🏛 [Analysis] How central banks increased inequality – Louis Rouanet

The rise in income inequality over the past 30 years has to a significant extent been the product of monetary policies fueling a series of asset price bubbles. The redistributive effects of money creation were called Cantillon effects, which means that the first ones to receive the newly created money see their incomes rise whereas the last ones to receive the newly created money see their purchasing power decline as consumer price inflation comes about. Under modern central banking however, money is created and injected into the economy through the credit channel and first affects financial market, making commercial banks and other financial institutions the first receivers of the newly created money. This increases their wealth and income inequality.