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
Inflation is how government robs money from taxpayers. For example, wage earners put good money into Social Security and 50 years later take out inflated money that has reduced purchasing power. A $321 average Social Security check in 1980, adjusted for inflation, should be $7529. Instead the average Social Security check is ~$1543 today.
Zang notes: “Wealth never really disappears; it just shifts location.”
What will the FED do?
What is the Federal Reserve Bank to do? It has already lowered the base interest rate to near-zero percent in an attempt to get Americans to spend rather than save. Or is the FED driving inflation in an intentional attempt to crash the economy, bring it to its knees, so it can usher in a new system?
Or is the FED driving inflation in an intentional attempt
to crash the economy, bring it to its knees,
so it can usher in a new system?
Lynette Zang, chief marketing analyst for a precious metals trader, answering questions at an online investment platform (YouTube, posted March 22, 2021, 22-minutes) says the US has already begun to shift into a completely new system. The system died in 2008 and was only put on life support, she says. The FED is about ready to lose control of inflation, maybe by plan.
Zang provides evidence the Federal Reserve bank is quietly attempting to introduce a cashless society. That is a stated objective of Klaus Schwab’s 4th industrial revolution or “Great Reset” emanating from the World Economic Forum in Europe.
Zang say the FED is planning to quietly introduce a cashless monetary system that is an 18-step plan outlined by the IMF. The FED wants to distance itself from this conversion to digital money however. The FED uses retailers to do their job for them.
Many retail stores snow post signs that state: “NO CASH – credit and debit cards only.”
Zang quotes an International Monetary Fund (IMF) Working Paper that advises how to get the public to voluntarily give up their cash and replace it with digital money. It appears bankers have been planning this since at least 2015 (see date on IMF report below).
As an aside, now China is providing incentives to their citizens and retailers to use digital money. Chinese people have received a free round of digital currency in lotteries to spend anywhere as an inducement to begin using this electronic money. Thousands of merchants signed up to receive the digital money. For now, merchants pay zero transaction fees.
She explains that in 2008 with the collapse of the lending/banking system, the FEDERAL RESERVE simply applied a band aid and never fixed the fundamental problems. Banks kept interest rates inordinately low at the expense of savers who only gain less than 1% on their banked money.
The FED took a pile of non-performing home loans off the accounting books of the banks and put them onto its own ledger. Then it later sold off some of those homes to their banker buddies at a discount. Instead of bailing out home owners, it chose to bail out the lenders.
Prospective homebuyers can still qualify for a mortgage with low interest loans that simply creates a housing bubble (propped up demand). And now that interest rates are about to go up, there is yet another rush to buy homes before interest rates rise, making the bubble even worse.
The FED needs real-time data
Lynette Zang talks about a lag time between when the FED issues a new policy and when the FED acquires data to assess the outcome of that new policy. With paper money, she says, it takes the FED ~18 months for money in circulation to show the FED what is really happening, whether consumers are spending or not.
It takes 18 months for their policies to wind through the commercial banks with paper money, but with digital money they can immediately gauge how their monetary policy is doing. Then the FED would have real-time data to determine consumer spending habits.
Real time surveillance of spending
Government will know in real time how much money you are spending and what for. Government will know if you just dropped a dollar into the collection plate at church and deny the digital dollar payment because the church is branded as an organization that is “racist” or “hateful,” or “terrorist.” It can deny payment on any products that are not sustainable under the New Green Deal agenda. Or just maybe your digital bank account will be frozen if you don’t vaccinate. But will it deny payments for cigarettes or other unhealthy purchases?
Creating consumer spending at a time of uncertainty
But uncertainty, caused by the FED, is driving savings, not spending, says Zang. Government can’t spread the contrived fear of a pandemic and expect the public to go out shopping for lingerie, sporting goods and other self-indulgent spending sprees when the TV set blares about people dying of a mutated virus.
IMF 2015 How to break below the zero lower bound
Zang says the purchasing power of the US dollar today, relative to when the FED created the current monetary system in 1935, has eroded to almost zero (ShadowStats.com inflation calculator; $100 US in 1935 only has a purchasing power of $5.30 today.) Therefore, the FED now only has the principal amount (the amount of earned money deposited) to stir up the economy and get consumers to buy stuff.
What that means is, in order to coerce savers to spend, it will employ negative interest rates on banked money. In other words, savers can’t just park their money in the bank. If they don’t spend, they will see their savings erode.
Transparent savings accounts, corrected for inflation
Zang predicts the FED will usher in an era of greater transparency. Savings accounts will have totalizers attached to reveal how inflation is slowly eroding their savings. That would get savers to run out and spend money, hopefully on something durable.
