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> But the most revealing parallels relate to a different expansionary dynamic—that of money. The key to so much else that happened to both countries was the app

> But the most revealing parallels relate to a different expansionary dynamic—that of money. The key to so much else that happened to both countries was the appearance of what seemed like unlimited wealth but was actually access to unlimited quantities of a universal medium of exchange, craved and accepted everywhere. If you can’t tell the difference between stealing a bunch of gold in a gold based economy and the US Dollar, then there is not much hope for a decent analysis. At that time gold was the universal currency. So everyone wanted gold itself, and nobody cared where you got it from or if it was backed by anything, as long as the gold was real. So to summarize, people only cared about the material medium, not the backing of the Spanish government and economy. With the US Dollar, nobody wants the paper or ink that is the material medium. People care about the US Dollar because of the backing of the United States and its economy. The US Dollar could be paper, plastic or digital bits. People wants what it represents, not its medium. This is exactly opposite to Spanish gold.

rightbyte 3y ago
With enough gold mines under your control, you are essentially printing money.
- Darmody 3y ago
  Not exactly because gold has an intrinsic value.
  - boffinAudio 3y ago
    .. and thats the point: the intrinsic value of the US Dollar is has been declining for the last year. Gold holds its value because it can always be used for the things for which it is useful - the US Dollar, not so much.
  - throw0101b 3y ago
    > Not exactly because gold has an intrinsic value. Gold has zero intrinsic value. Like all forms of money, its value is a psychological and sociological construct to treat it as if it had value. The Incas for example simply used it for religious and ornamental purposes: * https://www.tourinperu.com/blog/inca-gold-culture-invasion-role https://www.tourinperu.com/blog/inca-gold-culture-invasion-r... Anything can be used as money, including giant rocks: * https://en.wikipedia.org/wiki/Rai_stones https://en.wikipedia.org/wiki/Rai_stones
    - Darmody 3y ago
      Gold is the only currency that kept it's value through time. There's a reason people buy gold. 1kg of Argentinian gold has the same value as 1kg of American gold. And both have the same value as 1kg of gold from any ancient civilization. Big rocks as currency is purely anecdotic. Of course, if you're in the desert and you're thirsty, a bottle of water has more value to you than all the gold in the world, but that doesn't change the fact that through millennia people has seen gold as something valuable that it's not tied to an economy, a country, an empire or even a culture despite de Incas.
      - throw0101b 3y ago
        > Gold is the only currency that kept it's value through time. Papers have been written on how it does not: * https://www.nber.org/papers/w18706 https://www.nber.org/papers/w18706 * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 See also Roy Jastram's The Golden Constant: The English and American Experience 1560 to 1976 on how it's no good against infaltion: > Andre Sharon, head of the international research department at Drexel Burnham, Inc., notes, “the value of gold essentially derives from its capacity to preserve real capital and purchasing power.”† I select this particular quotation because of the prestige of the organization and the position of the spokesman, but statements in this vein can be found in great numbers. They can be traced back for generations and in many countries. How can this proposition so contrary to statistical fact become so widely believed and quoted? Possibly because gold has preserved capital in cataclysmic cases it is easy to infer that it can be trusted to do the same in less severe circumstances. To extrapolate from gold’s protection in singular catastrophes to its use as a strategy against cyclical infation is an example of faulty inductive reasoning. * PDF: