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>The result was an immediate increase in the money supply, and a rapid growth in overall economic activity. Wouldn't a massive increase in money supply of the

>The result was an immediate increase in the money supply, and a rapid growth in overall economic activity. Wouldn't a massive increase in money supply of the amount Smaug guarded just lead to Hyper Inflation?

omegant 13y ago
Or an economic bubble. Or both depending on the rate of release of the cash
chrisgd 13y ago
Hyper inflation is hard without an external event (war, loss of all foreign trading partners, etc.). Just an increase in the money supply has very little to do with hyper inflation.
ctdonath 13y ago
No, because the "money" involved is real goods with intrinsic value, not to be confused with "fiat money" where currency units have value unilaterally declared and have no market value on their own. Sure, unleashing all that gold etc. would have a massive economic impact (as the annual GDP jumps several times over), but not hyperinflation. AFAIK, hyperinflation amounts to cutting a pizza into thinner slices to feed a large number of people: the total "value" of the pizza being inadequate to satisfy the group's hunger, cutting enough slices by cutting them thin renders each slice unsatisfying, and addressing subsequent demands for more by cutting existing slices thinner still just "devalues" existing slices while giving a brief (and absurd) stance of "I gave you however many slices you wanted - be satiated!" Fiat currency just represents the total value of the culture holding it, with N currency units each representing 1/Nth of total value; hyperinflation occurs when the government owes debt D > 1 and tries to make N*(1/N) > D by increasing the value of N, which of course doesn't work.
- jerf 13y ago
  Recall that part of the economic impact would be to send the real value of gold plummeting, significantly mitigating any "economic damage" that might occur. Given the primitive communications available at the time, the adventurer's best option is probably to spend as little gold as possible in town as rapidly as possible, before the collective value of gold can catch up, then burn metaphorical rubber for the next large town to try to beat their own news about their stash, and repeat as long as possible. If you price everything in terms of their gold value, the result would look like hyperinflation, but it wouldn't really be that, it's really just a one-time event. But it would be disruptive.

omegant 13y ago

Or an economic bubble. Or both depending on the rate of release of the cash

chrisgd 13y ago

Hyper inflation is hard without an external event (war, loss of all foreign trading partners, etc.). Just an increase in the money supply has very little to do with hyper inflation.

ctdonath 13y ago

No, because the "money" involved is real goods with intrinsic value, not to be confused with "fiat money" where currency units have value unilaterally declared and have no market value on their own. Sure, unleashing all that gold etc. would have a massive economic impact (as the annual GDP jumps several times over), but not hyperinflation. AFAIK, hyperinflation amounts to cutting a pizza into thinner slices to feed a large number of people: the total "value" of the pizza being inadequate to satisfy the group's hunger, cutting enough slices by cutting them thin renders each slice unsatisfying, and addressing subsequent demands for more by cutting existing slices thinner still just "devalues" existing slices while giving a brief (and absurd) stance of "I gave you however many slices you wanted - be satiated!" Fiat currency just represents the total value of the culture holding it, with N currency units each representing 1/Nth of total value; hyperinflation occurs when the government owes debt D > 1 and tries to make N*(1/N) > D by increasing the value of N, which of course doesn't work.

jerf 13y ago
Recall that part of the economic impact would be to send the real value of gold plummeting, significantly mitigating any "economic damage" that might occur. Given the primitive communications available at the time, the adventurer's best option is probably to spend as little gold as possible in town as rapidly as possible, before the collective value of gold can catch up, then burn metaphorical rubber for the next large town to try to beat their own news about their stash, and repeat as long as possible. If you price everything in terms of their gold value, the result would look like hyperinflation, but it wouldn't really be that, it's really just a one-time event. But it would be disruptive.