What is the Cantillon Effect?

PLTR will rise because the government’s money pipeline will go straight to them. [The Rude Awakening] October 12, 2023 [WEBSITE]( | [UNSUBSCRIBE]( What is the Cantillon Effect? - Richard Cantillon was an Irish-French economist who realized money creation distorted the economy. - Here’s further reasoning as to why I love Palantir (PLTR) going forward. - Who gets the freshly printed money first gets to profit and spend, raising prices for everyone else. [Nvidia’s Supplier Reveals “A.I. Crown Jewel”]( A.I. investors…get ready: Because a little-known supplier just received a GIGANTIC order from Nvidia. In short: This supplier is planning to pump out 2,000,000 units of a critical piece of tech which I call… [“The A.I. Crown Jewel”]( [Click here to learn more]( It’s one of the biggest production runs in technology history. And it’s part of the reason why Barrons says this supplier could see $100 BILLION in sales by 2025. So if you want to see how to get in front of this fortune-building wave – before it’s too late – [then click here now](. [Click Here To Learn More]( [Sean Ring] SEAN RING When I explained why I love Palantir stock (PLTR), I didn’t give enough reasoning. Let’s do that today. The same arguments I used to show why banks do well applies to PLTR. Except, and this is the best part, the money goes straight from the government to PLTR. We need to talk about Richard Cantillon, the great Irish-French economist. Cantillon was an Irish-French economist and author of [Essay on the Nature of Trade in General]( a book William Stanley Jevons considered the "cradle of political economy.” That book influenced reams of classical economists like Adam Smith. And his theories hold water to this day. Note: I borrow heavily from a [Rude I wrote on October 21, 2021](. Cantillon effects are worth re-examining. But first, let’s define the term. The Cantillon Effect is the concept of relative inflation or a disproportionate price rise among different goods in an economy. Richard Mayberry, the author of the Uncle Eric books, redefined this as “cones.” Mayberry laid out the concept first in The Clipper Ship Strategy, one of his Uncle Eric books. I can't recommend these books enough if you haven’t read them. All eleven are available from his publisher [here]( much cheaper than you can get them on Amazon. But before we get to Mayberry and his cones, let’s visit an old friend first. Rothbard Eloquently Explains the Process It's not a mystery why the banks are so profitable. Whether you've read Cantillon, Mises, Rothbard, Hayek, or more contemporary writers like Richard Mayberry, they've all pointed to one thing. When a central bank prints money, the first people who get said printed money are the commercial banks. Both central banks and the government then lavish spending on their pet projects. Of course, Wall Street is the Fed’s one and only. The monetary largesse goes there first before The Street places its bets. In his magnum opus Man, Economy, and State, Murray Rothbard lays out exactly how banks benefit at the expense of the rest of us: Credit expansion has, of course, the same effect as any sort of inflation: prices tend to rise as the money supply increases. Like any inflation, it is a process of redistribution, whereby the inflators, and the part of the economy selling to them, gain at the expense of those who come last in line in the spending process. This is the charm of inflation—for the beneficiaries—and the reason why it has been so popular, particularly since modern banking processes have camouflaged its significance for those losers who are far removed from banking operations. The gains to the inflators are visible and dramatic; the losses to others hidden and unseen, but just as effective for all that. Just as half the economy are taxpayers and half tax-consumers, so half the economy are inflation-payers and the rest inflation-consumers. [You’re Invited To A LIVE Zoom Call!]( What: An urgent Zoom call exclusively for Rude Awakening readers. When: Friday, _______ at 10 AM Eastern. Where: Attend right from home via a virtual link. [>> Spots are limited. Click here to see how to reserve your seat.]