3 ms·
I remember reading an economic history book and they mentioned that the Spanish bringing gold to Europe from the Americas stimulated the European economy, and i
by ksdale 6y ago
I remember reading an economic history book and they mentioned that the Spanish bringing gold to Europe from the Americas stimulated the European economy, and it struck me all at once that basically none of the economic activity in Europe required gold (they weren't making intricate electronics, after all). Growing food, making clothes, tools, shelter, it all could have been done without the gold. What they needed was "money" that everyone believed was valuable in order to convince people to do work. It's the work that causes prosperity, not the gold.
I think local currency can function similarly. A lot of people in small towns struggle to turn their skills into dollars, partly because the modern economy values a lot of stuff rather weirdly. Just because their skills aren't easily translatable into dollars globally doesn't mean that they can't still make their local community a much better place, provided there's a way for someone in the local community to communicate that they value the service (which they can't do using dollars, because they also don't have any).
- hammock 6y ago>the Spanish bringing gold to Europe from the Americas stimulated the European economy "Stimulated the economy" is a choice way of looking at it. What it did was create a period of inflation on a scale of size and duration never before seen. It basically led to the decline of Spain as a major world power. https://en.m.wikipedia.org/wiki/Price_revolution https://en.m.wikipedia.org/wiki/Price_revolution
- ksdale 6y agoInteresting! Thank you for the link.
- dctoedt 6y agoI've just finished Stephanie Kelton's book on modern monetary theory (MMT), The Deficit Myth, which says much the same thing about any fiat currency: The issuer of a fiat currency is not bound by the same constraints as users of that currency. I'm not quite convinced (although I'm no economist), but it was an interesting "read" (audiobook). The Deficit Myth: https://www.amazon.com/Deficit-Myth-Monetary-Peoples-Economy/dp/B087KJLKCC/ref=sr_1_1 https://www.amazon.com/Deficit-Myth-Monetary-Peoples-Economy... (not an affiliate link) A good MMT primer seems to be a Vox article by Dylan Matthews (TIL he's the son of Jim Matthews, creator of the Fetch FTP client), at https://www.vox.com/future-perfect/2019/4/16/18251646/modern-monetary-theory-new-moment-explained https://www.vox.com/future-perfect/2019/4/16/18251646/modern...
- dumbfoundded 6y agoDemand for gold primarily was due to trade with Asia. The problem wasn't that people didn't have gold to trade in their local communities. Local economies rarely relied on coinage during this time. They use an informal credit system on the small scales (like IOUs). The Asian thirst for precious metals was driven by high internal use of coinage where for Europe, it was mostly to buy things from Asia. As the European gold balances dropped, they sought other sources from Africa and later from the Americas to continue trade. You can learn more here: https://en.wikipedia.org/wiki/Great_Bullion_Famine https://en.wikipedia.org/wiki/Great_Bullion_Famine If you're really interested, I recommend "Debt" by David Graeber