http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram-TheGoldenConstant.pdf http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram... * https://www.pwlcapital.com/will-gold-save-the-day/ https://www.pwlcapital.com/will-gold-save-the-day/ Having gold as one's monetary base (e.g. Gold Standard) doesn't even help in stabilizing currencies: * https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... * https://archive.ph/FWKcL https://archive.ph/FWKcL > Big rocks as currency is purely anecdotic. Big rocks as currency is one example of how any arbitrary object can be treated as such: * https://americanhistory.si.edu/the-value-of-money/origins-money/forms-money https://americanhistory.si.edu/the-value-of-money/origins-mo... Gold (or silver) bars and coins are nothing more than shiny rocks and are just as arbitrary.
  - krapht 3y ago
    What intrinsic value? It's shiny and rare, valuable for the same reason BitCoin is. The industrial usage of gold is limited to niche uses. The Spanish price revolution crippled the Spanish state due to the huge inflation driven by New World treasure fleets. Gold is nothing special here.
pavlov 3y ago
That's what makes the comparison interesting. Intuitively Spanish colonial gold and contemporary US Treasury bills are very different kinds of national wealth outputs. But what if the outcomes are still the same?
roody15 3y ago
“ People care about the US Dollar because of the backing of the United States and its economy. ” This may be changing. The US may have overextended its “credit line” if you will.
- yardie 3y ago
  The libertarians keep saying this. Yet the US continues to sell bonds to international investors who never question if the credit line is overextended. They continue to use the economic model they learned in high school economics class to a more complex economic model that is designed by and for a hegemony. The US has an almost unlimited credit line because investors are clamoring for it. It's literally the best, most stable investment going right now. They wanted it to be the EU and it has not been. They wanted it to be BRICs and that is a flaming dumpster fire right now. Very soon, they will state Africa is a better bet than the US. It's a young, dynamic economy; the very opposite of stable.
  - mwbajor 3y ago
    Could this not change in an instant though? "The US has an almost unlimited credit line because investors are clamoring for it. It's literally the best, most stable investment going right now. " Its hubris like this that worries people, not partisanship.
    - amanaplanacanal 3y ago
      What’s the alternative though? There has to be one for the dollar to fall.
  - somenameforme 3y ago
    The US debt is $32.3 trillion, and skyrocketing. [1] Total debt held by foreign/international investors is $7.3 trillion, and declining (both in absolute $ as well as percent). [2] The largest single holder is the Federal Reserve. Other holders are disproportionately made up of domestic organizations (like pension or mutual funds) which will collapse when the USD collapses, essentially regardless of hedging efforts, so they have no motivation to consider risk of collapse in their evaluations. [1] - https://fred.stlouisfed.org/series/GFDEBTN https://fred.stlouisfed.org/series/GFDEBTN [2] - https://fred.stlouisfed.org/series/HBFIGDQ188S https://fred.stlouisfed.org/series/HBFIGDQ188S
krona 3y ago
> People care about the US Dollar because of the backing of the United States and its military Corrected that for you.
- deleted 3y ago
  [deleted]
- nemo44x 3y ago
  The backing implies the military. A strong military is necessary for any independent, thriving state. The USA economy is the most dynamic and powerful in the world by a large margin. People want their wealth backed by this and will pay a premium for the right.
  - medo-bear 3y ago
    who this people ?
    - nemo44x 3y ago
      All the people holding trillions in treasuries. The people invested in USA markets. Etc.
louthy 3y ago
> People care about the US Dollar because of the backing of the United States and its economy. Really? Or is it that oil is purchased in dollars? There's no other reason to find it useful over say the Euro (for example).

