Subnostr

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 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

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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.