- Alt-M - http://www.alt-m.org -

Cantillon effects in Africa

Here's my small contribution to what J.P. Koning calls "The great monetary injection debate of 2012." (See also George Selgin's post two below.) It's a third-hand anecdote told to me by Larry White, who heard it from an African economist when Larry was chairing a conference whose proceedings were published as the book African Finance: Research and Reform.

The African economist told Larry, "Here's how the money supply increases in my country. The president orders the central bank to send an armored truck full of cash to his house. The president's wife goes into town and pays for her shopping spree with cash from the truck."

I doubt that these increases in the money supply were announced in advance or easily anticipated.