Macro opens his pizzeria
Macro has been making pizza his whole life. In 2015, he finally opens Strategia Pizzeria — a small, excellent restaurant in his neighborhood. His food costs are manageable. His rent is fair. His margins are thin but workable, as they always are in restaurants.
A 50-pound bag of tipo 00 flour costs Macro $28. San Marzano tomatoes, $18 a case. Fresh mozzarella, $4.20 a pound. He runs his numbers carefully. At $16 a pie, he makes it work.
Now let's jump forward five years. Nothing dramatic happens to Macro's business. He has the same suppliers, the same menu, the same rent. But something quiet has been happening in the background.
The same bag of flour now costs $34. Tomatoes are $24 a case. Mozzarella is $5.80 a pound. His rent increased 18% at renewal. Macro raises his prices to $19 a pie and hopes his regulars understand. Most do. Some don't come back.
By 2023, post-pandemic supply chain chaos has accelerated what was already happening:
Flour is $52 a bag. Tomatoes, $38. Mozzarella, $8.10 a pound. Energy costs — to run his ovens, his refrigeration, his lights — are up 40%. Macro is now charging $24 a pie. His margins are actually worse than they were in 2015, even at 50% higher prices. He's working harder for less.
This is inflation. Not a sudden crash. Not a dramatic event you can point to. Just a slow, relentless increase in the cost of everything — while the dollars in Macro's savings account sit quietly buying less and less each year.
What inflation actually is
Inflation is a general increase in prices across an economy over time. When inflation runs at 3% per year — which sounds harmless — prices double roughly every 24 years. At 7%, which the US experienced in 2021–2022, prices double in about a decade.
The official measure is the Consumer Price Index (CPI), which tracks a basket of common goods. But many economists and business owners note that CPI tends to understate what they actually experience — particularly for housing, food, insurance, and education, which have inflated faster than the headline number in recent decades.
The shape of that curve matters. The steepening in the early 1970s coincides with a decision that changed the monetary system fundamentally.
What printing money does — and who gets it first
In 1971, President Nixon ended the convertibility of the US dollar to gold. Before that, every dollar in circulation was theoretically backed by a specific amount of gold held in reserve. After that, the dollar became what economists call a "fiat currency" — its value derives from government decree and public trust, not from any physical commodity.
This gave the government — specifically the Federal Reserve — the ability to create new dollars. And it has. The US money supply (M2) has grown from roughly $600 billion in 1971 to over $21 trillion today. More dollars chasing the same amount of goods means each dollar buys less. That's inflation, at its root.
But here's the part that doesn't get talked about enough: newly created money doesn't reach everyone at the same time.
The Cantillon Effect
Richard Cantillon was an 18th-century Irish-French economist who observed something important: when new money enters an economy, it doesn't spread evenly like water filling a bathtub. It enters at specific points — and the people closest to those entry points benefit before prices have a chance to rise. By the time the new money ripples out to everyone else, prices have already adjusted upward.
In modern terms: when the Federal Reserve creates new money, it flows first to banks and financial institutions, then to large corporations and asset owners, and eventually — much later, and much diluted — to workers and small businesses.
The people who receive new money first can buy assets (stocks, real estate, bonds) before those assets become more expensive. The people who receive it last find that everything has already gotten more expensive by the time it reaches them. Their wages and savings have been quietly eroded.
The term for those who benefit most from being closest to the money spigot is "Cantillionaires." It's not a moral judgment — many wealthy individuals are enormously generous and create tremendous value for the world. It's simply a description of a structural advantage built into how money creation works. Understanding it isn't about resentment. It's about seeing the system clearly.
How this flows through the economy
Macro isn't at the top of this flow. He's in the middle. He gets squeezed from both directions — his costs rise before he can raise prices, and his customers' real purchasing power falls, making them more price-sensitive just as he needs to charge more.
The hard asset chart — where savings go to grow
If holding dollars erodes value over time, what do people do with savings they want to protect? Historically, they move them into assets with limited supply — things that can't be printed.
Real estate and gold have both significantly outpaced inflation over long periods. That's not a coincidence — it's why people have always moved savings into hard assets during inflationary periods. Their supply can't be expanded by government decree.
Bitcoin's design takes this principle to a logical extreme: its supply is permanently capped at 21 million coins, enforced by mathematics rather than by policy. No central bank, no government, no company can create more. For a growing number of small business owners, this makes it the most sound store of value ever created. For others, its volatility makes it too risky to hold. Both perspectives deserve respect.
What Macro did about it
Macro's response to inflation wasn't dramatic. He didn't move all his savings into Bitcoin or close his bank accounts. He started accepting Bitcoin at his register in 2021 — which cost him nothing to set up — and began setting aside a small percentage of his revenue in BTC each month as a long-term reserve alongside his traditional savings.
By 2023, that small reserve had grown substantially. He used it as collateral for a business loan to expand his kitchen — without touching his operating cash. His Bitcoin position had functioned the way gold used to function for businesses: as a store of value that appreciates against the currency his costs are denominated in.
What you can do
Understanding inflation doesn't require an economics degree and it doesn't require any particular action. It just requires seeing the system clearly.
The dollars in your register are losing value slowly and silently every year. That's not a conspiracy theory — it's the stated goal of the Federal Reserve, which targets 2% annual inflation as a policy objective. It's a modest rate by historical standards, but compounded over a business lifetime it's substantial.
Holding some portion of savings in assets that historically outpace inflation — real estate, gold, or Bitcoin — is a response that predates cryptocurrency by centuries. Bitcoin simply offers a version of that protection that's accessible to anyone with a phone, divisible to eight decimal places, and portable across borders.
Macro figured it out from behind his pizza counter. You can figure it out from behind yours. 🍊