( [Click Here To Learn More]( Uncle Eric Explains All Richard Mayberry concentrates more on the fiscal side, but the results are the same. Mayberry notes that analysts and economists wrongly assume that the new money printed and the fiscal deficit spending are evenly distributed throughout the land. Nothing could be further from the truth. Instead, money is injected into specific locations, which he calls “cones.” Mayberry writes, "The best way to invest is to look where the government is putting money and invest there." To use his euphemism, they essentially “pour” the money into a city, a geographical area, or an industry. Because of the government largesse - just redistributed taxpayer funds - the stocks representing the companies receiving the subsidies, tax breaks, or straight investment will go up. That was his entire theory in a nutshell, and it's exquisite. The biggest cone in the world is lower Manhattan. That's the most oversized cone in the world because they get the new, freshly printed money. Bankers have driven up this bubble because they get paid first. Of course, it’s not just the bankers but asset managers, non-bank financial institutions, and private equity funds. After distributing their profits, they go out and spend their money and drive prices up first. By the time the money trickles down to the populace, they can't buy nearly as much with it because the bankers have driven the prices up. This is why there is such an enormous disconnect between what's going on on Wall Street and Main Street. Main Street doesn't get the money fast enough. Now, Main Street can't buy a house because of it, and it's a damn shame. A genuinely free market would have gently rising and falling asset prices, and you could time the market better. It wouldn't be perfect, and sometimes you'd have to buy it when prices are high. How Do Banks Make All That Money? There are a few ways that banks make money. One is net interest income. If rates are indeed going to rise because of inflation, banks should make more money based on the difference between the amount that they pay you in deposits and the amount they charge to lend to you. But because our big banks are also investment banks and sales and trading houses, they get to make money in many other ways. Bankers who are working in equity origination charge advisory fees. That's IPOs, mergers and acquisitions, and leveraged buyouts. They're making a ton of money, as are their lawyers and accountants. Sales and trading will also make a ton of money because the market's just going up, and they have a bullish natural ax. I explained these natural axes in an earlier Rude, but let me remind you what's happening here. The Axes Grind The biggest clients of Wall Street are the portfolio managers like BlackRock, Fidelity, and Vanguard. Pension funds, insurance companies, and endowment funds that use portfolio managers to execute their strategies always hold stock. There are two ways that they will hedge this stock. One way is to buy puts against the stock, which is slightly more expensive but completely protects the stock’s downside. They'll buy the puts from the banks, which means the banks are naturally long the market. If you're short a put, it’s a bullish play. They may also sell calls against stocks that they don't think will fall too much, but they also don't think are going to roof it. Naturally, when they sell those calls to the banks, the banks are long calls. When you combine a long call position and a short put position, you have a bullish synthetic long stock position. So, as long as the stock market keeps going up, the banks will make loads of money just from the inventory of options positions and the stocks they hold to lend to other financial institutions and hedge funds. Let me leave you with Uncle Eric’s excellent advice: - Find out where there is a cone. - Tap into that cone. - Don’t expect the cone to last forever. - Always be searching for new cones. Thanks to America’s penchant for spying, PLTR’s cone is just getting started. Have a great day! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( In Case You Missed It… Skittles Ban in California? Good morning from autumnal Asti. As I was chomping on my salami panini and drinking my caffé Americano at Fabrizio’s this morning, I was once again grateful for the cuisine in this country. When I returned to my apartment to start writing this Rude, I checked Google Trends to see how hot the Palestinian situation was. Truth be told, it didn’t even register in the Top 10 of searches. But something about a “Skittles ban” did. What was Governor Gruesome up to now? As a man with extra flesh around his waist, I usually avoid writing about health. But this time, I’ve got some insight to share. Hong Kong, 2015 Pam and I moved to Tung Chung, a town on Lantau Island, just next to the airport, when we settled in Hong Kong in mid-2015. [Rude] Click [here]( for Google Maps to see it more clearly. The commute to work in Kowloon was easy, and all the amenities we needed were right in our apartment complex. Our supermarket was in the basement of our building, making it easy to get all the food upstairs. One day, while shopping, I noticed two different Heinz Ketchup bottles. From living in London for nearly a decade, I knew the US and EU had different food safety policies. But I never really looked any deeper. Here is the back of the US Heinz Ketchup container: [Rude] Credit: [reddit.com]( Here’s the UK version: [Rude] Credit: [heinz.co.uk]( Here’s Italy’s version: [Rude] Credit: [heinz.it]( It’s the same as the UK recipe. Notice the difference between the European versions and the US version? There’s no high fructose corn syrup in the European versions. I noticed that in Hong Kong and wondered to myself, “Why do Americans allow that?” I still don’t have a satisfactory answer. [Will Inflation’s Second Wave Wipe Out America’s Middle Class?]