How the rich get richer, what it means for you, and why cryptocurrency could be the answer




The Cantillon Effect is arguably the most important economic concept you’ve probably never heard of. In this article, I’d like to change that.


Here’s a simple breakdown of the Cantillon Effect which effectively explains how the rich get richer, but although this is might be a little depressing I'll explain why crypto could be the answer.


Background


Richard Cantillon was an Irish-French economist and philosopher who was born in the 1680s.


Although he is somewhat of an enigma as not a lot is known about his life, what is known is that he was a successful banker and merchant. According to historians this success can be attributed to the political and business connections that he made through his family and an early employer.


Although Cantillon was able to acquire great wealth by speculating in, and later helping to fund, John Law's Mississippi Company he learned of the impact and importance of the proximity of power.


He recognised that money has to travel through institutions, which means that money gets to the rich first. Eventually, some money will get to the rest of society, but in the interim period before that money fully circulates, the wealthy are able to use their access to money to buy up physical or financial assets.


Through his life experiences Cantillon wrote about this in a French economics paper titled Essay on the Nature of Commerce in General (Essai Sur La Nature Du Commerce En Général) and it formed the basis of what is known as