"while the flood of gold into Spain in the 16th century seemed like a big haul at the time, by modern standards it was a trivial amount. Total world gold production during the 1500s is estimated to have been around 36 tons;"
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World silver production during the 16th century was around 23 thousand tons[1]. Silver was closer in value to gold back then too, at around one tenth the value per weight. The economic impact of new world gold was a rounding error compared to the impact of silver.
If you have a mental image of Spanish conquistadors sparking global inflation purely by looting Inca gold, erase it. The real culprit was silver extracted from Potosi and a few other New world mines.
[1]https://digital.library.unt.edu/ark:/67531/metadc40312/m2/1/...
Zacatecas (Mexico) is mostly a desert now but it used to be covered with forests. The wood was used as fuel for smelting silver during the colonial period.
>If you have a mental image of Spanish conquistadors sparking global inflation purely by looting Inca gold, erase it. The real culprit was silver extracted from Potosi and a few other New world mines.
That is when labors start to flood to Netherlands.
As I understand it, some of the silver was siphoned off in trade with China (via the trans-Pacific route to Manila). China needed continuing silver imports because silver was not used there in the form of standardized coinage, but rather in ingots that were weighed and subdivided, with inevitable continuing loss.
It was very surprising to see zero mention of the Manila galleon[0] trade route in the linked article, even if technically the question was about gold rather than silver. The simple answer to the question of what happened to the money was that Spain spent it! The impacts on SE Asia were profound and are still being felt today.
Would love to read about the impact on SE Asia that continue until today. Do you have a recommended resource?
It’s a broad subject. You have the existence of the Philippines itself, which is the only majority Christian nation in Asia, and given it passed from Spain to the USA, this influences everything from US force projection in the Pacific to the prevalence of BPO outsourcing to the sectarian conflicts in Mindanao.
More directly from the trade itself and the silver it brought permanently altered the demographics, flora and fauna of the region. Southern Chinese traders migrated in greater numbers throughout the region, new world fruits and vegetables such as sweet potato and pineapple are introduced. Chinese merchants in the region are producing Christian religious art for export back to the old world, giving rise to a unique hybrid artistic style.[0] The region as a whole becomes more attractive for the Dutch and the British, which had its own set of downstream consequences …
I’m sorry I don’t have a single source that pulls this all together, you would probably need to pick an area and start reading!
[0] https://artsandculture.google.com/story/ivories-from-macau-a...
The book 1493 by charles c mann is an interesting read about this
I've not heard the inevitable loss as a culprit for Chinese demand. IIRC it had to do with a failed paper money system triggering inflation followed by a reversion to silver for exchange plus a growing population and market forces from the new supply from the new world.
https://en.wikipedia.org/wiki/Global_silver_trade_from_the_1...
Some of all this gold is still on display in Spain. Earlier this year my wife and I visited Granada in southern Spain. Vast amounts, truely impressive, of gold are exposed in its Cathedral and in the burial place of Emperor Karl (Charles/Carlos) and his wife, Isabella. Alhambra is still the #1 sight there but if you can spare the time, do visit these two places. They are co-located in central Granada.
> The problem was that the conquest of the New World left Spain with a lot more money, but not that much more wealth, if you follow me.
ELI5, please!
Spain’s colonies funneled huge amounts of gold and silver into the European economies without a complementary increase in productivity to absorb it, causing massive inflation.
A ship for transatlantic shipping might have first cost 100,000 maravedí to build and equip before the treasure fleet expeditions, but afterwards with so much gold flowing into the economy and lots of competition for a limited ship building industry, the costs would inflate to 1 million maravedí (number roughly from memory). Same with the canons and shot, animals and sailor salaries, and so on.
Meanwhile, shipbuilders with all their newfound money are competing for blacksmiths, the outfitters are competing for livestock and horses, and so on. This puts lots of pressure on the rest of society which might need the iron for farming tools and the livestock to survive the winter, which they can no longer afford since the conquistadors and their merchants can pay a lot more in gold. In the end the maravedí accounts look bigger but represent the same amount of physical goods or labor.
Repeat this process across the whole economy and it throws everything into chaos. Some people here and there get rich, but economy wide it’s a total wash. Any wealth created for the state mostly just went into paying for wars because the inflation worked its way up through salaries.
This entirely misses the fact that Spain became a European superpower during that period because war was then done by mercenaries…
> Any wealth created for the state mostly just went into paying for wars because the inflation worked its way up through salaries.
Wealth created for the state just went into paying for wars because that what mattered to the early modern aristocracy and that's what they wanted to pay with their additional money. From the point of view of the Spanish elite of the time, their “wealth” increased dramatically during that period, it's just that this don't fit your or my criteria for wealth.
hold up a minute
We’re sadly living through the same thing right now
And people won't point to the actual causes:
- The COVID free-money needed to be less and to end sooner
- The COVID restrictions needed to be less and end sooner
The disease didn't go away, we just at one point decided we were done with restrictions even though conditions didn't change.
We needed restrictions ONLY during spikes and more consideration needed to be given to the long term economic effects of COVID policies.
An example graph, when restrictions should have been on or off left as an exercise to the reader
https://wgntv.com/wp-content/uploads/sites/5/2022/01/tuedeat...
The problem is it became a non-expert political issue where people who knew meme-facts based on their social bubble only really argued absolutist policies against stone wall opposition.
We needed people in a minmax mode arguing about specific levels of risk vs reward to set optimums, instead you had 0 risk folks screaming at 0 restriction folks screaming back with the middle entirely excluded. (We'll STILL get people on both sides responding here)
I was in NZ during COVID. I was adamantly pro-lockdowns. In hindsight, it was a very selfish view. It benefitted my family directly and I was more than happy to follow the rules and scoff at those that didn’t.
