{"id":8066,"date":"2019-07-22T12:47:49","date_gmt":"2019-07-22T19:47:49","guid":{"rendered":"http:\/\/www.rationalargumentator.com\/index\/?p=8066"},"modified":"2019-07-22T12:47:49","modified_gmt":"2019-07-22T19:47:49","slug":"gold-asteroid-economic-effects","status":"publish","type":"post","link":"https:\/\/www.rationalargumentator.com\/index\/blog\/2019\/07\/gold-asteroid-economic-effects\/","title":{"rendered":"What That Giant Asteroid of Gold Would Really Do to the Economy \u2013 Article by David Youngberg"},"content":{"rendered":"<p style=\"text-align: center;\"><a href=\"https:\/\/www.rationalargumentator.com\/index\/wp-content\/uploads\/2015\/06\/tophatwhitesm.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-4311\" src=\"https:\/\/www.rationalargumentator.com\/index\/wp-content\/uploads\/2015\/06\/tophatwhitesm.jpg\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.rationalargumentator.com\/index\/wp-content\/uploads\/2015\/06\/tophatwhitesm.jpg 150w, https:\/\/www.rationalargumentator.com\/index\/wp-content\/uploads\/2015\/06\/tophatwhitesm-100x100.jpg 100w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/p>\n<h2 style=\"text-align: center;\"><span style=\"color: #0000ff;\"><strong>David Youngberg<\/strong><\/span><\/h2>\n<h3 style=\"text-align: center;\"><span style=\"color: #0000ff;\">July 22, 2019<\/span><\/h3>\n<p style=\"text-align: center;\">*****************************************<\/p>\n<p>In Greek mythology, <a href=\"https:\/\/en.wikipedia.org\/wiki\/Cupid_and_Psyche\">Psyche<\/a> was a woman of such beauty that she inspired jealousy in the love goddess Venus. The 19th-century Italian astronomer Annibale de Gasparis named a massive asteroid after her. How appropriate that it turns out that 16 Psyche, one of the biggest asteroids in the asteroid belt, is made out of a metal famous for inspiring lust: gold.<\/p>\n<p>Unlike gold discoveries of the past, there\u2019s no rush to harvest Psyche. NASA wants to send a probe only to study it, prompting <a href=\"https:\/\/bigthink.com\/surprising-science\/space-miners-race-to-an-asteroid-worth-quintillions?rebelltitem=2#rebelltitem2\" rel=\"nofollow\">several<\/a> <a href=\"https:\/\/www.wtsp.com\/article\/features\/producers-picks\/report-nasa-to-explore-asteroid-so-valuable-it-could-make-everybody-on-earth-billionaires\/67-76f0f317-65ca-4e7e-81c2-cb7f90829ed0\" rel=\"nofollow\">articles<\/a> to erroneously breathe a sigh of relief. <a href=\"https:\/\/www.foxnews.com\/science\/nasa-headed-towards-giant-golden-asteroid-that-could-make-everyone-on-earth-a-billionaire\" rel=\"nofollow\">According to one<\/a>:<\/p>\n<blockquote><p>\u2026.if we carried [Psyche] back to Earth, it would destroy commodity prices and cause the world&#8217;s economy \u2013 worth $75.5 trillion \u2013 to collapse.<\/p><\/blockquote>\n<p>No one tries to explain how cheap gold would cause an economic collapse, and for good reason: it wouldn\u2019t.<\/p>\n<h2 id=\"link-0\">There\u2019s Gold In That There Asteroid!<\/h2>\n<p>Psyche has a lot of gold\u2014about <a href=\"https:\/\/www.forbes.com\/sites\/bridaineparnell\/2017\/05\/26\/nasa-psyche-mission-fast-tracked\/#78cc17bb4ae8\" rel=\"nofollow\">$10,000 quadrillion worth<\/a> at current prices. The eye-catching headlines that claim it\u2019s enough gold to make \u201ceveryone on earth a billionaire\u201d are, of course, complete fantasy. Selling that much gold would cut prices nearly to zero.<\/p>\n<p><span class=\"rte-quote\">Harvesting Psyche would not cause an economic collapse.<\/span><\/p>\n<p>If gold was still used for money, that much gold would create massive inflation, resulting in a lot of economic hardship. No country uses the gold standard anymore, so that\u2019s hardly a concern. Rock-bottom gold prices would certainly be devastating for gold mining companies and people who keep their wealth in gold bars. That\u2019s really bad for them, but they\u2019re a tiny part of the global economy.<\/p>\n<p>Perhaps the confusion rests in simple reverse causation. Recessions definitely cause lower commodity prices, but lower commodity prices cause recessions no more than umbrellas cause rain.<\/p>\n<p>Harvesting Psyche would not cause an economic collapse. If that much gold could cheaply be brought to market it would be a boon, not a bust. It\u2019s impossible to predict what a world of cheap gold would look like, but the story of aluminum gives us a hint.<\/p>\n<h2 id=\"link-1\">The Precious Metal That Became Trash<\/h2>\n<p>Even though it\u2019s the most abundant metal on the planet, most aluminum is trapped in bauxite and was difficult to purify for most of human history. Pure aluminum was incredibly rare, and there was once a time when the stuff of soda cans was <a href=\"http:\/\/www.slate.com\/articles\/health_and_science\/elements\/features\/2010\/blogging_the_periodic_table\/aluminum_it_used_to_be_more_precious_than_gold.html\" rel=\"nofollow\">more precious than gold<\/a>. Aluminum bars were displayed next to the French crown jewels, and pure aluminum caps the Washington Monument.