In the 18th century, this meant that the closer you were to the king and the wealthy, the more you benefitted, and the further away you were, the more you were harmed. His basic theory was that who benefits when the state prints a bunch of money is based on the institutional setup of that state. “If there’s money for the entire economy, why is that normal people and small businesses can’t access unemployment insurance and lending programs?”Īn 18th-century French banker and philosopher named Richard Cantillon noticed an early version of this phenomenon in a book he wrote called An Essay on Economic Theory. Eventually, some money will get to the rest of us, but in the interim period before that money fully circulates, the wealthy can use their access to money to buy up physical or financial assets. The reason is because money has to travel through institutions, and right now, the institutions for the powerful function well, and those for the rest of us are rickety and broken.
If there’s money for the entire economy, why is it that normal people and small businesses can’t access unemployment insurance and lending programs? To put it another way, why is the money meant for everyone only showing up in the stock market? There’s a “monetary bazooka” aimed at the economy. The reason the stock skyrocketed is because investors believe the new measures from the Federal Reserve will bail out the debt of this private equity fund. So what has happened so far? This is Thursday’s change in the stock price of a real estate venture run by one of largest private equity funds in the world:Ī thirty-five percent jump in a day is… a lot. Last week, the Federal Reserve built on top of Congress’s framework, announcing yet another multi-trillion dollar set of facilities, on top of what it already put out, to help cities, states, small businesses, main street businesses, and so on and so forth. Supposedly, it was money for a host of stakeholders, including hospitals, states, Wall Street banks, Big Business, the unemployed, and small businesses. Three weeks ago, the government passed a giant multi-trillion dollar bailout. The same is true today, with the Fed’s anti-pandemic liquidity measures benefitting hedge funds and private equity firms first.
According to the 18th-century French banker and philosopher Richard Cantillon, who benefits when the state prints money is based on its institutional setup.
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