Subnostr

The fundamental flaw is thinking you can sustainably consume more than you produce, or that you can create real wealth through accounting tricks and money printing.

S!ayer 4mo ago

The other thing is that in merchantilsm (Adam Smith's time) places like England, still to this day, don't produce anything. It's a small island. Neither does the Netherlands or France or Portugalbor Belgium, or Spain.

So the only way to compete, and grow the economy, was to literally steal it from elsewhere. Hence colonial endeavours to places that are producers (South America, Africa, China, India, Indonesia) and bring that wealth to your economy.

The problem is fixed supply.

You need more vessels to compete to steal more and that costs more gold than you currently have so you go to South America to get more, but then there's a war and you need to use that same gold to pay soldiers. You can't do both. You collapse.

Rome, Greece, Colonial Europe. It's why it all collapses, because a fixed supply of anything requires you to shift that around, which is costly and cumbersome and the only way to increase what you can do is by increasing the supply of that thing, in this case Gold.

So if you want to build ships to explore and wage war of France, you got to go steal more Indian gold or Botswana diamonds

Reply to this note

Please Login to reply.

Discussion

Contra 4mo ago

But didn’t Spain get tons of gold from the Americas and still go bankrupt because they stopped producing? If more gold was the solution, why did they collapse while importing everything instead of making it themselves?

S!ayer 4mo ago

What did Spain produce? 😂

It collapses when they (anyone) tries to expand the empire without having the gold to do so. Debt instruments didn't exist, there was not banks issuing loans for high rise apartments 😂

So the gold in the coffers need to increase.

Soliders won't fight for free...

Contra 4mo ago

Exactly my point! Spain produced nothing. That’s why all the gold couldn’t save them. They became a giant import economy living off colonial wealth instead of building productive capacity.

Meanwhile, England and Holland were building shipyards, textile mills, and trading companies. When Spain’s gold ran out, they had nothing. When other countries’ trade got disrupted, they still had industries.

Isn’t that the same trap we’re in now? Living off printed money instead of building real productive capacity?

S!ayer 4mo ago

Well that's the thing too, British textiles were just imported from India. At the time, India had 33% of total global GDP, it's biggest export being textiles. Briton dismantled and destroyed that industry, usurping it to create "production" although it wasn't theirs.

Same in China with the opioids. This allowed for the transfer of wealth to the small island.

Even today, all financial flows go through London, to their offshore islands for safekeeping..

Contra 4mo ago

You’re 💯 right about the colonial extraction. Britain did destroy India’s textile industry to create their own. But here’s the thing: that kind of wealth transfer only works temporarily and requires massive state violence to maintain.

The countries that got rich and stayed rich were the ones that built actual productive capacity, not just extracted it. And today’s financial flows through London? That’s the same extractive model, skimming off the top of other people’s productivity.

I will argue until the end; Bitcoin eliminates that middleman rent seeking entirely. No London clearing houses, no offshore havens, just direct peer-to-peer value transfer.

S!ayer 4mo ago

So, why do you think American warships are in Venezuela?

The Americans perform merchantilsm as a means to redress their printing spree in 2020. They literally blew up gas pipelines to force Europe to buy from them Only. Now they seek to invade Venezuela, after several failed coup and assassination attempts in the past two years, under the guise of 'drug control'.

Contra 4mo ago

You’re connecting the dots perfectly. When you can print unlimited money, you can afford unlimited military adventures to secure resources and markets. It’s the same extractive playbook, just with aircraft carriers instead of colonial armies.

This is exactly why sound money matters. Under a gold standard (or Bitcoin), you can’t fund endless foreign interventions because the money actually has to come from somewhere real, taxes or productive output.

The printing press enables the empire. Cut off the printing press, and suddenly “spreading democracy” becomes too expensive to sustain.

S!ayer 4mo ago

Mate, if you want a crystal ball, just follow oil and gas.

The energy markets will explain EVERY geopolitical move ever made.

Contra 4mo ago

We don’t need a crystal ball, the empirical evidence is before us. Energy is the foundation of everything. Without energy, you can’t mine, manufacture, transport, or even think (your brain runs on glucose). Every economic activity is essentially energy transformation.

S!ayer 4mo ago

Ya and the thing is, if your money can't pay the soldiers....

History doesn't repeat but it most certainly rhymes

S!ayer 4mo ago

Well this is why Trump is trying to get factories and production back., but doing it at the expense of the Europeans

After all, they are deindustrialising Germany, Europe's biggest and most important economy.b

They literally blew up their gas pipelines and forced them to buy American gas at higher prices.

So again, here you see merchantilsm.

China since Deng Xiaoping has literally pulled itself out of poverty into prosperity through almost one thing entirely: production.

It came at a human cost, a national cost, and also uses debt (keyenisan) but still, it succeeds because of production

Contra 4mo ago

Exactly! You just proved Smith’s point perfectly. China got rich through production, not financial engineering. And you’re spot on about the pipeline situation being classic mercantilism.

But here’s the key difference: China’s debt is mostly invested in productive capacity (factories, infrastructure, technology). Western debt goes to consumption and financial speculation.

S!ayer 4mo ago

Well China also had the Evergrande crisis which was basically debt funding the growth, specifically into housing. 'ghost cities' became more profitable business with low interest rates, then it flipped when the production stopped (COVID Lockdown) and then it cracked.

In other words, when it works it works really well, but when production stops, then the debt markets collapse, see 2008

Contra 4mo ago

Agreed.