I won’t claim to know what the appropriate response level should have been back then. But it is very clear that the whole affair has hurt and damaged people and society irreparably. The only winners are the wealthy who scooped up assets at never-before seen interest rates.
Yeah the lockdowns have really damaged my mental health. And the mask mandates even more so due to ancient trauma (where I nearly suffocated and have very bad associations with breathing that feels obstructed). But that's a very personal reason that I understand couldn't be accommodated for back in those days.
I don't know if it was worth it or necessary but tbh I just try to forget the whole phase ever happened. For me it was a few lost life years and I'm still trying to get back to where I was mentally.
I do feel those things were really overlooked back in the day. But I'm also glad I'm not the one making such decisions which can't be easy.
The only thing I have an outspoken opinion about were the curfews we had here. Meaning the available time for things like shopping was more compressed and thus the shops were a lot busier than normal which was super counterproductive. And it didn't stop partygoers because they simply slept over.
Everything is easier in hindsight isn't it? Especially with such a complex problem.
> The COVID restrictions needed to be less and end sooner
What would we have been optimizing for here? GDP? Deaths? ICU Capacity? Lifestyle? Or would we weight them? If so would we take 2nd and 3rd order effects into consideration?
> An example graph, when restrictions should have been on or off left as an exercise to the reader
I lived in a country/state that did this during the pandemic. It wasn't a case of restrictions on, restrictions off. It was more a dialing back or ramping up of restrictions. If you look at other countries that did this you will still find the wave pattern. If I had to guess that is related to immunity after exposure. What would change however is the height of the peaks. With it's political/media landscape I don't know if the approach you suggest could have been applied effectively in the USA. Ultimately what drives cases/deaths is human behavior and the virus itself. Those who thought covid was an issue were taking precautions regardless of the restrictions.
> The disease didn't go away, we just at one point decided we were done with restrictions even though conditions didn't change.
This is a gross simplification of the whole pandemic. If I was to narrativize it I would say that over time as exposure to the virus increased it became less deadly so the vast majority of the people who were already prone to dying via covid had done so already.
> The problem is it became a non-expert political issue where people who knew meme-facts based on their social bubble only really argued absolutist policies against stone wall opposition.
This is more a comment on the political/media landscape than the response to covid itself. People have to operate within the system. If they present any sort of nuanced idea then they are persecuted by roughly 50% of the population whose narrative it infringes upon.
> We needed people in a minmax mode arguing about specific levels of risk vs reward to set optimums, instead you had 0 risk folks screaming at 0 restriction folks screaming back with the middle entirely excluded. (We'll STILL get people on both sides responding here)
The WHO was very clear at the beginning of the pandemic about the risks of the virus. For wealthy countries whose hospitals were "lean and mean" a high number of cases would cause immense pressure on these hospitals resulting in otherwise avoidable deaths not just from covid but from other things that would result from a limited ICU capacity. By this I mean life saving operations getting cancelled because there was no capacity in the ICU. It's also worth mentioning the restrictions pared with the financial aid allowed people to stay at home and not engage in any risk taking activities.
To summarize I think it's easy to arm chair quarterback the response to the pandemic. It's like most of politics. We sit here watching what is effectively a shadow puppet show but are left clueless to what is really going on because if we did know we can't be trusted with the secrets, or wouldn't be able to understand the data, or would object to a course of action as an emotional response, even if what is presented is truthful and the most optimal solution to a problem. The "masks are ineffective" narrative at the beginning of the pandemic was a classic example of this.
>Everything is easier in hindsight isn't it? Especially with such a complex problem.
These sorts of statements are far too often as a justification to dodge responsibility used by those who at the time just poured more virgins into the volcano in a obviously vain attempt to change the weather (or whatever metaphor for "clearly not gonna work but ideologically convenient" you want to use).
By all means after fact have an enquiry into the response and how it could have been better but don't do that without first acknowledging the uncertainty that was present at the time.
I agree with everything you said
I just want to add that there is always a latent chaos / anarchy in people ready to jump at any oportunity to convince others to follow them. Doomsayers introducing themselves as messiahs. They are any combination of pseudoscience, religion and conspiracy. All this in addition of the normal political power struggles.
>Everything is easier in hindsight isn't it? Especially with such a complex problem.
I wrote the following July 2020:
>And with all of this money being injected into the economy, we are absolutely going to get an enormous amount of inflation... eventually. You could see it as already happening with the valuation of the stock market.
And in January 2022:
>It’s time to admit defeat and plan for what that looks like and stop pretending like anything at this point is going to make this virus go away. It’s here, it’s going to kill about one person in a thousand of those left, and if you choose to not get vaccinated that’s your choice and if you’re not young you’re taking a significantly higher risk of death.
Not so much hindsight as "what I've been saying all along".
>We sit here watching what is effectively a shadow puppet show but are left clueless to what is really going on because if we did know we can't be trusted with the secrets, or wouldn't be able to understand the data, or would object to a course of action as an emotional response, even if what is presented is truthful and the most optimal solution to a problem.
This is a bunch of nonsense. What was happening was quite transparent. The science was out in the open in papers and government statistics for anyone with scientific training to read. Politicians were caving to polarized public opinions on both sides to take advantage of and encourage their chosen pole.
Those of us talking about moderation and common sense reactions were demonize by one side or usually both depending on the venue. Nobody in leadership had the balls to lead and try to make people understand a middle path based on reason.
People STILL fall into their previously chosen polar opinion and refuse to accept that moderation was the correct and untaken path.
Not so much hindsight as "what I've been saying all along".
