A line of kids waits at the school shop. The class bank has just made new coins.
The bank hands out the coins from the front of the line. You get to pick your spot.
Where do you stand?
New coins go down the line. Each kid spends theirs on sweets. Watch the price.
First in line gets the most.
The first kids paid the old, low price. Every spend pushed the price up, as more coins chased the same sweets.
The shop made no extra sweets. The new coins only changed who got the sweets.
Remember chapter 4? A bank loan makes new money and a debt. The borrower gets the money first, but must pay it back.
Cara keeps her coins in a jar. When prices rise, her coins buy a little less. A bank's interest helps only if it beats the price rise.
Ben owes Ali 10 coins. Since then, prices and spending money have both gone up. Ben still owes 10.
Is paying back easier or harder now?
Rising prices are like a cold wind. A house can be a warm coat if its price rises. Owners may get richer, but house prices can fall too.
In England in 2025, a usual home cost about 7.6 years of a usual full-time worker's pay. Since 2021, pay in England and Wales has risen faster than house prices.
In England and Wales, the gap between homes and pay grew fast from 1997 to 2005. But homes don't always race ahead of pay.
Who often gains when prices rise? Who often loses? Tap a card, then its box.
New money is not shared evenly.
People near the front can gain. People near the back often pay more. How big the effect is in real life is uncertain.
But what if a country makes far too many coins? What happens then?
What happens when money breaks? Find out in chapter 7.
🧠 What you learned
- The first to spend new coins pay the old price
- By the back of the line, prices have risen
- New money is not shared evenly, and the size of the effect is uncertain
🎯 Question 1 of 11 · Easy
In the queue game, who got the most sweets?
Why did sweets cost more at the back?
Cara keeps coins in a jar and prices rise. Her coins now…
Ben owes 10 coins. Prices and spending money both rise. Paying back gets…
Cara's bank pays interest. When does that stop her coins losing buying power?
A bank gives Ben a loan. What does the loan create?
In England and Wales since 2021, what rose faster?
Prices rise. Whose savings lose buying power?
In our sweets shop, the bank gives every kid the same new coins at once. The sweets stay the same. What happens?
The queue game shows who gains from new money. What is still uncertain in real life?
House prices jump. One family owns a house. Another is saving to buy one. What is most likely?
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Education, not financial advice. Never put in money you can't afford to lose.
👩🏫 Grown-up corner · 1 of 6
A 300-year-old idea
Around 1730, an Irish-French banker called Richard Cantillon wrote that people who receive new money first gain at the expense of later receivers. His book was not published until 1755. Today the idea is called the Cantillon effect, or relative inflation: prices do not all rise at the same speed. How large it is in real life is uncertain.
👩🏫 Grown-up corner · 2 of 6
Hard money can inflate too
Cantillon thought of money as gold and silver coins. In the 1500s, gold and silver reached Europe from the Americas. Prices in Western Europe rose roughly sixfold over 150 years, about 1.2% a year. It is generally thought that the new metal caused this. So a money that is hard to make can still lose buying power, slowly.
👩🏫 Grown-up corner · 3 of 6
The spigot and the slow freeze
The Saylor Series argues that printing money adds no new production. It only moves claims from savers to whoever gets the new money first, and its host calls this a mechanism of theft. The host's picture is a spigot: insiders drink freshly printed money before it is diluted. Saylor's own picture is a slow freeze: the rich buy a coat or fly to the Caribbean, and the poor simply freeze. Saylor also says whoever adopts something first captures more of the gain, which is worth remembering whenever someone says 'get in early'.
👩🏫 Grown-up corner · 4 of 6
The mainstream view
The Bank of England, the UK's central bank, is given a 2% inflation target by the Government (chapter 5's Grown-up corner explains why). It says most money is created when commercial banks make loans, so new money often starts with borrowers, who also take on a debt. And its 2012 study found that without its asset purchases (QE), unemployment would have been higher and most people worse off.
👩🏫 Grown-up corner · 5 of 6
But the same study found winners
That 2012 Bank of England study also found its asset purchases raised the prices of a wide range of assets, shares included. It said the gains go to households holding the most financial assets: in a 2011 survey the top 5% of households held about 40% of them (outside pensions). It called the effect on a wider range of financial asset prices 'more uncertain'. So even the Bank's own study leaves the size open.
👩🏫 Grown-up corner · 6 of 6
Debts, savings and houses
A fixed debt gets easier if your pay keeps pace with prices, and harder if it does not. Savings lose buying power only when interest is lower than the price rise. Houses tell a mixed story: in England and Wales, house prices compared with pay rose fast from 1997 to 2005 and peaked in 2021. Since 2021, the ONS reports pay up 25% and median house prices up 5%. These figures show what happened, not why, so the warm-coat picture is only part of the story.