Posted on 06/03/2011 8:10:13 AM PDT by SunkenCiv
Between 1520 and 1650, Spain's economy suffered crippling and unrelenting inflation in the so-called Price Revolution. Most historians have attributed that inflation, in part, to the importation, starting in 1550, of silver from the Americas, which supposedly put much more currency into circulation in Spain. But in a report out this week, a team of researchers argues that for more than a century the Spanish did not use this imported silver to make coins, suggesting that the amount of money circulating in Spain did not increase and could not have triggered the inflation... archaeometrist Anne-Marie DeSaulty and colleagues at the University of Lyon in France used mass spectrometry to measure the ratios of several metal isotopes -- atoms of the same element with different numbers of neutrons in their nuclei...
The Latin American coins generally had a broader mix of different silver, lead, and copper isotopes than the European coins, likely because of the geologic complexity of the volcanic caves that hosted the New World's most prolific silver mines, the researchers report online this week in the Proceedings of the National Academy of Sciences. The ratio of the silver-109 isotope to silver-107 turned out to be much higher in New World silver than in the European coins. More important to the debate over the Price Revolution, the researchers discovered that coins with dates and heads indicating that they were minted in Spain prior to the reign of Philip V (1700 to 1746) had an isotopic makeup similar to medieval European coins. In contrast, coins minted later were more similar to those from the Andes. That suggests that even though American silver arrived in Spain in 1550, the Spanish waited well over 100 years before using it for their own currency.
(Excerpt) Read more at news.sciencemag.org ...
History.
Excellent. These economists epitomize poor economic thinking. That imported silver wasn’t used for coining doesn’t mean it didn’t affect prices.
Uh, history as your life’s work, or as an avocation?
You know more history about so many things that I can’t imagine that you teach it. No offense to my history teachers over the years, but most of them are more limited in their scope — concentrating on one, or two, periods, or regions.
In 1500 Spain had a quite vibrant economy, with prospering mercantile, financial, agricultural and industrial sectors, certainly as compared to France or England of the time.
For a host of reasons these sectors all declined, not only as compared to competitors, but even absolutely, particularly after the mid-1600s.
There are literally dozens of reasons, so trying to nail down A or B as “the cause” is pretty much a waste of time.
Possibly the most important single cause would be the 80 Years War Spain engaged in to try to crush Protestantism and independence in the Netherlands, not to mention intermittently trying to enforce absolutism and absolutism throughout Europe (Armada, 30 Years War, etc.).
10 years of war in Iraq and Afghanistan has been a strain on our economy. The Spanish wars were at least an order of magnitude more difficult for its economy to handle and were pretty nearly continuous for a century.
It was more the social dislocation caused by emigration to the colonies and the banishment of the people who constituted the knowledge base.
They kept kicking people out because of their religion, or doubts about their religion.
BTW, Philip II had been King of England with Queen Mary. He was hardly isolated from world affairs and the currents of Protestant thought. His war against Nederlandish rebels would have happened even if they'd all turned into Recollect Friars.
Spain had this Democrat thing down pat ~ NO THINKING ALLOWED ~ just spend the money!
At the same time, with all the smart guys in the country somewhere else, many in the Americas, the colonies prospered, and by the time Philip II reached the end of his reign the smart guys had already prepared to establish a prime meridian in North America, and several baselines, for purposes of subdividing the continent, selling off the land to developers, and creating a new civilizatioin.
Fortunately Philip died and was replaced by his son Philip III, and he actually put that plan into place. Check the Treaty of London in 1604. That singular act made it possible for EUROPE to develop North America, which happened, and here we are.
BTW, Philip III was otherwise not terribly interested in government, and that was a good thing. His involvement in parties and socializing allowed Spaniards abroad to give up the fascist mailed fist.
They kept some of it to make guns. They formed the Swedish Empire around the care and use of that single product ~ which was a very good product for its day.
Later on they actually started to think they were smart and good and all that and next thing you know the whole Empire belonged to other people.
LOL, that’s the cycle of every great people/nation/society since the dawn of time.
Pride cometh before the fall.
Wow! I am embarassed that such abject ignorance could pass muster among the peers of the AAAS that this could be published on Science NOW!.
Inflation is always and everywhere a monetary phenomenon.
—Milton Friedman, Wincott Memorial Lecture, London, September 16, 1970
This article hinges on quibbling about the difference between money and coinage which is but one component of money. That there was inflation is itself evidence of increased quantity or velocity of money. The only question is to understand what was the source of that.
Indeed, the article states " the heavy bars ... could ... traded with other countries to offset Spain's many costs, which at this time included financing wars in the Netherlands and importing porcelain and silk from China."
Ok so it was not turned into coins because such large quantities were needed for large scale purchases of war supplies, etc. In a world where the value was the precious metal and not the coin, and indeed debasement of coinage was an understood concept, silver bars were sound money if somewhat cumbersome for your standard consumer transaction.
Let’s not forget that as the Jews and Moors were being ejected from Spain, most of their wealth was being stolen from them and kept in Spain. What would be the impact of fewer people and more property, goods, and money?
But, in order to have a lot of inflation you have to have a lot of new money in circulation, and so where did the money come from? This article attempts to argue that the the new silver did not go into coinage in Spain, and so could not have caused monetary inflation. The sample size was far too small to reach the minor premise, and is irrelevant to the major premise. Coinage is only a small part of money. As we know, give a few gold bars to a banker and the value of the gold will be lent out 10 to 20 times over again.
New silver bars on deposit in treasuries could have displaced coins that were hoarded. It is easier to store, and why mint new coints when you already have coins minted that you are holding. There are all sorts of fallacies in this story.
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