It was a dynamic situation and it sounds like the only things that you were optimizing for in your mind was inflation and covid deaths whiles ignoring second order effects and data that likely wasn't available to the public.
You are like a person who kept telling everyone it was 12:00am but it wasn't, then when it finally became 12:00am and everyone agreed you jumped up and said "See guys it's 12:00am why didn't anyone listen to me! I was right all along!".
It's a bit rich to blame all the inflation on the financial response to the pandemic without taking into consideration the effect the pandemic had on logistics or considering what would have happened if the government didn't spend enough. Also it's probably worth mentioning that the Fed operates independently and is tasked with only financial functions.
> The science was out in the open in papers and government statistics for anyone with scientific training to read. Politicians were caving to polarized public opinions on both sides to take advantage of and encourage their chosen pole.
No argument here except to say it's one thing to know the science and it's another thing to act on the science.
> Those of us talking about moderation and common sense reactions were demonize by one side or usually both depending on the venue. Nobody in leadership had the balls to lead and try to make people understand a middle path based on reason.
If there is one thing I know it's that common sense only exists when people share the same values and assumptions. Why for example was it acceptable to you that 1 out of 1000 people died of covid? Why not more? Why not less?
>It's a bit rich to blame all the inflation on the financial response to the pandemic without taking into consideration the effect the pandemic had on logistics or considering what would have happened if the government didn't spend enough. Also it's probably worth mentioning that the Fed operates independently and is tasked with only financial functions.
The treasury spent an extra $2 trillion which the Fed facilitated the creation of and your response is "what about logistics??", hindsight isn't 20/20 for you and sky isn't blue it's a ham sandwich. It is pointless discussing this with people like you, this is why we can't have nice things.
So with your 20/20 vision and your ability to see into the future what was the exact dollar amount at the time that you thought should be enough to stop a total meltdown of the US economy? Using logic and reason how did you come to the exact dollar amount that would emotionally appease investors and business providing them with enough "investor confidence"?
The timescale you are looking at is very small. The federal reserve has a dual mandate to have maximum employment and stable prices. What would have happened on a longer timeframe to employment and prices if every other country effectively backstopped their economy but the USA didn't?
It's like you don't know why the fed even came to exist or have any knowledge about the great depression or just fail to recognize how catastrophic that the pandemic was to the USA economy or the world economy as a whole.
You're talking about the Fed, I'm talking about government policy.
>- The COVID free-money needed to be less and to end sooner
>- The COVID restrictions needed to be less and end sooner
Neither of these are about the Fed and that was my original point. It's not clear you were understanding what I've been writing.
I'm from a country that did not create $2 trillion
Home still got ass-busting inflation
The biggest number for total global fiscal support I found was $14 trillion, but that was only from before mid-2020.
Most countries created a whole lot of new money and even if yours didn't, unless you're very economically isolated from the rest of the world the inflation hits you just the same.
If you are talking about the US, the COVID money needed to be distributed to the people, not to rich investors to buy stock and land.
... $900+ billion dollars in the US were given directly to the people.
If you use the most restrictive definition of money available, they printed 16 trillions:
Time is a flat circle
Legends fade to myth, and even myth is long forgotten when the Age that gave it birth comes again.
I win again, Lews Therin..
Sounds an awful lot like the AI data center build out sucking up resources at the expense of the rest of the economy. E.g.: Sam Altman cornering the market for computer memory.
It was not actually a massive inflation. It was a little inflation but people were not used to it.
As a sibling comment said, gold was effectively money. Having more money, without having more products to buy, effectively triggered massive inflation. Prices went up, but the actual supply of goods and services didn't change much. The Spanish economy suffered massive inflation, as did Europe in general to a lessor extent.
Notably, the 'massive inflation' was a rate of 1-1.5% per year...
Which, for the gold standard, is still rather shocking.
Since the industrial revolution productivity has actually been increasing and automation continues to make this happen.
If you don't have a mechanism for productivity increase matching your inflation it's just making whoever is creating the new money temporarily proportionally wealthier until the money spreads everywhere.
Well only with a fairly fixed amount of gold available. If suddenly a vast new supply of gold is discovered, its not shocking that there would be inflation.
It's interesting that mining gold and silver is similar to printing more money; we usually think of inflation as represented by debasing coinage but there's been a few circumstances where flooding the local economy with precious metals is the same effect.
We sometimes see similar localized effects when wealthy foreign governments and NGOs go into poor countries to "help" with foreign aid and investment. When done correctly this can boost the local economy in a sustainable way, kind of priming the pump. But often it just dumps a lot of cash in, causing price inflation as the supply of goods and services fails to keep pace with the supply of money.
Outside influence heavily distorts local economies and needs to be done extremely carefully or you end up making a few people rich and starving everybody else.
Heifer International presents a good face on doing this by introducing livestock, providing education to the new owners, and imparting an in-kind donation requirement so as to perpetuate and spread the gains.
Likewise charities that build clean water infrastructure, small scale solar, cell phone infrastructure, insulated cooking pots to reduce fuel use, and build infrastructure and training for basic medical care – these are all things that support increases in productivity by removing barriers and introducing efficiency into people's lives enabling them to do more, for their children to attend more school, for them to lose less time to illness and malnutrition.
Where just giving away food or money, especially on large scales distorts and ruins economies. Likewise introducing significant export markets when a local economy isn't ready.
Maybe, but not in this case:
> Early data from a sub-district pilot showed sharp reductions in extreme poverty and improved wellbeing with minimal inflation, showing direct cash is a scalable tool to accelerating the end of extreme poverty.
https://www.givedirectly.org/district-scale/
Perhaps things are different in Malawi?
