understanding what humans collectively find valuable is much more lucrative than understanding why humans collectively find a thing valuable

being on this forum for a decade I see people consistently get caught up in the latter, at the expense of noticing the opportunities the same people are here for

Yes, I often say that the gold from America was a poisonous gift. It made the country so rich that they stopped caring about other stuff, they could just buy them from elsewhere. So there was little incentive to manufacture first, and industrialize later. Which is ironic because some of first steam engines you can find in Europe were invented in Spain (https://en.wikipedia.org/wiki/Jer%C3%B3nimo_de_Ayanz_y_Beaum...). It also enabled the funding of numerous stupid wars, with the human cost they bring. The name of this process is called the Dutch Disease https://en.wikipedia.org/wiki/Dutch_disease

Arab states could get into the same trap

Marx called gold "the money-commodity" and said that paper money (even early fiat currency) always represents gold/silver in circulation.

The massive Spanish purchases of weapons and other manufactured goods from other countries in the 16th and 17th centuries played a large role in jump-starting the capitalist economic revolution in Europe.

spain was no longer a major player in world politics by 1800s, but they had a good 2-3 century run. not sure if the monetary crisis was really did them in, or more just it being the ebb and flow of history. britain's world dominance is long over too. if they did "fuck up", it was because charles v was the first global hegemon, nobody know how to do that, he was in uncharted territory. and obviously no, the merino sheep weren't a better bet long term, that's absurd. global dominion required a cohesive domestic home country to serve as the wellspring of power, not the fractured foedal remnants of a mediaeval europe that required constant war to keep together. and then of course, industrialize early.

Gold is a VERY unique metal and its value comes directly from that. Particularly the complete lack of oxidation, I'm sure it was seen as absolutely magic that it would not tarnish while every other metal known at the time would oxidize very easily.

Value is ultimately always in the eye of the beholder.

To be fair, Adam Smith and Marx would 100% agree on this point. It's not "capitalist" to confuse money with value, it's just a mistake.

Gold is used by industry at current prices due to its physical properties, so its current price and value are fairly close.

This still allows for significant price swings because there vast quantities of gold sitting around in vaults, but unlike say bitcoin it does have high intrinsic value. IE: If gold sustained a 90% drop in price across decades at lot more would be used by industry creating a price floor.

If gold is inherently valueless, then isn’t shipping all of it away immediately to other countries in return for useful goods the most rational thing to do?

And if they could get gold at a fraction of the cost of other countries and exchange it for useful goods, isn’t that more rational than building the goods yourself?

The Spanish were not stupid and were not acting irrationally — except perhaps thinking on too short of a time frame. The gold trade was a total moral abomination, but it was a good trade economically for hundreds of years.

The main problem was that it was basically an arbitrage play and once the margin got erased from inflation, they had let the rest of their economy atrophy.

This is one of the reasons the Saudis invest so much money in tech companies and other industries.

The School of Salamanca about value and money said something else in 16th century. The Spaniards were anything but dumb.

It just happened that the British industrial revolution steamrolled everyone. You can't compete aganst the steam engine and the railway making communications and sharing of goods and raw materials something ridiculously cheap compared to the previous times, even by boat in both UK and Spain where the big rivers like Douro and Tagus could sustain a lot of transport. But, still, the train allowed to reach anyone in the country.

Which cheap transportation you can connect industrial powerhouses (and competent engineers and scientists) and the rest it's history. Addthe telegraph on top of that and it's game over for any outdated empire. When knowledge sharing can be reduced hours and maybe a day or two instead of weeks or months, it's like upgrading from having a 486 based computer with DOS to a Ryzen one with multiparallel processing. Literally.

No it didn't. The gold didn't disappear.

Did you actually read the wiki you linked?

Spain transferred the gold to Moscow who liquidated it on Spain's behalf to buy guns, fund the civil war, and deposit in banks.

There's mixed views whether Moscow took too much of a margin, but they melted down gold after selling it and the gold is still in circulation.

Money is the thing you use to buy things. Wealth is having those things. Only in an ideal world are the two the same. The world is not ideal.

You can't eat gold.

They spent a lot of resources (some tangible, some less tangible) and ended up getting a roughly equivalent amount of money out if it

Bullion imports caused inflation; the money supply increased without corresponding increases in the production of goods and services. https://en.wikipedia.org/wiki/Price_revolution

As a sibling comment said, gold was effectively money. Having more money, without having more products to buy, effectively triggered massive inflation. Prices went up, but the actual supply of goods and services didn't change much. The Spanish economy suffered massive inflation, as did Europe in general to a lessor extent.

Spain’s colonies funneled huge amounts of gold and silver into the European economies without a complementary increase in productivity to absorb it, causing massive inflation.

A ship for transatlantic shipping might have first cost 100,000 maravedí to build and equip before the treasure fleet expeditions, but afterwards with so much gold flowing into the economy and lots of competition for a limited ship building industry, the costs would inflate to 1 million maravedí (number roughly from memory). Same with the canons and shot, animals and sailor salaries, and so on.

Repeat this process across the whole economy and it throws everything into chaos. Some people here and there get rich, but economy wide it’s a total wash. Any wealth created for the state mostly just went into paying for wars because the inflation worked its way up through salaries.

Spain was different. There were no 'proper' colonies, but everyething was deal as if they were an inner province in Iberia. That's the way you could get fancy universities for its time.

But backwards people like Ferdinand the 7th cut down the modernisation of Spain which could boost us up to the level of France if not more. I'm no kidding. Just look at the Cádiz constitution from 1812.

https://en.wikipedia.org/wiki/Ferdinand_VII

https://en.wikipedia.org/wiki/Spanish_Constitution_of_1812

Not bad for its time at all.

We were democratic before Franco. Twice. Until the damn conservatives threw the Republic down, twice, too.