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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(Nick, Let me know if these replies are unwanted...don't always mean to be devil's advocate) But figured i'd post a counterpoint Would be curious of other people's thoughts (Sumner argues ending "too big to fail" but keeping NGDP growing at 5%/year)https://www.themoneyillusion.com/it-really-really-really-doesnt-matter-who-gets-the-money-first-part-2/ …
Pathological on so many levels. Give government employees more salary, but those employees won't gain. Apparently only thing central banks buy are perfectly priced gov bonds, don't need to discuss any other Cantillon beneficiaries. WTF?! Malicious dishonesty via obscurantism.
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I think he'd def agree re:gov't employees salaries (Sumner is fairly libertarian) -but re: bankers getting rich..he does think bonds are priced about right (Fed hasnt bought material amt of bonds since QE3)- If I sell bond to govt for $, do i benefit? crux=are bonds priced right?
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Who knows what he actually believes. I was just paraphrasing the whacky, obviously wrong things he said.
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Right, but if Cantillon Effect was playing a big role, Sumner would argue: "then why did rates RISE on news of new QE?" (as they did with QE1-3) Those rise in rates (drop in bond price) would HURT the rich bankers who were trading with the Fed, no? https://www.themoneyillusion.com/interest-rates-and-the-facevase-problem/ …pic.twitter.com/iIhkYNHgmV
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Tons of things can cause rates to rise. It's a multicausal world.
End of conversation
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