That is an organization judging it's own success while a program is accelerating.
And if you measure poverty by how much money someone has and then give them money saying you've fixed poverty is tautology.
If your plan is to build a client state on perpetual welfare, well sure it's easy to be successful. But you can never leave and it's very possible that if you do leave things will be worse than if you had done nothing at all.
Whereas if you distribute a bunch of goats and chickens among a community and spread some education about raising goats and chickens, there's a good chance you've made a one shot permanent improvement to the quality of life of a community.
The criticism for giving direct aid in food and cash isn't that things are worse for the people you're giving them to while you're giving it to them... it's that you wreck the local economy for food and everything else because nobody can sell food when food is free and you can't price things correctly when money is pouring in. The money always stops and the aftermath is a disaster.
In the latter 1800 there wasn't enough gold to accommodate the vast increases in industrial production. Which was deflationary.
https://en.wikipedia.org/wiki/Cross_of_Gold_speech
You can imagine every year the price per bushel of the wheat you grow drops and your mortgage stays the same. When your whole economy is like that no one wants to borrow or lend money and investment slows.
No, inflation is just an increase in prices. Insisting it is only due to an increase in the money supply is an RW talking point.
Bullion imports caused inflation; the money supply increased without corresponding increases in the production of goods and services. https://en.wikipedia.org/wiki/Price_revolution
What an interesting topic. One of the further reading links is to a paper that claims the inflation started earlier in the 1500s, due in part to the rise of German silver mining: https://web.archive.org/web/20110706211346/http://repec.econ...
It would be interesting to learn about the technological developments Spain failed to make compared to some of their European neighbours. Merchant banking is one of them.
Money is the thing you use to buy things. Wealth is having those things. Only in an ideal world are the two the same. The world is not ideal.
But why couldn't they, e.g. buy other people's thing in exchange for their gold? IOW, why is the relevant fact that _Spain_ didn't have much more wealth despite having more gold? Other people in other countries valued (and still value) gold too.
Think of difference between buying bunch of cars from someone making cars. Instead of buying the factory making cars.
Or maybe currently RAM. You found pile of money somewhere. You buy big amount of RAM. RAM prices go up, you do not care you have money. In a few years DDR6 comes out. The RAM you bought is not that expensive anymore. You do not really have either money or something currently expensive.
Wealth is owning the land, the machines, the buildings, the knowledge(more so now). Being rich is owning lot of what can buy those things. But if you keep spending liquid wealth, eventually it is gone and you are not wealthy anymore.
You can, but then those people have more money, and you have less. The money supply is much smaller than the supply of goods and services, because the same money circulates repeatedly. So simply doubling your money can tilt things a little more your way, but does not make the situation completely lopsided, because you can only spend the extra money once.
Also, to quote Jastram [0], "In spite of the romanticism of the Spanish Main and treasure ships, the supply of gold from the New World was just a trickle by later standards. Less than 1% of what was to be 1930 world production was produced in each of the years from 1500 to 1520." Over the next 80 years, it never got much above 1.3%.
[0] Roy W. Jastram, The Golden Constant (1977), pg. 41.
They could and they did. That meant that Spain ended up importing more and exporting less, which would have been bad for Spanish businesses.
There’s a lot more to “wealth” than just having a bunch of stuff. Especially in the long term, since most “stuff” will wear out or otherwise decay over time.
That may be true, but a modern money system could get you pretty close to that ideal, where the main difference is the friction of transactions.
It's close to ideal for a loaf of bread, or a bag of nails. I can hop on my bike and turn my money into either of those things in a few minutes. Turning money into a house is further from that ideal of course.
They spent it on war. The Spaniards were fighting the Ottoman Empire and the Relgious Wars brought on by the Protestant Reformation. Funny enough their main enemy for the religious wars was France, who was also Catholic. The Spaniards also went bankrupt multiple times too.
[dead]
Adam Smith's Wealth of Nations explores the topic in depth
They spent a lot of resources (some tangible, some less tangible) and ended up getting a roughly equivalent amount of money out if it
Today - if you give everyone $10 million dollars there isn't enough production for everyone to buy what they want - you just get inflation. Its probably worse for the economy as people stop working.
It's just investing vs extracting/exploitation. Both can get you rich, but one is short-term and the other is long-term.
Consider what that means for sustainability and the future.
You can't eat gold.
You also can't eat money, but I imagine it's pretty useful if you're hungry
If all the sudden someone airdrops a hundred tons of $100 bills into your area, you are going to have a hard time buying food with just the $20 in your wallet.
That is what is being discussed.
You can though. People eat gold all the time.
Fine: you can't physiologically sustain yourself on a diet of gold alone. Gold is not a nutritionally complete diet. If all you have to eat is gold, you will soon be dead.
Midas didn't eat gold, and that's all he could have had.
Actual EL5 - Stregga Nona but with money.
[flagged]
Smugness level 110. It is a good question. Get over yourself please.
Fair enough, but I disagree that it's a good question. "Explain it to me like I'm 5" (not even written out in words, just the abbreviation we all know) is not a curious place to come from, it is a desire for the quickest path to the end/payoff.
I think you're taking the comment too literally.
I took it to mean something like, "I won't understand an abstruse Ph.D.-level explanation of what happened. I need an explanation geared toward the layperson."
In fact, I think that's closer to the essence of ELI5--as opposed to literally explaining something at the 5 year old level.
I suppose you can quibble about using the initialism, ELI, but only if you're advocating for people who might be unfamiliar with its use. Otherwise, I don't understand your complaint.
I don't think that I am. I don't think that they want to be treated like they're 5, but I do think they don't want to put thought into it. We're training ourselves to offload critical thinking and I was surprised to see it driving the conversation here.