( During the 1970s, inflation lasted for years and came in three separate waves. Each wave was far worse than the last. [Today, the same exact thing is happening again.]( Is the price of food, gasoline, housing and more about to skyrocket even higher? WARNING: The next wave of inflation could wipe out America’s middle class. [== > Get ready for “Inflation’s Second Wave.” Click here now to see my urgent warning.]( [Click Here To Learn More]( The “Skittles Ban” From [Forbes]( SURPRISING FACT Though the law will not ban Skittles, claims California has outlawed the candy are running rampant on social media. A post on X from Daily Loud, a pop culture updates account with 2.5 million followers, falsely stated, “California will officially ban Skittles and other candies from the state starting 2027.” The misinformed post was liked more than 68,000 times and viewed more than 15 million times. Actor and television host Mario Lopez reposted a false claim that the state will ban Skittles, stating: “Crime is through the roof, worst drug epidemic ever & homelessness at an all-time high in CA… Let’s focus on Skittles.” A YouTube video by right-wing personality The Quartering, viewed 50,000 times, falsely stated Skittles was banned by California’s “woke leaders.” CRUCIAL QUOTE “There’s a zero percent chance this is actually going to result in a ban on Skittles,” California state Rep. Jesse Gabriel, who introduced the bill, said. “All we want the companies to do is switch their recipes in the same way that they've done in Europe, and Canada and the U.K. and Brazil and other countries that have banned these chemicals.” The libertarian in me wants to tell Gavin Newsome to piss off. But the pragmatist in me thinks selling ingestible poison to people should result in a prison sentence. But this is what happens when people aren't educated about the food they eat. I’d prefer American consumers to tell these companies to either change their recipes, or they’ll take their business elsewhere. Ask a kid if he wants any food with harmful ingredients, and he’d say, “Ewwww… I don’t want to die!” Children are far smarter than adults in this regard. Californian companies affected have until 2027 to change their recipes. What Else Are Americans Ingesting? Piquing my curiosity, I asked Bard, Google’s AI program, “What else, besides high fructose corn syrup, was banned in Europe but available in the US?” Here’s what it came up with: - Titanium dioxide (E171): Banned as a possible carcinogen. (This ingredient would have banned Skittles in their present form.) - Potassium bromate (E924): Banned as a possible carcinogen. - Azodicarbonamide (E927a): Banned as a possible asthma trigger. - Butylated hydroxyanisole (BHA) and butylated hydroxytoluene (BHT): Banned as possible endocrine disruptors. - Brominated vegetable oil (BVO): Banned as a possible carcinogen. - Recombinant bovine growth hormone (rBGH): Banned due to concerns about its impact on animal welfare and human health. - Red dye #40 (also known as Allura Red AC): Banned as a possible carcinogen and hyperactivity trigger. - Yellow dye #5 (also known as Tartrazine): Banned as a possible carcinogen and asthma trigger. - Yellow dye #6 (Sunset Yellow FCF): Banned as a possible carcinogen and asthma trigger. High fructose corn syrup (HFCS) isn’t banned in Europe but is subject to stricter regulations than in the US. For example, it isn’t allowed in baby food or infant formula in the EU. There are also concerns that HFCS may contribute to obesity, diabetes, and other chronic diseases. One of the main concerns about HFCS is its high fructose content. The muscles do not metabolize fructose, which is more likely to be stored as fat in the liver. I’m neither a chemist nor a nutritionist, but I’m glad the EU has chosen a precautionary route. That is, they ban first and ask questions later. The US is far too trusting, especially considering it’s [the ninth most obese country in the world]( and first among developed economies. Wrap Up While there’s plenty to complain about Governor Gruesome’s tenure as Cali governor, this isn’t one of those things. I hope Americans start reading the back of their food containers and make better judgments about what they put in their bodies. Until then, the government will step in not because it loves its citizens but because it’s trying to minimize its socialized healthcare costs. Have a great day! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. 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