequality the Whole time central banks have been Conducting this experiment in quantitive Easing wealth inequality has been going Parabolic the Will's billionaires more Than doubling their wealth in a single Year during the pandemic well that just Says it all doesn't it and if money Printing by central banks is to blame For increasing inequality then we can Conclude that basically everyone who Isn't rich is a loser of the Cel on Effect the rich and the powerful Entities close to the money printer win And literally everyone else gets screwed By inflation simple right well in recent Years many academic Studies have Investigated the relationship between Monetary policy and wealth Inequality you might be surprised to Learn that it's failed to produce a Consensus One literature review published by the Journal public choice in 2023 they found that and I quote Studies Have varied dramatically with respect to Their conclusions with some saying that Quantitive easing has increasing

Decreasing heterogeneous ambiguous and Negligible effects on inequality the Growing literature on this topic seems To have failed to identify a systematic Effect between monetary policy and Inequality quality based on all of this Disagreement another researcher Concluded that and I quote the sheer Number of channels suggest that the net Redistributive effect is specific to Each economy and even the specific type Of monetary policy action undertaken by A central bank if we accept that there Is no single answer to money Printing And income inequality we might be better Off moving from a global view to a Granular one in other words rather than Trying to to discover some general law Of Economics regarding money Printing And also inequality we should just ask In each country who exactly is making The decisions how and what their Interests are in this video we've looked At the American context because the Federal Reserve is the most obvious and Consequential example of a central bank Printing massive amounts of money but The fact is the forces that shape Monetary policy vary quite a lot from Place to place to see what I mean let's Check out the European context we know That the European Central Bank creates Monetary policy for the Euro Zone but Did you know that National central banks

Are pretty much free to print their own Euros they can do this in the course of For example providing refinancing credit To local banks or buying more assets by The logic of the celon effect this makes Losers of other members of Eurozone Countries who have to deal with the Consequences of more money being issued To see what I mean just look at the Change in the money supply in the Euro Zone from the 2000s from 2001 to 2008 it Increased by 60% in Germany while in Spain it shot up by more than 150% so here you have different Countries printing the same money Turning each other into losers The Economist Philip Bas described this as a Form of monetary imperialism and I quote Where Banks and governments in southern Countries produce money that Germans had To accept meanwhile the winners of this Money creation varied from country to Country in Spain newly created money was Injected into real estate in Ireland it Went into the financial sector and in Greece it was used to increase the size Of the public sector I could keep going But I think you get the point the Council effect takes on an entirely New Dimensions in Europe there is a totally Different story unfolding over there now It is true that whatever the Federal Reserve does has a knock on effect for The global economy but for those of us

Outside the US that doesn't mean that Our own central banks doesn't have a Huge amount of power over the money in Your bank account so if you want to know Who wins and who loses when the money Printers in your country are switched on You probably should start investigating What your country's Central Bankers are Getting up to monetary policy might not Sound very exciting but if your central Bank is making you a loser wouldn't you Want to know about it if so then do ask Who has the power to shape monetary Policy where I live and who is first in Line to get their hands on the new money But also maybe don't stress about it too Much the sad truth is the cancelon Effect is not going to disappear any Time soon there is always going to be Somebody who gets to spend new money First somebody who's last and Unfortunately someone who never even Gets to see it okay I mean technically You could get rid of the Cel on effect If you distribute all new money Simultaneously through a universal basic Income so that nobody is first or last But whether or not that's a good idea is A whole different conversation for Another YouTube channel you can leave us Out of that one as long as we have to Live with money printers in central Banks picking winners and losers we Should keep ourselves informed about

Monetary policy even if it is a little Bit boring the more informed you are the Better you able to identify your place In the packing order and complain if you Suspect the money printers are turning You into a loser but as for our Prescription well you already know self- Custody of one of the greatest forms of Money that there is decentralized Permissionless peer-to-peer there are no Bankers or politicians there are no Monetary policy no lobbying and Certainly no quantitive easing the Ticker begins with a b and ends with a c That's right all you need now is a good Hardware wallet and you know where you Can find one of those for a very nice Price might I add the coin bu deals page Right well that is all for today folks If you have a different theory about the Money Printing and the cancel on effect Please let us know in the comments if You learn something roundhouse kick that Like subscribe and Bell notification Buttons that way more people can see This video and you'll be first in line To see the next one I mean you wouldn't Want to be last in line now would you Well thank you all so much for watching This is Jessica signing off A [Music]