Eli5 is a common way of asking for clarification. That's all.
It's common, I know what it means. It communicated its intent properly, I think. It's surprising to me that a venture capital finance site would need to clarify the difference between value and wealth, and I would be interested in hearing questions about this, but "ELI5" doesn't even meet the basic criteria for being a question. It asks no questions.
Not to mention one could easily search Google for "wealth versus value" and get tons of explanations in a few seconds.
People just like having things handed to them I guess.
> For the latter part of the 1500s and on into the 1600s Spain was a debtor nation, spending more abroad than it took in. The result was a net outflow of gold and silver. Attempts were made to restrict the export of precious metals, but without much success. In the end it all simply dribbled away. The problem was that the conquest of the New World left Spain with a lot more money, but not that much more wealth, if you follow me. They didn’t realize that until too late, and suffered centuries of poverty as a consequence.
Sounds like America since the second half of the 20th century.
Spain was different. There were no 'proper' colonies, but everyething was deal as if they were an inner province in Iberia. That's the way you could get fancy universities for its time.
But backwards people like Ferdinand the 7th cut down the modernisation of Spain which could boost us up to the level of France if not more. I'm no kidding. Just look at the Cádiz constitution from 1812.
https://en.wikipedia.org/wiki/Ferdinand_VII
https://en.wikipedia.org/wiki/Spanish_Constitution_of_1812
Not bad for its time at all.
Nope. By any objective measure the USA has continued to organically generate enormous amounts of real wealth during that period. We have some issues with inequality and letting foreign countries take advantage of our trade policies but the new wealth is quite real.
Could you elaborate a little bit more?
With all this gold, Spain went on a buying spree, weapons, art, churches etc - and the sellers(rest of Europe) industrialized as the gold trickled down into THEIR economies. When the gold no longer arrived, Spain went into a steady decline as their rich upper crust of RC Churche, Kings, Queens, Lords, Ladies etc. and eventually became democratic after Franco.
We were democratic before Franco. Twice. Until the damn conservatives threw the Republic down, twice, too.
Primarily spent in wars (mercenaries, weapons, warships...) and keeping the colonies under control.
As the poet Quevedo wrote,
Nace en las Indias honrado, // donde el mundo le acompaña; // viene a morir en España // y es en Génova enterrado.
(Mr. Money) is born in the Indies an honest man, with the world on his side; he comes to Spain to die, and is buried in Genoa.
It got also invested in religious ceremonies like https://en.wikipedia.org/wiki/Thirty_Years%27_War
Marx wrote about commodity fetishism. Perhaps the ultimate version is a belief gold is innately valuable. It has valuable properties, but almost its sole function is to be rare and desirable. That we now use gold for electronics in some ways undermines its rei-ification as the personification of value.
Spain fucked up. They mistook the gold for something more valuable than Labor. The Merino sheep of Spain were a better bet, in the long term.
The Spanish gold disappeared into economies with a better sense of what value is.
Yes, I often say that the gold from America was a poisonous gift. It made the country so rich that they stopped caring about other stuff, they could just buy them from elsewhere. So there was little incentive to manufacture first, and industrialize later. Which is ironic because some of first steam engines you can find in Europe were invented in Spain (https://en.wikipedia.org/wiki/Jer%C3%B3nimo_de_Ayanz_y_Beaum...). It also enabled the funding of numerous stupid wars, with the human cost they bring. The name of this process is called the Dutch Disease https://en.wikipedia.org/wiki/Dutch_disease
Arab states could get into the same trap
> It made the country so rich that they stopped caring about other stuff, they could just buy them from elsewhere. So there was little incentive to manufacture first, and industrialize later.
Transcontinental fleet of ships regularly circumventing the globe and transporting cargo requires lots of technology. Why marine industry didn't stimulate manufacturing and industrialization?
It's a recurring theme. At the time of the Civil War, the Mississippi River Valley had more millionaires per capita than anywhere else in the US.
https://www.history.com/articles/slavery-profitable-southern...
> the Mississippi River Valley had more millionaires per capita
TIL.
Does anyone have any good recommendations for a (relatively) good social/economic history of the Southern US states? (because I guess that that type of history book would cover this type of information).
from the antebellum era? try anything by eric foner, but a good place to start is forever free: the story of emancipation and reconstruction. it's accessible history that includes a bit of background about the political economy leading up to the civil war. any of his books about reconstruction might be interesting but not exactly what you're looking for. "black reconstruction in america" by dubois is a keystone text that has a bit about the southern economic history. and maybe "old south, new south" by gavin wright for post reconstruction economic history
Thanks a lot!
never heard of the dutch disease (i am dutch). pretty cool comment thanks.
kind of funny to think they still have trouble to actually extract that gas due to activism around earthquakes and ppl not eager to move away from these places. also now the climate push.
it kinda looks (from an uneducated perspective) they suffered this disease for nothing.
Spaniard there. We have gentlemen like Leonardo Torres Quevedo and the 'Telekino', something even the IEEE would get amazed of.
But our damn national motto on R&D was "Que inventen otros" (Let the -foreign- ones invent).
EDIT: It actually was "Que inventen -sth- ellos" (let the others invent -it-).
Something like let's just slack down/keep living under a traditionalistic, rural, Romantic life at the 19th century, let the rest do the modern inventions. OFC as I said Torres Quevedo was the exception, but overall I find our right wing politicians still have that Empire bound mindset. Even the progressive left are almost ranting luddites, they look the Science down from their Liberal Arts thrones.
In the end it's some kind of outdated rural-Romantic idiots fighting another share of left sided outdated jerks with, paradoxically, a similar love to the Rural Spain, with the pure, hard working, 'ecological' peasant against the polluting urbanite.
