Does it matter who gets the money first?

Here is Scott Sumner, gently poking Richard Cantillon and the Austrians:

This is a good example of the fallacy of composition.  In aggregate, the total level of nominal purchases is constrained by the amount of currency in circulation.  But not at the individual level.  Hence being the first to get the new money doesn’t confer any advantage at all–as the new money has no more purchasing power than the existing money.  A dollar is a dollar—and a $100 bill is a $100 bill.

Read the whole thing, there is much more, and here Scott follows up.


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