A Gloss on a Gloss

I. What this is about

On 29 May 2026 the newsletter The Pioneer published a gloss that draws on the study Vermögenspreise steigen weiter — Vermögenspreisindex Deutschland Q1-2026 (Asset prices keep rising — German asset price index Q1 2026) by the Flossbach von Storch Research Institute, written by Philipp Immenkötter. The gloss opens with a strong image: 83.5 million Germans live in one country, but in two worlds. In one, the grass grows green; in the other, it has withered. In one, people seem to grow ever richer of their own accord; in the other, people toil without getting anywhere.

That is well observed, and it matches the study. The study shows that asset prices in Germany rose by 75 per cent between 2005 and the first quarter of 2026. Real wages rose by 15 per cent over the same period. The wealthiest households saw an asset-price increase of 86 per cent, the lower middle class one of 17 per cent. The study names the cause: monetary policy, above all the expansion of the money supply by the European Central Bank. The Cantillon effect — newly created money flows first into asset markets and raises their prices long before it reaches society at large — is not a conjecture but textbook knowledge since Friedman and Schwartz in 1963.

Up to this point we are in agreement. The diagnosis is harsh, and it is correct.

II. The leap

Roughly halfway through the Pioneer gloss, something happens that is worth describing. The study's diagnosis has been reported. The Cantillon effect has been rendered in substance: the additional money of the central banks seeks investment and discharges itself into the capital and property markets. Then the text asks the question What is to be done? And at this point it leaps.

It leaps from monetary policy to tax policy. The central bank that put too much money into circulation becomes the high-tax state that also helps itself generously to social security contributions. The study did not name the high-tax state as a cause. It did not mention it at all. It spoke of economic growth, public spending and monetary policy, in that order and with a clear emphasis on the third point. The gloss changes the subject without marking the change. A monetary-policy diagnosis becomes a tax-policy therapy.

There follows a quotation from Confucius. Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime. What is needed, the gloss concludes from this, is a state that invests not only in bridges and the citizen's income but in the financial education of its inhabitants.

That is a fine sentence. But it bears no relation to the problem the study described. The lower middle class in Germany, as Table M.1 of the same study shows, owns net assets of 21,700 euros per household. Of this, 42 per cent is in savings and sight deposits and 28.6 per cent in durable consumer goods — the fridge, the car, the furniture. Shares account for 5.6 per cent, which comes to around 1,215 euros. That is not the distribution of people who need to be taught to fish. It is the distribution of people who have nothing they could hang on a fishing line, while the wealthy have leased the lake.

The Cantillon effect the study describes does not sort by knowledge. It sorts by ownership. Whoever had assets at the moment the money supply expanded profits; whoever had none does not, no matter how many books on ETF savings plans he has read. The Confucius quotation does not fit, because it poses a question of ability where the question was one of ownership. The problem has been swapped, and the solution was swapped along with it.

III. The rhetorical bracket

The gloss frames the study's findings with two remarks about Heidi Reichinnek of the Left Party. At the beginning it says the study author's conclusion sounds unsparing, as if Heidi Reichinnek had guided his pen. At the end it says that if Reichinnek is honest with herself, she will one day admit: Capitalism is not the problem, it provides the solution.

This bracket does two things. It relieves the study's findings of their political weight by tying them to a person who is likely to be unpopular among the readership. In this way the sober finding of a value-conservative asset manager — not an address one would suspect of sympathy with the Left Party — is pushed into an ideological corner in which findings need not be taken seriously. And it closes the text with an assertion that is not substantiated in the text. Capitalism provides the solution. Which capitalism — the same one whose monetary policy the study has just described as the cause of the drifting apart? Or another one that goes unnamed?

A gloss may use rhetorical closures. It is a literary form; it lives by the punchline. But when the punchline contradicts one's own analysis, it is no longer a punchline but embarrassment. The study's finding is declared to be that of a Left Party politician, without being refuted thereby, and the market's therapy is recommended without saying how the market is to solve the problem it has itself helped to create.

IV. What the study does not say — and what ought to be said

It is worth reading the study again, because in several places it is very precise. It says that asset-price inflation widens the gap between the wealthy and those with little wealth. It says that households with little wealth find it increasingly difficult to catch up. It says that these distributional effects create a breeding ground for social tensions, as the middle class too increasingly feels left behind. It says that on the property market the dream of home ownership is receding further into the distance for many households.

What the study does not say — and saying it was probably not its task — is the political consequence. But it is obvious. If the Cantillon effect favours the wealthy, then the question of distribution is not a question of individual effort but a question of monetary policy and of the rules under which gains in value accrue. No savings plan changes that. Nor does any tax cut. What could change something are things such as a different monetary policy, a tax on gains in wealth, housing construction that lowers the scarcity price, a different distribution of participation in productive assets. There is no need to pass judgement on any of these options here. But naming them is the minimum requirement for a text that takes seriously the problem it has itself described.

Whoever recommends financial education instead is saying, in plain terms: we leave the mechanism that creates the problem intact and commend adaptation to its consequences to those affected. That is a political position. It should be recognisable as such.

V. The two worlds, a second time

The image of the two worlds with which the Pioneer gloss begins can be extended. There are not only the two worlds of wealth, in which some share in the increase in value of their property and others do not. There is a second division into two worlds, connected with the first without being identical to it: the world of those who live in a system that accommodates them, and the world of those who are told they must learn to adapt better. The first world looks upon the second with pity, the second upon the first with anger. The gloss describes this itself, and it is right to do so.

Where it errs is in the passage between the worlds. The gloss suggests that the passage is possible individually, if only one learns to fish. The study it draws on shows the opposite. The passage has become harder today, because asset-price inflation makes the gap grow faster than any earned income could close it. The individual citizen cannot close the gap, because the gap does not arise from his behaviour but from the monetary policy of the central banks. Whoever has observed this and then recommends financial education has not taken what he observed seriously.

VI. What remains

A gloss is a form in which one may sharpen the truth to a point. But whoever reports on a study of asset-price inflation centred on the Cantillon effect, and at the end declares capitalism to be the solution, has turned his form against himself. The diagnosis and the therapy do not fit together. The text thus falls short of what it has itself cited.

The Flossbach von Storch finding deserves to be widely read. It is good that the Pioneer gloss brought it to its audience. What it did not bring to them, however, is what ought to follow from the finding. The Cantillon effect is not a constant of nature. It is the consequence of a particular monetary policy, which could have other consequences if it were conducted differently. And the question of whether the increasing concentration of wealth demands a political answer — one that goes beyond recommending savings plans — is not a question for the Left Party. It is a question for anyone who has read the material presented.

The Pioneer gloss evaded this question by changing the subject. That is a tried and tested technique. It works as long as nobody turns back the pages.