And sometimes I wish these Boomer (literal boomers in both sides) influenced journalists get to the times for once and all. Use science to fight the climate change. Use libre software to expand education and knowledge like anywere else in History. Act smart and not with the guts.
But that's Science Fiction here.
Gold is a VERY unique metal and its value comes directly from that. Particularly the complete lack of oxidation, I'm sure it was seen as absolutely magic that it would not tarnish while every other metal known at the time would oxidize very easily.
Value is ultimately always in the eye of the beholder.
> Value is ultimately always in the eye of the beholder.
If you mean value per se, not at all. There are difference kinds of value (intrinsic, instrumental).
A piece of bread has objective nutritional value, for example. It doesn’t matter whether you personally dislike bread.
Nope.
As a trivial example, someone with celiac’s disease is not going to value your gluten ridden bread very high.
There are intrinsic properties of bread such as calorific content that a celiac can't deny. Same with gold.
The nutritional value of bread is still in the bread, even if celiac disease impedes or frustrates access to that value.
Indeed. I believe the parent commenter should pause and assess why people buy things, and what makes something desirable or a luxury good. We can start with mechanical watches: They are of poorer quality by every utilitarian measure than a crystal-oscillator driven one, but command much higher prices and status.
> They are of poorer quality by every utilitarian measure than a crystal-oscillator driven one, but command much higher prices and status.
But the value of the watch is not reducible to its value as a timekeeping device. (Even here, you could argue that the mechanical watch has more instrumental value as a timekeeping device where batteries are unavailable.)
A mechanical watch has greater value as a mechanical watch; it is mechanically more sophisticated, even if not electronically. It can have greater value as a product of superb craftsmanship or as an object of art. (And here, while tastes vary, I would reject the reduction of beauty to taste.)
> it is mechanically more sophisticated, even if not electronically. It can have greater value as a product of superb craftsmanship or as an object of art.
On any objective measurement axis a $15 Casio is more sophisticated than a $10_000 Rolex. I think what we value is the human scale of the Rolex, it operates and is manufactured at a scale we intuitively understand as humans, and we(or at least some people) value the sacrifices and effort needed to run at that scale.
Consider this, on your cheap Casio, the manufacturing tolerances are so tight and the parts are so complex and fine the only way to manufacture them are fully automated lines requiring a staggering capital investment of many millions, however because these lines have to be fully automated the economy of scale applies hard and the final product is very inexpensive.
All it takes to make a fine mechanical watch is a good watchmaker and several hundred thousand dollars of tooling.
One of my favorite watch repair videos is of a guy who rescues a smashed Casio, It has this fun combination of. it's a Casio, not worth even looking at. It is not designed to be serviced. Everything in it is super tiny, I mean watchmaking is already an exercise in frustration with how small everything is, which is why I enjoy watching them work but I have no real desire to do it myself, however in this Casio they were absurdly small. But this madlad did it. What a heroic fix.
> A mechanical watch has greater value as a mechanical watch
Note that this cannot work as a theory of value; everything has infinite value if you define value as "the ability of a thing to be itself".
There are various kinds of value and it is a mistake to confuse them or to reduce them to just one kind.
W.r.t. your imputed definition, there is a sense in which everything is irreplaceable, because the identity of two things that are otherwise entirely identical is never the same; that X is never this X.
But I was not making the claim that the value of something is its “ability be itself”. I was claiming that a thing x of kind A is more valuable as an A than a thing y of kind B as an A, where A is not B. This is trivially true.
Consider the utilitarian value of a pencil as an object for writing and consider a particle accelerator. It should be clear that the utility of a pencil as a writing instrument is greater than the utility of a particle accelerator as a writing instrument. The particle accelerator is more complex as a piece of technology, but so what? It has no value as an instrument for writing down your grocery list.
In any case, I was not proposing a comprehensive basis for a theory of value on this notion alone, so I’m not sure how you managed to selectively read that into my comment. It was only listed as one way in which one could say that a mechanical watch is more valuable than a Casio.
Can you see how that elegant description you wrote could be applied to Gold?
> every other metal known at the time
You’re forgetting lead, but the point is all the same.
Lead rapidly oxidizes and tarnishes, and is reactive with many chemicals, as any person who has actually worked with it can attest to.
If gold is inherently valueless, then isn’t shipping all of it away immediately to other countries in return for useful goods the most rational thing to do?
And if they could get gold at a fraction of the cost of other countries and exchange it for useful goods, isn’t that more rational than building the goods yourself?
The Spanish were not stupid and were not acting irrationally — except perhaps thinking on too short of a time frame. The gold trade was a total moral abomination, but it was a good trade economically for hundreds of years.
The main problem was that it was basically an arbitrage play and once the margin got erased from inflation, they had let the rest of their economy atrophy.
This is one of the reasons the Saudis invest so much money in tech companies and other industries.
It wasn't an arbitrage thing and I'm not sure there's anything fruitful in the comparison to saudi arabia.
The Spanish Empire was, more than anything else, a product of the reconquista. The major institutions of Spain were all directed towards the taking and holding of new lands. When granada finally surrendered in 1492, the monarchy turned towards conquering the canaries and then the new world to avoid the large scale structural changes needed to go from a militaristic, medieval nation to a peacetime state in the early modern. The systems of repartimiento and encomienda were more or less borrowed wholesale from the reconquista. The conquistadors and chroniclers all saw the Americas through the lens of the chivalric literature they loved. The name "California" was borrowed from one of those books, about a fictional island of Amazons who aided the moors.
