Richard Cantillon, the Most Important Economist You’ve Never Heard Of
Richard Cantillon is the most important economist you’ve never heard of.
Born in Ireland sometime in the mid- to late-1600s, Richard Cantillon’s contributions to economics are found in his major work, Essai sur la Nature du Commerce en General (Essay on the Nature of Commerce in General).
In 1734, Cantillon was mysteriously murdered by a disgruntled former employee, and his home was set ablaze. Essai, which survived the fire, was published in 1755.
Cantillon’s work went on to influence Adam Smith and other well-known economists. Essai included his observations on production and consumption, money and interest, international trade and business cycles, and inflation.
We have a basic understanding of inflation and its effects. Put simply, inflation is an increase in the money supply.
An increase in the supply of money that isn’t met with an increase in the demand for money necessarily leads to price inflation, ceteris paribus. Said another way, prices rise as new money is introduced, all other things being equal.
However, this cursory understanding of inflation only paints half the picture. A less discussed aspect of this process is not only that the monetary supply has increased, but how. The entry point of new money into the economy has profound implications.