Can Bitcoin save you from the dreaded Cantillon Effect?

In 2025, the 10 richest US billionaires gained nearly $700 billion in wealth over the course of the year, according to Oxfam.

To put that in perspective, 1,000 Americans working for 32 years earn as much as these billionaires make in a single day.

The rich are getting richer, and the poor are getting poorer. Over the past four decades, the wealthiest 1% of Americans have seen their average yearly income skyrocket to $731,492, while those in the bottom 20% have barely moved at just $33,000, US statistics show. 

Inflation is one part of that equation. Over the past five years, while the consumer price index is up 24.3%, real average US hourly earnings are actually down 0.1%, meaning wages haven’t even kept up with inflation. 

There are many reasons for the widening gap between rich and poor, but one of the major contributors was identified 300 years ago, long before the US Federal Reserve even existed.

It’s a theory called the “Cantillon Effect,” devised by an Irish-French economist named Richard Cantillon.

“In a fiat system, the money creation inflates asset values via the Cantillon effect,” explained Thomas Fahrer, the co-founder of Apollo Sats on X . “Capital wins and workers become debt slaves.” 

Here’s how it works. 

What is the Cantillon Effect?

In simple terms, the Cantillon Effect is the theory that when new money is introduced into a system — like when the Fed’s money printer goes brrr — it is distributed neither equally or simultaneously.

Instead, it mostly benefits those who get the money first as it allows them to spend it before prices rise via inflation. By the time it reaches everyone else, a large chunk of those early-spender advantages has vanished. 

Imagine an isolated town that discovers a new gold mine, which suddenly introduces new wealth into its economy. In “Essay on the Nature of Trade in General,” Cantillon suggests that when this wealth enters an economy, it doesn’t spread evenly or quickly. 

“The river, which runs and winds about in its bed, will not flow with double the speed when the amount of water is doubled,” wrote Cantillon.

Instead, the wealth is initially concentrated among the owners of the mine and those who work there, such as miners, smelters and refiners. 

Their households will consume more meat, wine or beer than before, explained Cantillon. They’ll wear better clothes and have more “ornate houses and desirable goods” all bought at  “normal” market prices.

This gold-mine wealth then flows to the artisans, chefs and tailors who supply these fine products — and as a result, they start to increase their prices due to higher demand.

From there, it hits the next layer — the farmers who supply the livestock or silk producers, for example — and it keeps going on from there until it eventually hits the furthest reaches of the economy, like a housemaid or a stablehand. 

The kicker is that people in every layer are exposed to a period of price increases before their own wages rise. The ones furthest from the gold mine (which was the initial source of the new money in this example) will feel the longest stretch of inflation before their wages can catch up. 

And this effect is even more relevant today than it was when Cantillon wrote his thesis in the 1700s. The gold mine isn’t producing the new money, it’s the Fed’s digital “money printer.”

Cantillon Effect in the modern economy

An economy is pretty hard to keep humming along. 

Central banks “print money” on occasion to keep the economy flowing, such as by increasing liquidity, influencing interest rates and supporting financial stability during crises.

There’s no functional limit on how much new money supply they can create, either. Some countries, like Zimbabwe and Venezuela, have seen hyperinflation after excessive money printing. 

How this new money enters the system matters, though. When a government decides that it needs to inject more money into the economy, one way it does this is by buying short-term Treasury securities from banks and individuals in the open market using money they conjure up with a few keystrokes.

That money increases liquidity in the financial system,…