Have you ever wondered why giving free resources doesn’t always help everyone equally?

The answer lies in something called the "Cantillon Effect." To learn more about this, like and comment.

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Imagine the government announces a scheme to provide subsidized fertilizers to help farmers improve crop production. At the time of distribution, the big farmers and agrobusinesses with better connections get these fertilizers first. They stock up in large quantities, use them early, and even sell the excess later at higher prices

Meanwhile, smaller farmers, especially those in remote areas, receive the fertilizers much later. By the time they get their share, stocks might already be limited, and prices of other essentials like seeds and transport have risen due to increased demand created by larger farmers. As a result, the smaller farmers can’t fully benefit from the subsidy, while large farmers reap most of the benefits.

So, what’s the real issue?

The Cantillon Effect shows that the same principle applies to money. When new money is printed, it first reaches banks, big corporations, and government agencies. They use it before inflation hikes the prices. By the time the money trickled down to civilians, especially to those at the bottom of the pyramid, prices had already risen, and their purchasing power had decreased. Instead of fixing economic problems, printing money often widens the gap between the rich and the poor.

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