In all my life, living and/or studying in different countries and universities, I do not recall one single mention of the concept ‘Cantillon Effect’. So I was surprised to see a wide-ranging discussion of it in the blogosphere. I read a couple of posts that were put up but felt ‘zero excitement’.
So I went to take a look at Wikipidia. This came up:
Richard Cantillon amassed a great fortune from his speculation, buying Mississippi Company shares early and selling them at inflated prices. Cantillon’s financial success and growing influence caused friction in his relationship with John Law, and sometime thereafter Law threatened to imprison Cantillon if the latter did not leave France within twenty-four hours. Cantillon replied: “I shall not go away; but I will make your system succeed.” To that end, in 1718 Law, Cantillon, and wealthy speculator Joseph Gage formed a private company centered on financing further speculation in North American real estate.
The highlighted words are key. The ‘Cantillon Effect’ is nothing more than the advantage the first or early movers have in a Ponzi Scheme!
Since Austrian Economics is much about credit booms and busts, ‘Ponzi schemes’ fit the bill. Maybe they consider all credit activity, in particular that involving government debt, as containing significant ‘Ponzi elements’.
Update: JP Koning has provided a ‘public service’ by linking most posts involved in the ‘CE’ debate.