How The Nation’s Central Bank Is Covertly ‘Nudging’ Americans To Accept Digital Money & The Great Reset
Ever heard of the Cantillon Effect? Neither had I.
It is what is happening right now in America, and it reveals that the primary objective of the nation’s exclusive distributor of money, the Federal Reserve Bank, is to boost the value of wealthy people’s incomes at the expense of the poor, which is why the rich get richer and the poor get poorer in America today.
First, a reader needs some backgrounding before wading through all the financial gibberish found online.
The status of the American economy is determined by how much Americans spend versus save. Consumer spending accounts for roughly 70% of US economic growth. If Americans are saving or paying down their credit cards rather than buying stuff, the economy falls flat.
To understand the Cantillon Effect (named after 18th-century economist Richard Cantillon), which explains that a change in the supply of money results in a change in prices, one must also understand, that in periods of inflation (what is happening today) consumer goods cost more, while in periods of deflation, consumer goods are more affordable as prices fall. The nation’s central bank, the Federal Reserve, fears deflation (stuff becoming more affordable) far more than inflation (stuff costs more to buy).
Also, the Cantillon Effect explains that money is first distributed to the financial classes, bankers, government, etc., and then the masses. As money ripples through the economy, its value is inflated away. The first people to receive the money do not experience the inflationary (loss of purchasing power) that the last people to get the money do.
The wealthy benefit from inflation as the value of their assets (property, investments) rise. The poor benefit from deflation because necessities are cheaper to buy, effectively giving them what they perceive as a pay raise.
Also, in periods of credit expansion, the poor borrow much like receiving a pay raise. For the wealthy, the stock market is their playground; for the poor, lottery tickets may be their only opportunity to get ahead financially.
Says INVESTOPEDIA (paraphrased and simplified for those readers like me who have a difficult time understanding all the financial lingo):
The current situation in the US can be explained as biflation. During biflation there is increased demand for certain assets and weak demand for others. Suddenly prices rise in one part of the economy and fall in another, giving the appearance of a mixture of inflation and deflation, or biflation.
An expanded definition of the Cantillon Effect is a type of biflation which happens during a period of debt deflation — when money has more and less purchasing power at the same time.
But in this out-of-the-ordinary case, productivity in the US is in steep decline as millions are added to the unemployment rolls, and consumers are flooded with free stimulus money but elect to “spend” by paying off debts or saving (which is the current situation in the US), that results in a recession.
Savings up, spending down
The US personal savings rate has skyrocketed to a record 32.2% in April of 2020, up from 12.7% in March, while consumer spending declined by 12.7%. The previous record savings rate was 17.3% in May of 1975 when rising gas prices, the Vietnam war and a Wall Street crash were in play. Over the past ten years the savings rate has averaged 6-8%.
The helicopter drop
When the central bank pumps money into the economy, or the federal government just does a “helicopter drop” of cash as it is doing now, this is an attempt to get consumers to buy stuff. But a look in most Americans garages reveals most Americans have over-consumed. They have a lot of stuff they almost never use, including some high-ticket items like boats and motor homes.
In handing out free money to the unemployed, workers are being paid NOT to work. And being paid more than they earned on their job. This will decidedly shutter the retail shops they work at. There will be no jobs to return to. Workers don’t get it. The government is crashing their jobs for good.
Because of all the free money, the economy is a farce
The nation’s Gross Domestic Product (GDP) has become a farce. It is now a measure of welfare rather than productivity.
In the current situation where pandemic stimulus money is being created out of thin air and being distributed to the masses directly, as citizens use the newly created stimulus money to purchase commodities (food, gasoline, other necessities), or worse, pay down debts or stash it in savings, there is little or no impact upon the consumer economy (buying household appliances, autos, houses, etc.).
But here is the irony. Should the masses elect to spend their money on consumer goods, as demand rises, prices and therefore inflation will rise, crushing the middle class and the poor into greater depths of financial turmoil.
The central bank’s effort to stimulate cannot only fail, but instead can result in a rise in the cost of living as prices of raw materials and necessities may rise due to increased demand.
A recent survey shows 77% of Americans are concerned about soaring inflation.
Inflation: a hidden tax on income
Article from LewRockwell