New money raises prices unevenly, benefiting whoever receives it first.
Cantillon wrote it around 1730. Whoever spends new money first buys at old prices; by the time it reaches wage earners, prices have already risen. It is the mechanism behind arguments about asset-price inflation.
In practice
- A construction lending programme raises prices for builders and materials suppliers first; the wage earner meets the higher house price a year later with the same salary.
- A subsidy paid to producers reaches consumers as a higher price for the thing the subsidy was meant to make affordable.