recently put out an excellent piece on the Cantillon Effect (first to receive printed money “wins”; others “lose”). At issue is whether central banks help. Here are graphs showing the doubling time for physical output is much lower when you don’t have a central bank:
1877 output:
2x the 1877 level:
It took just 14 years to double the output of 1877, back when the USA did not have a central bank.
1955 output (USA has a central bank):
2x the 1955 output:
After we got a central bank, it took 22 years to double the output of physical product. That’s an annual increase of about 3.2%, but before a central bank, we had annual increases of 5.1% — almost twice the productivity growth.
Circumstantial evidence suggests that central banks harm productivity growth.
