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40 sats \ 6 replies \ @Undisciplined OP 25 Nov \ parent \ on: Could an Increase in the Supply of Gold Cause a Boom-Bust Cycle? econ
I recall hearing that there is a pretty enormous amount of sunken treasure. If someone secretly discovered a way to locate and recover a bunch of it, that could upset the gold markets.
The issue would be if it was known that a new approach was discovered for locating sunken vessels. Then, prices and interest rates would anticipate the likely increase in supply.
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Also, the labor involved leads to making it have value. I guess you could say the Cantillion Effect would still happen and the finders would get the most benefit from the new-found gold but later inflation sets in. I don’t think it would be as bad as the Spanish Conquest, though, due to being only a small fraction of the existing supply of gold and the high demand for it.
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The magnitude of Spanish inflation was actually very low by modern standards, if I recall correctly. I think it was less than one percent a year.
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Yes, that may be true, but the stability supplied by gold and silver standards, imply that there was no inflation rather, deflation as the years went by. I think that there was the same sort of deflation in the US, even after the ‘49 gold rush.
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Yes, prices were so stable that they were believed to be almost divinely set.
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You know, they still might be that stable. The price of a good toga and complete outfit used to be one ounce of gold. I think a bespoke suit and accoutrements can still be bought for that one ounce of gold. Divinely set? I am not sure of that, but it certainly looks very stable to me.
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