Cantillon Effect: Are You Being Harvested or Do You Know the Rules?

Let's talk about why prices always rise faster than wages.

The reasoning is actually quite simple.

Newly printed money never falls evenly on everyone like rain.
It flows into the market through the credit system.

The process goes like this:
First, banks receive the money.
Then, people with collateral borrow the money.
Next, asset prices are pushed up.
This leads to higher prices for consumer goods.
Finally, your wages are increased.

By the time your income finally "catches up," the money in your hands can no longer buy as much as before.

And the really interesting part is here.

Many people think only the Federal Reserve (the U.S. central bank) can print money.
But in reality, most of the liquidity in the market is created by commercial banks through lending.

The first-tier players are not some elusive "core circle."
They are big banks like JPMorgan Chase, Bank of America.
Maybe even the bank that issues your paycheck.

Then, the game begins to operate:

→ Banks create money out of thin air through lending
→ People with assets use collateral to borrow
→ They use the borrowed money to buy assets at current market prices
→ Asset prices are driven up and start rising
→ After a while, the prices of everyday consumer goods also increase
→ Finally, workers' wages are passively raised

Data also confirms this:
The top 10% of the wealthiest hold nearly 90% of stocks.
Meanwhile, the bottom 50% own only about 1% of stocks.

But here’s the most critical and easily overlooked detail:

Almost everyone is eligible for a loan.
The difference is, what you buy with the loan.

Most people borrow to buy depreciating assets:
Cars, furniture, various consumer goods, or simply max out their credit cards.

Whereas those at the top of the food chain borrow to buy appreciating assets.
Then, they use the increased value of those assets as collateral to borrow even more.

Collateral becomes more valuable.
Debt is diluted by inflation.
Assets grow faster than anything else.

The rules are the same.
Banks are the same banks.
The gameplay is the same.

But the results are worlds apart.

The Cantillon Effect is not some "fate" happening to you.
You are already part of this game.

The key is, which side are you on in the bank credit game?

Understanding this won't change the world.
But it can change your strategy.

From here on, that’s when you start playing the adult financial game.