[HN Gopher] What happened to all the gold Spain got from the New...
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What happened to all the gold Spain got from the New World? (1985)
Author : titaniumtown
Score : 58 points
Date : 2025-12-22 07:18 UTC (4 days ago)
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| ggm wrote:
| 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.
| yieldcrv wrote:
| 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
| metalman wrote:
| then,
|
| selling people a better understanding of why they find things
| valuable, is worth a lot!
| empath75 wrote:
| 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.
| HPsquared wrote:
| 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.
| aarroyoc wrote:
| 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 (ht
| tps://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
| saidnooneever wrote:
| 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.
| Herring wrote:
| 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...
| paganel wrote:
| > 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).
| greenie_beans wrote:
| 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
| paganel wrote:
| Thanks a lot!
| anthk wrote:
| 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.
| faidit wrote:
| 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.
| trgn wrote:
| 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.
| B1FF_PSUVM wrote:
| > 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.
| pfdietz wrote:
| Also limestone, needed as flux for iron and steel making.
| Scubabear68 wrote:
| 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.
| the__alchemist wrote:
| 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.
| lo_zamoyski wrote:
| > 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.)
| the__alchemist wrote:
| Can you see how that elegant description you wrote could
| be applied to Gold?
| thaumasiotes wrote:
| > 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".
| somat wrote:
| > 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.
|
| https://www.youtube.com/watch?v=0IhPFutz1XI
| tylerflick wrote:
| > every other metal known at the time
|
| You're forgetting lead, but the point is all the same.
| buildsjets wrote:
| Lead rapidly oxidizes and tarnishes, and is reactive with
| many chemicals, as any person who has actually worked with
| it can attest to.
| lo_zamoyski wrote:
| > 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.
| Scubabear68 wrote:
| Nope.
|
| As a trivial example, someone with celiac's disease is not
| going to value your gluten ridden bread very high.
| ajross wrote:
| 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.
| RobotToaster wrote:
| A lot of Marx's writing was based on Smith's, so they agree a
| lot.
| Retric wrote:
| 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.
| Epa095 wrote:
| 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.
| scythe wrote:
| 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.
| Retric wrote:
| > 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.
| empath75 wrote:
| 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.
| AlotOfReading wrote:
| 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.
| anthk wrote:
| > 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.
| AlotOfReading wrote:
| _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.
| anthk wrote:
| 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.
| anthk wrote:
| 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.
| ErneX wrote:
| 510 tonnes went to Moscow to never be seen again.
|
| https://en.wikipedia.org/wiki/Moscow_Gold_(Spain)
| caminante wrote:
| 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.
| ErneX wrote:
| Exactly that, never to be seen again :)
| caminante wrote:
| Huh?
|
| If you melt down gold, how are you not staring at the same
| gold?
|
| Moscow didn't steal anything either.
| ErneX wrote:
| "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.
| throw20251220 wrote:
| > supposedly
| ErneX wrote:
| I'd give it the same relevance as "Moscow didn't steal
| the gold" in any case.
| caminante wrote:
| 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.
| caminante wrote:
| 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.
| gtech1 wrote:
| 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.
| caminante wrote:
| 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.
| gtech1 wrote:
| 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.
| caminante wrote:
| 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_interv
| ention...
| caminante wrote:
| 1917*
| mcc1ane wrote:
| > 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!
| adastra22 wrote:
| 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.
| PessimalDecimal wrote:
| 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.
| usefulcat wrote:
| 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.
| derf_ wrote:
| 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.
| Ekaros wrote:
| 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.
| analog31 wrote:
| 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.
| HPsquared wrote:
| You can't eat gold.
| gtdhvy wrote:
| You can though. People eat gold all the time.
| nkrisc wrote:
| 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.
| cenamus wrote:
| You also can't eat money, but I imagine it's pretty useful if
| you're hungry
| lazide wrote:
| 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.
| wongarsu wrote:
| They spent a lot of resources (some tangible, some less
| tangible) and ended up getting a roughly equivalent amount of
| money out if it
| esafak wrote:
| 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
| kristianp wrote:
| 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: h
| ttps://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.
| goodcanadian wrote:
| 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.
| ijk wrote:
| 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.
| nradov wrote:
| 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.
| Gibbon1 wrote:
| 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.
| nickff wrote:
| Notably, the 'massive inflation' was a rate of 1-1.5% per
| year...
| AnimalMuppet wrote:
| Which, for the gold standard, is still rather shocking.
| SoftTalker wrote:
| 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.
| throwup238 wrote:
| 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
| maravedi 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 maravedi (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 maravedi 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.
| ares623 wrote:
| hold up a minute
| financetechbro wrote:
| We're sadly living through the same thing right now
| conception wrote:
| Actual EL5 - Stregga Nona but with money.
| Herring wrote:
| 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.
| rr808 wrote:
| 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.
| cherryteastain wrote:
| Adam Smith's Wealth of Nations explores the topic in depth
| hecanjog wrote:
| How is this the top comment on a hacker news article... we all
| can't be bothered to use any critical thinking skills? Explain
| it to me like I'm 5 is seriously the most up-voted sentiment?
| This place has been proclaiming it's on a downtrend for years,
| but I think I finally believe it.
|
| Edit: I believe in plain-speaking. "ELI5" being code for this
| is weird to me but if that's really what it is, cool. If it's
| really a code for "I want to understand this more deeply
| without jargon" I get it.
|
| If it's code for "I don't want to understand this, just tell me
| the answer" then I don't really understand the appeal on a site
| like hacker news... that's the perspective that made me post
| initially. What is curious about this?
| delbronski wrote:
| Smugness level 110. It is a good question. Get over yourself
| please.
| hecanjog wrote:
| 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.
| Loughla wrote:
| Eli5 is a common way of asking for clarification. That's
| all.
| hecanjog wrote:
| 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.
| busyant wrote:
| 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.
| hecanjog wrote:
| 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.
| rayiner wrote:
| > 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.
| anthk wrote:
| 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 Cadiz
| 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.
| nradov wrote:
| 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.
| aurizon wrote:
| 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.
| anthk wrote:
| We were democratic before Franco. Twice. Until the damn
| conservatives threw the Republic down, twice, too.
| pfdietz wrote:
| 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.
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