Hey that is actually a valid point about Iberia, but I believe it was mostly silver with regards to the flood into Europe and the resulting price increases. Bolivia, Peru and such were oozing silver, kids would kick it down the alleys.
It really is the exception that proves the rule, though. There are no new continents to discover like there were 500 years ago. The galleons of silver poured into Europe before even Adam Smith’s grandparents were born. We can politely say the bullion was mismanaged long before the concept of supply/demand was codified.
Mine production has essentially increased in line with population growth for decades now if not centuries. You’ve got to move a lot of earth and there is no going around that. I’m guessing a couple grams per ton at the best mines.
Fiat is a different story altogether. They all go extinct. That is the rule without exception. I was looking at some paper currencies from the Mongolian Empire the other day!
Fiat counterfeiters have done more damage to humanity than anything else.
I don't doubt that.
In my opinion, gold is much better than fiat and that any other, however, is not because it has an intrinsic value but because of a series of circumstances that make it so.
Damn, I thought we were making progress.
intrinsic - Belonging naturally; essential.
extrinsic - Not part of the essential nature of someone or something; coming or operating from outside.
value - The regard that something is held to deserve; the importance, worth, or usefulness of something.
progress - Forward or onward movement towards a destination
Oxford dictionary.
Ha, that's what I thought.
If gold possessed intrinsic value there would be no possible way to devalue it.
What happened in Spain is not only an exception. It happened in all western Europe, the abundance of gold made that the products in the international market went up doing that the countries that did not benefit from the colonization went bankrupt, this is one of the reasons why the Ottoman Empire declined.
There is also the example of Mansa Musa, who on his pilgrimage to Mecca causes the devaluation of gold from Mali to the Middle East, wiping out all the markets of the Mediterranean.
And of course, the fact that the American Indians had so much gold that did not give them much value, they also did not know its usefulness, so it shows us that the utility is related to the knowledge that humans have of it and to the human needs.
It's not a myth that the Spaniards bartered with the Indians to give them mirrors and trinkets from the old continent in exchange for gold. This might seem like a scam today, but it was not, for an American the mirror had more value than gold.
I have never heard of Mansa Musa. Quick check shows he died 585 years before the end of the Ottoman empire and went to mecca, not anatolia.
Back to south America, we have already covered the fact that there was abundance of silver rather than a scarcity, which was the case everywhere else. Scarcity is one of the intrinsic features of precious metals, hence the term precious, hence their value.
To say silver has no intrinsic value would be saying nothing has intrinsic value. The main veins have been exploited, tons of earth have to be moved per ounce. Were there isolated times in history in isolated places where veins were bursting on surface? Yes, those are exceptions.
It has industrial uses as well. There is a reason the US constitution defines the dollar in terms of silver, that is because it has intrinsic value.
I never said that he went to Anatolia, and in fact, if you reread my comment you will notice that I said that he went to Mecca.
Mansa Musa has nothing to do with the Ottomans, maybe I did not explain myself well.
I said that the gold obtained by the Europeans through colonization made it devaluate, so the nations that did not colonize and therefore could not grow their coffers, like the Ottoman Empire, collapsed economically.
Scarcity can not be intrinsic, scarcity is precisely linked to other things, we say that something is scarce not because there is much or little, but because the supply is much less than the demand for such a thing. So that if the demand goes down, the same product that is scarce could become abundant, because nobody would want it anymore.
If tomorrow we go to Mars and discover giant gold mines there making it abundant, just to give an extreme example, then the gold would be devaluated.
Exactly. That is why I said that the value is subjective, because the valuation depends on the subject and not on the qualities of the object, therefore, the value varies depending on the circumstances, not depending on the object itself.
Obviously intrinsic value is a thing. It is no mystery gold has always been more expensive than silver because there is less gold than silver. I never said items with intrinsic value are not subject to changes in price in markets based on supply and demand. The two concepts are not mutually exclusive. Items with intrinsic value can vary in price over time and location.
Furthermore there is evidence colonies were more of a drain on colonizers than a benefit. As far as colonies go Germany had few yet they, the German people have always been a competent, educated, successful, manufacturing powerhouse. Sweden's colonial history is basically nonexistent and they have always been successful.
The richest country in the universe, the United States also barely had a colonial history. The few colonies we had contributed nothing to the enrichment of the US. The US became rich under the silver and gold standard. The industrial revolution occurred under the silver and gold standard. The path to the present day third world banana republic starts with the creation of the illegal federal reserve and their subsequent counterfeiting operations. Gold and silver can't be counterfeited like green cotton paper because of it's intrinsic qualities.
When you go back in history you'll find gold and silver money as old as 3000 years old from Lydia and Assyria. But it was used long before then as a sort of nonstandardized proto money. Even though the weights and purities brought some guess work into the game it was far superior to gurs of barley. Try using gurs of barley as you money and you'll see why gold and silver are intrinsically superior. "basic to a thing, being an important part of making it what it is" is how Cambridge defines intrinsic.
Indeed they can vary in prices without decreasing in value, but only now, that the price is dictated by FIAT currencies, but in the past, that FIAT did not exist and gold was money, depreciation meant exactly devaluation.
You also forget that gold had a lower valence in barter with other things, like when the Spaniards and Indians, and in that case, in which there was no price, the gold was effectively devalued.
Do not think that I come with a rhetoric of oppressors-oppressed, I know well that colonization brought both good and bad to both sides, however, it's not true that the colonies were a drain.
The colonies allowed countries like the United Kingdom to make a large accumulation of capital never seen before, which allowed the big capitalists to invest their money in specific places like London, which would cause a technological advance and allow the industrial revolution.
If you look closely at the story, there was always a constant East-West struggle; Greece vs. Persia, Rome vs. Carthage, the Barbarian Kingdoms vs. the Abbasid Caliphate, and Medieval Europe vs. Ottoman Empire. The battle was always close, and in the last centuries the East had a clear advantage. However, after the period of colonization, the eastern nations were not even rivals of Europe, who colonized the entire world, from the new America, to old China (some enclaves).
Germany certainly was not a great colonizer, however, its progress is due to the industrial revolution that took place in the United Kingdom, precisely because they did colonize.
The same with the United States, which also saw an advance driven, not by colonization, but by expansion in a territory very rich in resources, because we must remind ourselves that at the time of independence there were 13 colonies.
But I really don't think that by now we can reach an agreement on the main issue of gold. However, nice discussion.