The new digital money: use it or lose it
Says Zang: “There is no purchasing power value left in the US dollar. Bankers have to attack the principal amount (hard deposited money), so the bankers have to use negative interest rates to get consumers to spend. To do that we have to go to a full-surveillance economy so they can “nudge” (bankers’ words) everyone to go in the direction they have planned…. the reset.”
The FED can also coerce Americans to gravitate to digital money at retail stores by charging a small fee when paper money is used over digital money. Or maybe even issue an expiration date on digital money.
Transparent banking: now you can see your $$$ eroding away
In the new transparent banking plan, savers would view the balance on their bankbook in terms of inflation and see their money eroding in value. They would begin to spend instead of save. But Zang asks: “Isn’t this the fuel for hyper-inflation?”
Once there is demand for consumer goods and services, retailers raise their prices.
Soft introduction of universal basic income
Zang says the current stimulus bill is akin to the Universal Basic Income (UBI) concept. It is being ushered in under the Childcare Tax Credit by starting to send a monthly check.
Yet what the FED fears most is deflation. The hallowed stock market must perpetually rise for the wealthy. And Zang says there is only one way to fight deflation — inflation.
Remove all debts, but also eliminate all ownership
Zang says the globalists have to remove all value, get rid of all of the debt. That may mean all debts are cleared, but then no one owns anything. Which is why Klaus Schwab’s World Economic Forum out of Europe proposes the abolishment of private property and private enterprise. No one will own anything and everything will be rented. What you owe on your home mortgage will be forgiven, a kind of Day of Jubilee, in exchange for loss of privacy and control of your own life.
Get outside the monetary system
Zang says it is more important now to own physical gold and silver. These metals are used and recognized globally. One hundred percent of the time there is always demand for gold and silver.
Zang asks herself: “Am I going to buy stocks or investments with counter-party risk? No.”
She advises everybody to be as independent and self-sufficient as possible. Her mantra: food, water, energy, security, barterability (silver), wealth preservation (gold), community and shelter.
Why gold and silver prices don’t reflect their real value
Zang refers to a Bank of International Settlements report which reveals for every one physical ounce of gold there are 62,000 ounces of digital gold that do not exist. That is all leverage (gold bought on margin, or borrowed money). This is called paper gold.
Gold and silver coins are undervalued, purchased at the speculator’s manipulated low price (~$24/oz for silver, ~$1700/oz. for gold as of March 31, 2021). Physical silver and gold are scarce, are in great demand, there are reported shortages, and therefore warrant much higher resale prices than the quoted spot price.
Another financial sleuth
Another online financial sleuth is Maneco64 who echoes Annette Zang’s assertions, that the Federal Reserve Act of 1913 has destroyed the purchasing power of the dollar and has crushed the poor and middle class. New money flows through the rich, the bankers, government contractors, then to the masses in a debased form says Maneco64.
“The only thing the FED has done well is create inflation,” says Maneco64.
My paraphrased notes from Maneco64’s recent YouTube presentation (March 31, 2021):
Maneco64 says if he won a $50 million lottery, he would take 99% and buy land, properties, gold and silver, hard assets.
Referring to the manipulation of gold and silver prices by the bankers, MANECO 64 believes the increased demand for precious metals cannot be hidden much longer. “I think we are close to a juncture where they can’t do this anymore,” he says.
MONACO64 (at 10:22 mark on YouTube) says he saw a statistic stating in the first three months of 2021 the US Mint has sold more gold Eagles (401,500 oz) than the whole of 2018-19 (397,500 oz).
The COMEX, a division of the New York Mercantile Exchange that trades futures in metals such as gold, silver, copper and aluminum, is really a criminal outfit that he calls CRIMEX.
A rising price of silver at a time when public and private debt is rising is a death knell for the bankers, Maneco64 notes.
Sue the FED
Two volunteer watchdogs, George Gammon and George Barnes, are so irate over what the FEDERAL RESERVE is doing they are attempting to sue the FED under the Freedom of Information Act and audit the FED. They are raising funds at GoFundMe.com.
This idea of suing the FED emanated from the FED violating laws and getting away with it. The Law (The Humphrey-Hawkins Full Employment Act) mandates the FED, via Congress, create full employment and stable prices. Yet the FED is boosting Wall Street and the financial classes at the expense of the middle class.
Gammon and Barnes say a perfect example of this was in March of 2020, the Federal Reserve overstepped its boundary and explicitly broke the law, side-stepping the Federal Reserve Act of 1913 to buy corporate debt from Zombie companies via SPV (special purpose vehicles). However, as a result, corporations now have more debt than ever before, making the economy weaker.
The poor and middle class end up paying the price for the Fed ignoring the law, creating INFLATION, while the financial insiders and politicians get richer due to the Cantillon Effect.
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