In this article, we will talk about the events that made gold cause the inflation crisis.
Gold over time and across civilizations is an unparalleled material, its name has been associated with strength and wealth, and for it wars have been launched and civilizations have been destroyed and centers of power have changed on the world map.
The ancient Egyptians knew it around 3000 BC and it is said that it was known in Mesopotamia with the same date. However, the ancient Egyptians were the first to give gold a specific value, and the first to set a standard in history for evaluating the precious metal, as a piece of gold for them was equal to two and a half pieces of silver. At that time, this did not change from the principle that gold is more valuable than silver.
The high value of gold did not come from its scarcity, as it was abundantly available compared to the population at that time, but for a simple reason, which is the luster of gold, which is superior to silver.
Through the civilizations of the ancient world, such as the civilization of ancient India, Babylon, the Greeks and the civilizations of South America, the name of gold spread and its value increased, as these peoples believed in the awakening of the dead after their burial. Metal has advantages and characteristics such as being able to be divided into parts without deteriorating or losing its value and portability.
Gold has become widely accepted in dealing, and is traded as currency sometimes, as the oldest gold coin in history, the Lydian lion coin, was made in the 7th century BC in the Kingdom of Lydia, a kingdom located west of modern Turkey.
However, for centuries the world used gold to make collectibles as a form of ostentation, and it wasn't until 1492 when Italian explorer Christopher Columbus discovered the Americas that it was a staple of nations.
Some historians say that the inhabitants of South American civilizations owned gold in abundance, to the extent that they decorated their homes with gold, as well as the gold and silver mines located in the Potosi region in Bolivia today, which opened the appetite of the Spanish conquistadors.
In order to seize the gold, the Spaniards fought
Many wars, which resulted in the collapse of the Aztec and Inca civilizations in South America, later the Spaniards began extracting precious metals from South American mines at the lowest costs and their ships transported the equivalent of 170 tons of these minerals annually.
The result was an unprecedented inflation in the Spanish economy and the countries of Europe, which continued between the second half of the fifteenth century and the first half of the seventeenth century. This period witnessed an economic crisis that changed the centers of power in the ancient world and resulted in Spain losing its position among the richest and most powerful countries in history to A country suffering from inflation.
Where the prices of all other materials recorded a rapid increase, doubling six times during 150 years, throughout Western Europe, in an event called the “price revolution”.
But how did inflation happen?
Because of the large influx of gold and silver from the Spanish treasure fleet, the money supply increased due to the ease of re-forming money from precious metals.
Spain also went to import most of its goods from South America, so that the Spanish trade balance recorded a huge deficit, as the value of imports greatly exceeded the value of exports.
Food commodities and labor markets after the increase in population and urbanization at the expense of agricultural lands after the end of the plague or what is known as the Black Death between 1347 and 1352 AD.
Finally, I hope you will benefit from this article
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