Ranging from medieval times when gold was the only currency, to modern times until the currency was pegged against the gold standard, how good/bad was the economy?
Was there any inflation? If so, how did it occur without artificial manipulation of the economy.
In: 79
The global economy was basically really bad until the 19th century.
European economists and monarchies believed that the world had a limited number of resources and therefore we shouldn’t just give them up for free. Monarchs were happy to give away crops because well, they make those every single year. But metals were precious and often hoarded. Stockpiles of steel and iron could be used for war, so you wouldn’t want to trade that with your neighbors. And you wouldn’t want to give them any gold either because they could use that to finance a war.
There has been currency since the time of Mesopotamia. When the gold standard was first introduced the idea was that each coin would get a small amount of gold put in it that would give it an inherent value. In the middle ages Venice grew as the global currency and made Venice the centre of trade. Because Venice was friends with everyone, everyone was happy to trade with them.
Was there inflation? Yes. Monarchs would typically try and hoard as much of that precious gold for themselves. But when the economy started lacking a lot of things the monarchs would open their vaults to buy things with the state’s treasury. There was also war. Once a war happened it had this giant influx of gold into the economy to prepare for that war (and then pay the troops after). The ending result was prices would skyrocket and basically you couldn’t get ahead by volunteering.
Spain discovering America had a drastic impact on the European economy. The Spanish came home with shiploads of gold and suddenly the balance of power in all of Europe collapsed. It’s kind of like in Waterworld where the mutant arrives at a civilization and [buys all of their food and all of their supplies with dirt that he has gotten from the bottom of the ocean](https://www.youtube.com/watch?v=Fv9_YOL38MM). And just like that the Spanish could now afford to buy everything. This actually triggered a number of famines in Italy.
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