We are all in service to a money system based on simple injustice. It floods rich people with money taken from the poor. Money is created out of nothing for those who already have lots, and who know how to make more.

The system is not only unjust, it is also extremely bad for our world. It favours the insatiable and those with no sense of morality. Inequality becomes massive. Citizens who chase money without any consideration of the harm their activities do are given power. The outcome is our world today.

The longer we put up with this injustice, the shorter will be our time as a species on Earth.

For centuries people have known this. Opponents of the system are those who know and refuse to take advantage from it; but most of those who know do take advantage of the opportunities the system presents.

The facts of the system are known and described by critics from ancient times to the present day but they are not widely disseminated, for reasons that are obvious. The most obvious of these reasons is that if the system is to remain profitable, they must not be widely talked about.

The facts can be described in simple or in complex terms. Here I try to describe them as simply as possible.

Today, money creation is not complex. Gone are the days when money was gold or silver: today, a government or a bank creates debt from nothing, and the debt becomes money.

Laws authorise this debt being passed from person to person. If I have money, a bank owes me the amount. As the debt changes hands, so money passes from one person to another.

The money is an entirely theoretical debt from the government or the bank to the owner of the money—often in huge amounts. The process is profitable to borrower and lender.

The unjust laws that make this possible favour the rich, and also those who want to become rich.

If you borrow money from a bank or a government, you are NOT borrowing money deposited earlier by someone else (as we are taught at school); you are getting newly created money.

Poor people, on the other hand, borrow to stay alive—and their debts increase. As more and more of the world's money gets owned by the world's billionaires, it gets harder and harder for poor people to pay off their debts.

This is destructive for many reasons. Huge power goes into the wrong hands—ownership by people who are ruthlessly greedy. This gives rich people more money and makes poor people poorer.

This way of creating money has been used for centuries on-and-off and it has always resulted in huge and ever-growing inequality.

Recently, it has been adopted to concentrate power in the hands of those who are already powerful.

In the past, remedies were used to reduce the inequality, but today the inequality is carefully managed, and maintained as a power-source for the ruthless (or thoughtless) and greedy. The system creates oligarchies throughout the world.

Economists tend to skirt round these facts out of simple human self-interest, because economists are mostly employed by the powerful.

Of course, some economists are honest and straightforward; for instance, Michael Hudson writes:

The Cantillon Effect describes a simple but powerful reality: newly created money does not reach everyone at the same time. Try our Cantillon Simulator

Those closest to the source of money creation receive and spend it before prices rise, while those further away face higher costs before their incomes adjust.

Named after eighteenth-century economist Richard Cantillon, the concept challenges the common assumption that money creation affects all participants in the economy equally.

Instead, the path that new money takes determines who benefits and who bears the costs.

Newly created money does not arrive everywhere at once. Those who receive it first spend it before prices have fully adjusted, while later recipients experience the effects of rising prices.

In modern economies, new money is typically introduced through central banks, commercial banks, government spending, and financial markets.

The first recipients—large financial institutions, governments, major corporations, and asset holders—gain access to additional purchasing power before inflation spreads throughout the economy.

They can buy stocks, real estate, businesses, and goods at yesterday's prices.

As this new money circulates, demand increases and prices begin to rise.

By the time the effects reach wage earners, retirees, and savers, the purchasing power of their existing income and savings has often declined.

While they eventually receive higher wages or benefits, these increases frequently lag behind rising living costs.

The result is a redistribution of wealth. Those closest to money creation enjoy the greatest advantage, those connected to them benefit next, and those furthest away bear the burden through higher prices and reduced purchasing power.

Modern monetary policy enables the Cantillon Effect, which many economists argue helps explain rising asset prices, growing wealth inequality, and the widening gap between financial markets and the everyday economy.

Understanding the Cantillon Effect encourages us to look beyond headline inflation figures and ask a deeper question: who receives newly created money first, and how does that influence the economy?

The Cantillon Effect suggests that the path newly created money takes can influence wealth, prices, and opportunity throughout the economy.

Consider how the sequence of money creation might affect different groups in society, then compare your conclusions with those of other members in the discussion forum.