For Financial Advisors we deal with the “top 1%” of wealthy individuals and families and, for me, I read headlines about “the wealth gap” and instinctively become a bit protective of them, mainly because I see the good that they do. These are productive people, in my experience by and large, who make a positive impact on the world.
They’re business owners and key corporate people who are skilled at “adding value” to the economy, without whom the world would not be as productive. They add to society by consuming less than they earn rather than consume all that they earn, or go into debt.
That’s wealth, without any judgement or commentary regarding how the bottom 90-99% came to be consuming all or more than they’re earning. I realize that part’s complicated, but to place their plight on the top 1% also seems inequitable to me, given what I’m seeing in the value my clients add to the world.
But nevertheless, I see headlines regularly pointing to this “wealth gap” and I acknowledge it is widening at an accelerated rate. So how can a Financial Advisor frame this in a realistic, yet empathetic way, acknowledging it is a problem? Here are some things you might want to think about, as a Financial Advisor who interacts routinely with lot’s of affluent people.
Let’s start with some comments by the current Secretary of the U.S. Treasury Department,
“The top 10% of Americans own 88% of equities. The next 40% own the remaining 12%. The bottom 50%? They own debt.” — Scott Bessent, April 2025
In the summer of 2024, Americans were traveling to Europe in record numbers. That same summer, food banks across the United States saw unprecedented demand. Two headlines, side by side — one about luxury, the other about survival — tell the story of a nation increasingly divided by access to capital.
Scott Bessent captured the paradox bluntly in a televised interview:
“I was really struck by two different statistics last year — summer of 2024: more Americans were using food banks than they ever have in history. … And I was really struck by … Americans took more European vacations than they had in history.”
That contradiction struck him — and it should strike us too. This is not simply a story of haves and have-nots. It’s a story of proximity to power — and more specifically, proximity to the printer.
The Cantillon Effect, Explained
To understand how we got here, we need to travel back in time — to 18th-century France. The term “Cantillon Effect” comes from Richard Cantillon, an Irish-French economist who observed that when new money enters an economy, it does not affect all citizens equally. Those closest to the source — governments, banks, asset owners — benefit first. They use this freshly printed money to buy goods, services, and assets before prices rise.
Everyone else? They get the higher prices without the benefit of the early money. By the time the new money “trickles down,” the cost of living has already risen, and wages have not kept up.
Cantillon saw this first-hand during the economic disaster triggered by John Law, the Scottish economist who became France’s de facto central banker in the early 1700s. Law flooded the French economy with paper money, causing a speculative boom that enriched the elite — and a crash that devastated the poor.
Richard Cantillon worked for John Law’s bank, which printed the increasingly worthless money, as the gold backing it up didn’t increase, and Cantillon observed the benefits seen by those “close to the money printing” and he avoided getting caught-up in the bubble. Cantillon became fabulously wealthy, while John Law died poor, simply by recognizing the “plugged-in” people were the beneficiaries of money printing, not the masses.
ZIRP: The Modern Money Machine
Fast forward 300 years. The United States Federal Reserve launched ZIRP strategy (Zero Interest Rate Policy) in the wake of the 2008 financial crisis and kept it in place, with few exceptions, for nearly 15 years.
The fed made money available at zero to low rates, but not to everyone. The “plugged-in” class (Banks, institutions, big corporations) were able to borrow money because the Fed manipulated interest rates, to make the “cost of money” close to free.
But, who benefited from borrowing at 1–3%? Not the hourly worker. Not the single mother balancing rent and groceries. It was the investor class — those who already held financial assets — who used cheap capital to:
- Buy equities at depressed prices
- Refinance real estate portfolios
- Launch startups or acquire competitors
- Engage in buybacks to inflate their stock holdings
Meanwhile, those without meaningful asset holdings were:
- Watching their wages stagnate
- Taking on credit card debt at 17% to 24%
- Renting homes instead of owning
- Paying more for gas, groceries, and education
This is the Cantillon Effect in high definition.
A Clarifying Distinction: Asset Holders vs. Wage Earners
It’s not simply the “rich” vs. the “poor.” A more precise distinction lies in who holds productive financial assets and who does not.
- Asset holders benefit from dollar dilution: their stocks, real estate, and businesses rise in nominal terms, outpacing inflation. Those who own assets ride the wave of benefits accruing from printing new money out of thin air.
- Wage earners and renters bear the brunt of dollar dilution: their incomes lag, and their costs rise faster than their purchasing power. Many go into credit card debt attempting to keep up as costs keep relentlessly rising, sometimes rising a little, and other times (like following Covid-19) rising a lot. But always rising due to an unlimited supply of endless money being printed.