Precious metals were a solution to the problems Spanish monarchs had in organizing Spanish society. It paid for soldiers in the monarchy's constant wars. It paid off loans to italian and dutch financiers, and it was something that could much more easily be controlled by a distant monarch than import duties or taxation (which nobility were largely exempt from). It also gave them some limited control over their inflation issues by devaluing and revaluing the coinage as financial pressures required. This eventually caused other problems, but the point is that Spain was never really an arbitrage play. They didn't have to be, since they controlled some 30% of the world's gold supply and >90% of its silver at points.
> The conquistadors and chroniclers all saw the Americas through the lens of the chivalric literature they loved.
More like the opposite. The Golden Age of Spain was all about making fun on the knight from the "New Man" making wealth from the Americas.
Heck, it's the main theme from Don Quixote. The old, idealistic, outdated, Medieval wannabe-knight (hidalgo meant hijo-de-algo, son of something, hereditary titles) vs the simpleton but grounded peasant from the New World era. Also tons of peasants tried to travel overseas to make good money, and maybe scaled up their status to the ones from a merchant.
As Cervantes itself was a limp from a war which was something reminiscing old romantic but bullshit times, with Don Quixote you have the clear message that the warrior/knights were looked down against the traveler making wealth from overseas.
Kinda like a far west outdated "Justiciero" in the US from an aristocratic background compared to some middle-level educated hick but with a prosperous job in the 50's thanks to making good money from trade in a fish port.
Don Quixote came out nearly a century after Cortes and is often cited as specifically having killed the genre/culture it was parodying. Look at how much Diaz talks about Amadis with full seriousness.
I would like to think that the New World self-building travelling pragmathism killed the epic born maybe from the Reconquista epics and of course from El Cid.
It's like finding New York policemen devouring dime novels around the Far West and believing themselves as lonely, macho gunslingers...
In the end the 70's cop movies aren't that different to a Western movie, but they still look a bit rusty compared to a Charles Bronson movie with slight detective skills where a bit of slow pace and thinkering it's needed and most of the old rural tropes wouldn't apply to a big city.
A similar thing would be comparing the Medieval Spain tactics against the post-Spain birth ones where guns were becoming to be the norm, such as the Arcabuz.
The old men in knight novels fought for their own good cause, but the New World men where just about the profit and trade. Coming back to Spain with goods was far more 'secure' than getting your life threatened by Mesoamerican tribes everyday. I mean, if you got the goods and avoided any fight, the better. It would be the most rational thing to do for the times. Specially without advanced medicine.
Meanwhile, it's obvious that the old Quixotic man wasn't afraid of death, but the new pragmatic Spaniard would have for sure a different mindset. Still a Catholic, but he would value far more its life once he was aware that some of his neighbours could improve their life in a trip and actually have some terrenal, tangible, REAL goods to enjoy instead of being tied to a farm or the fields and maybe just religion and the paradise as a relief.
Your values could quickly shift once you turned back to Spain loaded as hell with spices -very valuable for the time-, salt, exotic fruits, gold and who knows what. That and the incipient technology. Windmills? Guns? Far better ships? To hell with the hoe.
They did what was considered the rational at the time.
The modern view would be that investing the money can product long term economic benefits. The Saudis are trying to turn the temporary oil wealth into more permanent economic strength, so they'll remain wealthy when the oil is gone.
spain was no longer a major player in world politics by 1800s, but they had a good 2-3 century run. not sure if the monetary crisis was really did them in, or more just it being the ebb and flow of history. britain's world dominance is long over too. if they did "fuck up", it was because charles v was the first global hegemon, nobody know how to do that, he was in uncharted territory. and obviously no, the merino sheep weren't a better bet long term, that's absurd. global dominion required a cohesive domestic home country to serve as the wellspring of power, not the fractured foedal remnants of a mediaeval europe that required constant war to keep together. and then of course, industrialize early.
> then of course, industrialize early.
It's extremely convenient to have coal, iron, and waterways in the region where you wish to achieve that early industrialization.
There's a map somewhere showing where those happened - England, France/Germany, eastern/great lakes US.
Also limestone, needed as flux for iron and steel making.
The School of Salamanca about value and money said something else in 16th century. The Spaniards were anything but dumb.
It just happened that the British industrial revolution steamrolled everyone. You can't compete aganst the steam engine and the railway making communications and sharing of goods and raw materials something ridiculously cheap compared to the previous times, even by boat in both UK and Spain where the big rivers like Douro and Tagus could sustain a lot of transport. But, still, the train allowed to reach anyone in the country.
Which cheap transportation you can connect industrial powerhouses (and competent engineers and scientists) and the rest it's history. Addthe telegraph on top of that and it's game over for any outdated empire. When knowledge sharing can be reduced hours and maybe a day or two instead of weeks or months, it's like upgrading from having a 486 based computer with DOS to a Ryzen one with multiparallel processing. Literally.
Gold is used by industry at current prices due to its physical properties, so its current price and value are fairly close.
This still allows for significant price swings because there vast quantities of gold sitting around in vaults, but unlike say bitcoin it does have high intrinsic value. IE: If gold sustained a 90% drop in price across decades at lot more would be used by industry creating a price floor.
How can you conclude that the current price and value is fairly close? Seems to me that all you are showing (rightly so) is that there are some use of gold which has higher value than today's price.
I agree that industry use creates a price floor, but that might be much lower than what the price is today. I.e if suddenly everyone lost faith in gold as a carrier of value, so everyone who keeps gold just as a passive keeper of value started selling it off, then we would get a new market clearing price which represents golds 'real value'. I have no clue what this would be, but it is certainly not obvious to me that it's close to today's price.
