101–110 of 159 posts
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Notably, the 'massive inflation' was a rate of 1-1.5% per year...
Which, for the gold standard, is still rather shocking.
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.
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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 advocati…
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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.
> 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 ind…
> 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.
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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.
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 bett…
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...…
Transcontinental fleet of ships regularly circumventing the globe and transporting cargo requires lots of technology. Why marine industry didn't stimulate manufacturing and industrialization?
> 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!
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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 polic…
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.