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The Cantillon Effect is the reason why many people can’t break away from poverty. Here’s why Bitcoin is a perfect antidote for the Cantillon Effect.
Governments and central banks can make unprecedented moves to increase wealth for the rich and make vulnerable even poorer. And the Cantillon Effect hides behind this possibility. Luckily, Bitcoin can be a perfect antidote for such an eventuality.
Most people that have researched or invested in Bitcoin agree that this virtual currency prompts them to think more critically than ever before. Most people want to check everything and get at the bottom of what they do without assistance.
Consequently, some economic issues seem like an alternate reality. Bitcoin’s magic can prompt you to learn about almost everything that humans associate with money. However, the financial system and monetary mechanisms are ultra-complex. And these govern the world and how most people get rich.
Arguably, governments and central banks make decisions that mainly benefit the minority wealth in society. For instance, if the Fed declares a multi-billion dollar quantitative easing, the program helps a minority group in the community.
And this has always been the perverse impact of the traditional money system. Consequently, wealth inequalities have persisted for years since Richard Cantillon formalized this system in the 18th century.
The Cantillon Impact
According to the Cantillon theory, a state can print excess money knowing the beneficiaries, depending on the state’s institutional infrastructure. In his book, Cantillon explained that people closer to the king and the wealthier benefit when the state prints more money. Unfortunately, this mass printing of fiat money penalizes individuals distant from the ruler and the poorer in society.
The money that a state prints has distributive effects operating via the price system. The Cantillon Effect refers to this general observation.
Bitcoin as the Antidote
While the Cantillon Effect says that the enormous amounts of money that governments print goes to the wealthy, it eventually gets to the poor. However, the inflation that follows such a move penalizes the poor severely. Governments in many countries have benefitted the wealthiest with this massive injection of fiat money. What’s more, the activity has increased wealth inequalities over the years.
Therefore, the poorest members of society may not earn anything from cash savings since inflation reduces their buying power. And that’s where Bitcoin comes in as an antidote. Using platforms like BitIQ, anybody can combat the Cantillon Effect’s consequences. Such platforms enable individuals to purchase Bitcoin with fiat money and use the cryptocurrency as value storage or exchange medium.
Bitcoin presents a quantitative hardening monetary policy, protecting what a person owns. What’s more, this virtual currency has consistently grown in value over time. Hence, you can amass wealth by saving this virtual currency in a digital wallet or crypto exchange.
With Bitcoin, a person can select to postpone their investment decision in a real estate or stock market and wait for inflation to ease or prices to get reasonable. After the money that the government has poured into the monetary system reaches the poor, you can exchange your Bitcoins for traditional currency and then invest.
That way, you protect your value without suffering from currency devaluation like individuals that hold their funds in traditional currencies. Some individuals may argue that gold can serve the same purpose as value storage and protect you from the Cantillon Effect. While this might be true, the poor may not access gold.
Additionally, gold has significant flaws. When compared to gold, Bitcoin has better portability, durability, recognizability, and divisibility. What’s more, Bitcoin is rarer.
Final Words
Bitcoin is a perfect antidote for the Cantillon Effect. That’s because investing in this virtual currency can protect you from government or central bank decisions.
