Austrian economists say that if you magic a bunch of money into existence, the price of stuff tends to go up – you’ve added to the supply of money, and when people get more money, they use it to buy stuff that they couldn’t have bought otherwise. This increases the prices of whatever they buy.

Inflation of the money supply causing price inflation.

Now, we all know it’s a lot more complex than that, but it’s a useful example that helps us think about what Richard Cantillon said.

He said that which prices inflate first depends on who gets the new money earliest.

So if we print a billion dollars and hand it to rich people, the price of pasties won’t change much initially – the price of steak goes up first.

And if we print a billion dollars and hand it to poor people, the price of steak won’t change much initially – the price of pasties will go up first.

It’s a simple idea – pour more money into Rich World and more rich people will buy more steak, driving up the price of steak. Pour more money into Poor World and more poor people will buy more pasties, driving up the price of pasties.

So far, so good.

Back in 2008, the central bankers started printing lots of lovely money, in the hope they could boost our economies by increasing aggregate demand. Austrian economists like Robert Murphy (important not to confuse with Richard Murphy, pompous self-anointed midwife of Corbynomics) said it would cause price inflation in things bought by rich people, or poor people, depending on who you gave the money to first.

Then we gave all the lovely new money to rich people. And they decided to invest it.

The S&P 500 (for example) has risen quite a lot since 2009 – from 750 to 2750 or so.

According to Brian Barnier, principal at ValueBridge Advisors, the Fed has been responsible for almost all the U.S equity market appreciation, from when they started loosening in 2009, to when they started tightening in December 2015.

So that’s “steak” – the stuff that people buy in Rich World.

What about the price of “pasties”, in Poor World?

Tick tock tick tock.