I mentioned capital factors.
after 1492, something very interesting began to happen in Spain, and to ripple out around the rest of Europe.
Money prices for goods and services began to rise.
assuming a constant weight of precious metal, the price of goods usually goes down over time as improving technology and knowledge allows people to find better ways to do things and to become more and more productive
I said a constant weigh of precious metal, rather than the face value of the money because kings and governments have always tried to debase the currency, calling in the old coins and exchanging them one for one for new coins that contain less precious metal. the king then got to spend the precious metal that he had kept back.
Due to the Spanish conquests in the New World, the ammount of specie (precious metal coins) circulating in Europe, approximately doubled.
The new money caused economic distortions along the routes that it entered the European economy (these are called "Cantillon Effects" after the Irish French banker who described them after his experience with the paper money Mississippi Bubble in France).
There was massive development around the southern Spanish ports where the gold was landed - at the expense of development in other parts of spain (look at the current development around the areas where paper money enters the US economy - Wall Street, DC and Silicon Valley!)
The new money drew in imports, especially for luxury goods - rather than local production (sound familiar?)
Once the ship loads of new money stopped arriving, the oppulance in Spain was revealed to be un-sustainable
Agriculture and local industry had been run down, in favour of luxury developments in southern spain, paid for by the new money.
Ordinary Spaniards were left far poorer than they would have been - and many had developed a sense of entitlement rather than of enterprise. Arguably that attitude and those distortions still afflict Spain to the present day.
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Since LBJ stopped redemption of paper dollars into gold in around 1968, and Tricky Dicky completely reneged on the Bretton Woods agreement in around 1971 and removed the link between the dollar and gold
the whole world has been on an entirely paper money (this is the ultimate debasement of money).
to give some idea of how much the American establishment has robbed the world through money printing. One dollar was officially 1/32 of an ounce of gold in 1971
One dollar will currently buy you around 1/1300 of an ounce of gold.
That money printing has worked as an invisible tax on everyone - transferring resources to the establishment and to their cronies
It's a flow of resources away from productive activities and towards the kleptocracy (politicians, bureaucrats, Wall Street (banksters and hedge funds).
The effects of this on standards of living were masked for a while by women increasingly entering paid work, and contributing to family incomes.
but now, the economy is so starved of capital resources that productive activities are having to be abandoned. businesses and industrial plant that should have been maintained and updated has had to be neglected. Despite needs for goods and services - there are not the resources left to employ everyone, and the purchacing power of those who are still employed is declining.
It's very easy for politicians to point to what the stolen money was spent on and to claim credit for great works - it is much more difficult to explain to people that the stolen money would have been used by its rightful owners to make and do things that we will now never see the results of (this is the Broken window fallacy)
The result is - people are now seeing a future that is worse than the past
Too many have too little to lose and as a result are open to demagogues - and what a crop of demagogues this election cycle has thrown up.
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The broken window fallacy in under 2 minutes:
after 1492, something very interesting began to happen in Spain, and to ripple out around the rest of Europe.
Money prices for goods and services began to rise.
assuming a constant weight of precious metal, the price of goods usually goes down over time as improving technology and knowledge allows people to find better ways to do things and to become more and more productive
I said a constant weigh of precious metal, rather than the face value of the money because kings and governments have always tried to debase the currency, calling in the old coins and exchanging them one for one for new coins that contain less precious metal. the king then got to spend the precious metal that he had kept back.
Due to the Spanish conquests in the New World, the ammount of specie (precious metal coins) circulating in Europe, approximately doubled.
The new money caused economic distortions along the routes that it entered the European economy (these are called "Cantillon Effects" after the Irish French banker who described them after his experience with the paper money Mississippi Bubble in France).
There was massive development around the southern Spanish ports where the gold was landed - at the expense of development in other parts of spain (look at the current development around the areas where paper money enters the US economy - Wall Street, DC and Silicon Valley!)
The new money drew in imports, especially for luxury goods - rather than local production (sound familiar?)
Once the ship loads of new money stopped arriving, the oppulance in Spain was revealed to be un-sustainable
Agriculture and local industry had been run down, in favour of luxury developments in southern spain, paid for by the new money.
Ordinary Spaniards were left far poorer than they would have been - and many had developed a sense of entitlement rather than of enterprise. Arguably that attitude and those distortions still afflict Spain to the present day.
_____________________________________
Since LBJ stopped redemption of paper dollars into gold in around 1968, and Tricky Dicky completely reneged on the Bretton Woods agreement in around 1971 and removed the link between the dollar and gold
the whole world has been on an entirely paper money (this is the ultimate debasement of money).
to give some idea of how much the American establishment has robbed the world through money printing. One dollar was officially 1/32 of an ounce of gold in 1971
One dollar will currently buy you around 1/1300 of an ounce of gold.
That money printing has worked as an invisible tax on everyone - transferring resources to the establishment and to their cronies
It's a flow of resources away from productive activities and towards the kleptocracy (politicians, bureaucrats, Wall Street (banksters and hedge funds).
The effects of this on standards of living were masked for a while by women increasingly entering paid work, and contributing to family incomes.
but now, the economy is so starved of capital resources that productive activities are having to be abandoned. businesses and industrial plant that should have been maintained and updated has had to be neglected. Despite needs for goods and services - there are not the resources left to employ everyone, and the purchacing power of those who are still employed is declining.
It's very easy for politicians to point to what the stolen money was spent on and to claim credit for great works - it is much more difficult to explain to people that the stolen money would have been used by its rightful owners to make and do things that we will now never see the results of (this is the Broken window fallacy)
The result is - people are now seeing a future that is worse than the past
Too many have too little to lose and as a result are open to demagogues - and what a crop of demagogues this election cycle has thrown up.
_____________________________________________________________
The broken window fallacy in under 2 minutes:
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