The Cantillon effect: "the first ones to receive the newly created money see their incomes rise, whereas the last ones to receive the newly created money see their purchasing power decline as consumer price inflation comes about." https://mises.org/library/how-central-banking-increased-inequality … https://en.wikipedia.org/wiki/Richard_Cantillon …
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People often forget how important the mechanisms by which this money gets into the system are.
Macroeconomics is the art of ignoring the obvious in favor of belaboring the hopelessly speculative with pseudo-scientific math and pseudo-Greek prose. The Cantillion effect is one of the very obvious things that they very artfully ignore.
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No it’s easy. You just hit the ‘Increase Aggregate Demand’ button then sit back and watch the GDP roll in. Problem solved
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Bears about as much resemblance to the actual financial institutions as chess does to a medieval battlefield.
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Macroeconomists don't ignore the Cantillon effect at all. We teach this all the time in Principles of Macro and Intermediate Macroeconomics, thought not by the name "Cantillon."
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To me, the Cantillon effect is a good reason we should have higher reserve requirements: so that the Cantillon insider is the government, spending (sometimes, of course, badly) on behalf of everyone, instead of the insider being a bank.
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On the behalf of everyone...na I'll pass. I'm well aware where they do spend my money. Not interested in more wars and bail outs and systemic debt.
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Macro is comically easy if you don't do that. However, you can't even pretend to give nice quantitative predictions about when things will go to hell.
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Macro is -too- easy, it's not difficult enough to impress your friends if you're doing it right. And what's even the point of being an academic if your friends aren't all terribly impressed with how smart you are, right guys?
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the inflation rate, is probbaly the most gross example, put all products in one basket and calculate the average increase voilá! no inflation!
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Could be truth.
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