Even among those with modest incomes, owning productive assets can be a game-changer. But access to those assets — and the literacy to use them well — is not evenly distributed.
This isn’t just inequality — it’s asymmetry. Not everyone suffers from inflation. Some surf it.
The Great Bifurcation
Scott Bessent’s observation is more than a clever soundbite. It’s a devastating diagnosis of American financial structure:
- Asset Holders: Positioned to benefit from central bank interventions, especially those with leverage.
- Non-Asset Holders: Experience the inflationary pain without corresponding upside.
And that’s the most insidious part: the same monetary policies meant to stimulate the economy erode the financial position of those who never had a seat at the table.
Two Vacations, Two Realities
In the summer of 2024, one family is snapping selfies in front of the Eiffel Tower, their portfolio swelling from another quarter of double-digit equity gains. Another family is visiting a local church for groceries they can’t afford to buy.
Both are American. Both live under the same flag. But they inhabit completely different economic realities.
The Dollar as a Dialect of Class
There was a time when the American dollar served as a unifier — a symbol of shared prosperity. But over the last two decades, it has become a dialect of class. The closer you are to the money printer, the more fluent you are in its benefits.
Those with assets arbitrage monetary policy, leveraging low rates and high asset prices. Those without assets absorb monetary consequences, borrowing at double-digit rates and watching their purchasing power decay.
Offshore Profits, Onshore Pain
Were you aware that a trade deficit for our country is also a capital surplus on the other side of the balance sheet?
Most headlines focus on the trade gap itself—how much more the U.S. imports than it exports. But what’s often missed is that the dollars spent abroad don’t disappear. They come back—often in the form of capital purchases. Foreign governments and institutions use those dollars to buy U.S. Treasuries, equities, and real estate.
This creates a reinforcing cycle: trade deficits enable capital inflows that support lower interest rates and inflated asset prices—benefiting asset holders at home. But working Americans, who hold few appreciating assets, don’t see that upside. Instead, they face rising costs, outsourced jobs, and weakened purchasing power.
The trade imbalance, then, becomes yet another amplifier of the Cantillon divide—where benefits concentrate at the top, while the consequences diffuse across the working majority.
Conclusion: Toward a More Honest System
The core issue is not just inequality. It’s the gap between asset holders and those living paycheck to paycheck.
Until we re-center policy discussions around who benefits first from monetary expansion — and who doesn’t — we will keep seeing two Americas diverge.
The only question is: how much further can they stretch apart before the system snaps?
As Financial Advisors, working with affluent individuals and families, we need to be aware of these affects on our clients. Simply to understand that this endless printing of money worldwide is inflating both prices and assets. Real Estate, gold and, yes, equities like the S&P 500 are becoming more and more distorted.
If monetary inflation, growth of the money supply, is averaging 7% annually (which it is, on average over the past 100 years), and consumer price inflation is roughly 3% of that, what’s happening to the other 4% inflation? It’s distorting and creating bubbles in assets (stocks, real estate, gold and hard assets).
I’m not predicting crashes or bear markets in any particular asset market, but Financial Advisors must be aware that a bubble is being created by “the other 4%” of the monetary inflation. Asset inflation that is disconnecting the asset classes from their historical fundamentals that have driven their value in the past.
When Washington signals “higher tariffs” or “capital controls” being seriously considered, Financial Advisors need to be aware that is another way of telling foreign nations that “we don’t want you parking your U.S. dollars into our stock market or U.S. farmlands or real estate anymore.” It’s a warning that the support for those markets will decline as the trade deficits (capital surpluses) begin declining.
What’s interesting is to watch what Washington is not putting tariffs on. What is Washington signaling to other countries about what would be a good place to “park their U.S. Dollars?” If not U.S. stocks or real estate, then what isn’t being penalized?
Well, interesting that gold has not been mentioned for tariffs, and they’ve stated that “your best bet” to avoid penalties is to “build your plants in America.” So the choices seem to be increasingly, onshore manufacturing to the U.S., or park it in gold (or other hard neutral assets, like Bitcoin), but stop driving up our equity markets and real estate markets. Whether or not this is correct, Financial Advisors can help clients navigate uncertaininty, by thinking-through the big picture a bit more clearly.
As for monetary inflation and money printing, we don’t just need reform. We need honesty — about who money serves, how it’s distributed, and what kind of future we’re building.
Or to borrow Dickens one last time:
“It was the best of times, it was the worst of times… it was the spring of hope, it was the winter of despair.”
For too many Americans, it still is.
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