FEBRUARY 23
Who Gets the New Money First?
Why Some Can Spend Before Prices Catch Up
The Signal
Some people get newly created money while yesterday’s prices still exist.
The Reading
Picture two people. One is a worker. One is a land developer. The worker gets the same pay as before. The developer walks into a bank and is approved for a loan. The moment that loan is made, newly created money appears in the developer’s account. Fresh spending power exists that was not there before.
The developer moves quickly. They buy land, concrete, timber, machines and building services at today’s prices. The landowner gets paid. The supplier gets paid. The contractor gets paid. Then those people spend some of that money again. Like ripples across a pond, the new money moves outward from person to person.
Now watch prices. The extra spending reaches some places first. Land may become harder to buy. Materials may cost more. Contractors may charge more. The worker is still there with the same pay packet, but the world around them has started changing. The new money reached other hands first, and some prices moved before the worker received extra.
That is the advantage of being close to where new money enters. Early receivers can spend freshly created money while older prices still exist. Later receivers may meet higher prices before their own income changes. One person gets the head start. Another hears the starting gun after the race is already moving.
First Principles
Newly created money reaches some people before others.
Large borrowers can be close to where new money enters.
Prices can move before everyone receives more money.
Today’s Challenge
Place two identical objects on a table. Imagine each costs ten coins.
You and another person each have ten coins. Now give the other person ten newly created coins.
They immediately buy the first object for ten coins.
Before you receive anything extra, change the price of the remaining object from ten coins to fifteen. Now look at your ten coins. The other person received the new money and bought at the old price. You received no new money and arrived at the new price.
Which side of the table would you rather be sitting on?
Tomorrow’s Signal
Assets Rise, Workers Chase