> current price and value is fairly close
I’m talking orders of magnitude here. Supply and demand curves generally have a slope. As in the demand for goods by industry increases as the price decreases. A significantly larger portion of minded gold is used for jewelry than industry or investment, but a price drop would also reduce the amount mined.
Combine those and yes gold could get significantly cheaper especially with the vast quantities on hand, but it would still be a very expensive metal vs steel, aluminum, etc.
Gold's resistance to oxidation is pretty unique and valuable. Every metal with similar properties is also expensive — palladium is the most common and its price hovers around several hundred dollars per ounce despite being much less popular for jewelry or currency.
understanding what humans collectively find valuable is much more lucrative than understanding why humans collectively find a thing valuable
being on this forum for a decade I see people consistently get caught up in the latter, at the expense of noticing the opportunities the same people are here for
One thing you can do when people are spending money on magic beans is point out that magic beans don’t exist and they are all stupid for buying them. The other thing you could do is open a magic bean store.
Ideally you do the first part while buying up all the beans for cheap, then commence step 2: convince people they are super valuable and sell the magic beans for profit.
then,
selling people a better understanding of why they find things valuable, is worth a lot!
To be fair, Adam Smith and Marx would 100% agree on this point. It's not "capitalist" to confuse money with value, it's just a mistake.
A lot of Marx's writing was based on Smith's, so they agree a lot.
Marx called gold "the money-commodity" and said that paper money (even early fiat currency) always represents gold/silver in circulation.
The massive Spanish purchases of weapons and other manufactured goods from other countries in the 16th and 17th centuries played a large role in jump-starting the capitalist economic revolution in Europe.
Some of it ended up on the sea bed.
A solid 50% of this entire thread is people arguing about inflation and bikeshedding the concept of money. Amazing. (COVID gets an honorable mention. Six years on now, but hey. Stay mad.)
510 tonnes went to Moscow to never be seen again.
No it didn't. The gold didn't disappear.
Did you actually read the wiki you linked?
Spain transferred the gold to Moscow who liquidated it on Spain's behalf to buy guns, fund the civil war, and deposit in banks.
There's mixed views whether Moscow took too much of a margin, but they melted down gold after selling it and the gold is still in circulation.
Exactly that, never to be seen again :)
Huh?
If you melt down gold, how are you not staring at the same gold?
Moscow didn't steal anything either.
Hah, and me who thought they only stole Romania's national treasure, under the guise of 'safekeeping'.
I guess Russia has always been a shitty country.
> I guess Russia has always been a shitty country.
Eight hundred years is time enough to perfect it.
Except you're leaving out two key facts:
1. National treasures (ex gold) were returned in '35 and '56.
2. Romania intervened against the Bolsheviks in Bessarabia.
#2 seems like FAFO to me. And I'm sure some Romanians got kickbacks from the "transfers." Nobody forced Romania to transfer their assets.
You have no idea what you are talking about.
1. They never returned 92tons of gold. The vast majority of the national treasure is still in Moscow. I hope the EU ties this to the current Russian assets frozen in the EU.
2. Bolsheviks ? Russia collapsed in 1917 and Bassarabia voted to join Romania. There was no Russian control in Bassarabia, no war, no fight.
Nobody forced them, true, they were in dire circumstances, but it proves even more how much Russians can be trusted. 0. Shitty country since forever.
Please read again and calm down.
I expressly said "ex gold."
>Bolsheviks ?
Lmao. Where are you getting these falses premises?
1. Who rose to power after Russia collapsed in 2017?
2. There was no Bolshevik fighting or presence in Bessarabia?
3. Romania didn't intervene to fight Bolsheviks in Bessarabia?
You must be hallucinating to think otherwise.[0]
[0]https://en.wikipedia.org/wiki/Romanian_military_intervention...
1. You use 'ex' to mean except ? In common parlance ex means 'example'. So your phrase becomes: National treasures (example gold) were returned in '35 and '56.
Which is what I responded to.
Gold was part bars and part rare historical coins.
Also still unreturned, which is extremely valuable:
Queen Marie’s jewels were not returned The Romanian Crown Jewels were not returned Royal and dynastic archives Private deposits of Romanian citizens Orthodox Church treasures
https://www.europarl.europa.eu/doceo/document/TA-9-2024-0171...
2. Who were these Bolsheviks ? There was no government, they weren't Russian / Soviet - what were they ? Give me some source that shows Romania was fighting Tsarist Russia / URSS / Russia (?). Your article doesn't clarify that at all. I wonder why.
Romania entrusted Tsarist Russia with its national treasure.
Do you deny there's state continuity from before 1918 ?
>In common parlance ex means 'example'.
This claim is wrong.
You meant to say "ex." is common, noting the period for the abbreviation. Whereas ex is commonly used (See "ex dividend".) as I did above.
I'm skipping the rest of your reply because it's a waste of time after you loaded up with a spiteful tone -- "you don't know what you're talking about"-- only to be wrong about language and somehow you dispute the Wikipedia article which clearly mentions (anti-)Bolshevik opponents.
it's ok, I know you meant for this thread to diverge into pointless arguments. But for everyone else reading:
1. https://www.oed.com/search/dictionary/?scope=Entries&q=ex
2. "Bolsheviks" aren't a nation.
1917*
"The Spaniards will never see their gold again, just as they don't see their ears" this is supposedly what Stalin said according to Alexander Orlov. From the same link.
> supposedly
I’d give it the same relevance as “Moscow didn’t steal the gold” in any case.
If you sell something to another party or they deposit it in a bank on your behalf, then the other party didn't steal it.
You didn't answer my question.
Cherrypicking a quote from Stalin who was using sarcastic humor at a banquet when the gold arrived also doesn't refute my point or answer my question.
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