rightbyte 3y ago

With enough gold mines under your control, you are essentially printing money.

Darmody 3y ago
Not exactly because gold has an intrinsic value.
- boffinAudio 3y ago
  .. and thats the point: the intrinsic value of the US Dollar is has been declining for the last year. Gold holds its value because it can always be used for the things for which it is useful - the US Dollar, not so much.
- throw0101b 3y ago
  > Not exactly because gold has an intrinsic value. Gold has zero intrinsic value. Like all forms of money, its value is a psychological and sociological construct to treat it as if it had value. The Incas for example simply used it for religious and ornamental purposes: * https://www.tourinperu.com/blog/inca-gold-culture-invasion-role https://www.tourinperu.com/blog/inca-gold-culture-invasion-r... Anything can be used as money, including giant rocks: * https://en.wikipedia.org/wiki/Rai_stones https://en.wikipedia.org/wiki/Rai_stones
  - Darmody 3y ago
    Gold is the only currency that kept it's value through time. There's a reason people buy gold. 1kg of Argentinian gold has the same value as 1kg of American gold. And both have the same value as 1kg of gold from any ancient civilization. Big rocks as currency is purely anecdotic. Of course, if you're in the desert and you're thirsty, a bottle of water has more value to you than all the gold in the world, but that doesn't change the fact that through millennia people has seen gold as something valuable that it's not tied to an economy, a country, an empire or even a culture despite de Incas.
    - throw0101b 3y ago
      > Gold is the only currency that kept it's value through time. Papers have been written on how it does not: * https://www.nber.org/papers/w18706 https://www.nber.org/papers/w18706 * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 See also Roy Jastram's The Golden Constant: The English and American Experience 1560 to 1976 on how it's no good against infaltion: > Andre Sharon, head of the international research department at Drexel Burnham, Inc., notes, “the value of gold essentially derives from its capacity to preserve real capital and purchasing power.”† I select this particular quotation because of the prestige of the organization and the position of the spokesman, but statements in this vein can be found in great numbers. They can be traced back for generations and in many countries. How can this proposition so contrary to statistical fact become so widely believed and quoted? Possibly because gold has preserved capital in cataclysmic cases it is easy to infer that it can be trusted to do the same in less severe circumstances. To extrapolate from gold’s protection in singular catastrophes to its use as a strategy against cyclical infation is an example of faulty inductive reasoning. * PDF: http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram-TheGoldenConstant.pdf http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram... * https://www.pwlcapital.com/will-gold-save-the-day/ https://www.pwlcapital.com/will-gold-save-the-day/ Having gold as one's monetary base (e.g. Gold Standard) doesn't even help in stabilizing currencies: * https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... * https://archive.ph/FWKcL https://archive.ph/FWKcL > Big rocks as currency is purely anecdotic. Big rocks as currency is one example of how any arbitrary object can be treated as such: * https://americanhistory.si.edu/the-value-of-money/origins-money/forms-money https://americanhistory.si.edu/the-value-of-money/origins-mo... Gold (or silver) bars and coins are nothing more than shiny rocks and are just as arbitrary.
- krapht 3y ago
  What intrinsic value? It's shiny and rare, valuable for the same reason BitCoin is. The industrial usage of gold is limited to niche uses. The Spanish price revolution crippled the Spanish state due to the huge inflation driven by New World treasure fleets. Gold is nothing special here.

pavlov 3y ago

That's what makes the comparison interesting. Intuitively Spanish colonial gold and contemporary US Treasury bills are very different kinds of national wealth outputs. But what if the outcomes are still the same?

roody15 3y ago

“ People care about the US Dollar because of the backing of the United States and its economy. ” This may be changing. The US may have overextended its “credit line” if you will.

yardie 3y ago
The libertarians keep saying this. Yet the US continues to sell bonds to international investors who never question if the credit line is overextended. They continue to use the economic model they learned in high school economics class to a more complex economic model that is designed by and for a hegemony. The US has an almost unlimited credit line because investors are clamoring for it. It's literally the best, most stable investment going right now. They wanted it to be the EU and it has not been. They wanted it to be BRICs and that is a flaming dumpster fire right now. Very soon, they will state Africa is a better bet than the US. It's a young, dynamic economy; the very opposite of stable.
- mwbajor 3y ago
  Could this not change in an instant though? "The US has an almost unlimited credit line because investors are clamoring for it. It's literally the best, most stable investment going right now. " Its hubris like this that worries people, not partisanship.
  - amanaplanacanal 3y ago
    What’s the alternative though? There has to be one for the dollar to fall.
- somenameforme 3y ago
  The US debt is $32.3 trillion, and skyrocketing. [1] Total debt held by foreign/international investors is $7.3 trillion, and declining (both in absolute $ as well as percent). [2] The largest single holder is the Federal Reserve. Other holders are disproportionately made up of domestic organizations (like pension or mutual funds) which will collapse when the USD collapses, essentially regardless of hedging efforts, so they have no motivation to consider risk of collapse in their evaluations. [1] - https://fred.stlouisfed.org/series/GFDEBTN https://fred.stlouisfed.org/series/GFDEBTN [2] - https://fred.stlouisfed.org/series/HBFIGDQ188S https://fred.stlouisfed.org/series/HBFIGDQ188S

krona 3y ago

> People care about the US Dollar because of the backing of the United States and its military Corrected that for you.

deleted 3y ago
[deleted]
nemo44x 3y ago
The backing implies the military. A strong military is necessary for any independent, thriving state. The USA economy is the most dynamic and powerful in the world by a large margin. People want their wealth backed by this and will pay a premium for the right.
- medo-bear 3y ago
  who this people ?
  - nemo44x 3y ago
    All the people holding trillions in treasuries. The people invested in USA markets. Etc.

louthy 3y ago

> People care about the US Dollar because of the backing of the United States and its economy. Really? Or is it that oil is purchased in dollars? There's no other reason to find it useful over say the Euro (for example).