<\/p>\n<p><span class=\"rte-quote\">Cheap gold probably won\u2019t give us an economic boom, but that doesn\u2019t mean it wouldn\u2019t be an economic boon. <\/span><\/p>\n<p>Techniques like the <a href=\"https:\/\/en.wikipedia.org\/wiki\/Hall%E2%80%93H%C3%A9roult_process\" rel=\"nofollow\">Hall\u2013H\u00e9roult process<\/a> changed all that. What was once the metal of monarchs and monuments became readily available to everyone. It\u2019s so cheap that we now use it in fishing boats, airplanes, and beer kegs. Its foil version keeps food fresh\u2014we throw aluminum away all the time.<\/p>\n<p style=\"text-align: left;\">Making aluminum cheap didn\u2019t cause an economic collapse. Quite the opposite. It made society wealthier because refining improvements made everything else cheaper, thereby creating new opportunities. Wood that once went for beer kegs could be used for something else. Aluminum boats don\u2019t corrode in water, and this application freed up steel and timber that would otherwise be used to replace degrading vessels. Modern airplanes wouldn\u2019t even be possible without aluminum, and their existence frees up fuel, time, and materials that would have otherwise gone to passenger ships and trains.<\/p>\n<h2 id=\"link-2\">Harvesting Psyche Would Be an Economic Boon<\/h2>\n<p>True wealth is not found in precious metals, and <em>Bloomberg<\/em>\u2019s Noah Smith <a href=\"https:\/\/www.bloomberg.com\/opinion\/articles\/2019-07-08\/asteroid-16-psyche-and-all-that-gold-won-t-make-earth-richer\" rel=\"nofollow\">rightly points out<\/a> that harvesting Psyche won\u2019t cause a new industrial revolution. But he goes too far when he claims that it won\u2019t make society richer because, holding everything else constant, a cheaper resource is the definition of economic progress. It\u2019s only a question of magnitude.<\/p>\n<p><span class=\"rte-quote\">If a future entrepreneur were to harvest Psyche, it would certainly be devastating to the gold industry. For everyone else, it would be a stellar improvement.<\/span><\/p>\n<p>Harvesting Psyche, if it can be harvested at the right price (a big if), would make society richer because that much gold would allow us to reallocate our efforts to other endeavors. No one knows what exact effects cheap gold would have because the price of gold has <em>never<\/em> been anywhere near zero. While gold has limited production applications now, who knows how people will adapt if gold is functionally free? There are substitutes, and there are substitutes for substitutes.<\/p>\n<p>Gold, for example, is incredibly ductile and an excellent conductor of electricity; perhaps houses would be wired with gold instead of copper, freeing up copper that could be used in other ways. Or maybe there\u2019s an industry that\u2019s only possible with cheap gold, like aviation is for aluminum. We can\u2019t look at how gold is used now, with its sky-high price, and assume it\u2019ll be the same with a rock-bottom price. Cheap gold probably won\u2019t give us an economic boom, but that doesn\u2019t mean it wouldn\u2019t be an economic boon.<\/p>\n<p>If a future entrepreneur were to harvest Psyche, it would certainly be devastating to the gold industry. For everyone else, dirt-cheap gold would be a stellar improvement.<\/p>\n<div><a href=\"https:\/\/www.rationalargumentator.com\/index\/wp-content\/uploads\/2019\/07\/David_Youngberg.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-8082\" src=\"https:\/\/www.rationalargumentator.com\/index\/wp-content\/uploads\/2019\/07\/David_Youngberg.jpg\" alt=\"\" width=\"300\" height=\"300\" srcset=\"https:\/\/www.rationalargumentator.com\/index\/wp-content\/uploads\/2019\/07\/David_Youngberg.jpg 300w, https:\/\/www.rationalargumentator.com\/index\/wp-content\/uploads\/2019\/07\/David_Youngberg-150x150.jpg 150w, https:\/\/www.rationalargumentator.com\/index\/wp-content\/uploads\/2019\/07\/David_Youngberg-270x270.jpg 270w, https:\/\/www.rationalargumentator.com\/index\/wp-content\/uploads\/2019\/07\/David_Youngberg-100x100.jpg 100w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/div>\n<div>\n<h4><a href=\"http:\/\/fee.org\/people\/david-youngberg\/\"><br \/>\nDavid Youngberg<\/a><strong> is an associate professor of economics at Montgomery College in Rockville, MD.<\/strong><\/h4>\n<\/div>\n<p style=\"font-style: italic;\">This article was originally published on FEE.org. Read the <a href=\"https:\/\/fee.org\/articles\/what-that-giant-asteroid-of-gold-would-really-do-to-the-economy\/\">original article<\/a>.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/fee.org\/counter\/184314\" alt=\"\" width=\"1\" height=\"1\" \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>David Youngberg July 22, 2019 ***************************************** In Greek mythology, Psyche was a woman of such beauty that she inspired jealousy in the love goddess Venus. The 19th-century Italian astronomer Annibale de Gasparis named a massive asteroid after her. How appropriate that it turns out that 16 Psyche, one of the biggest asteroids in the asteroid belt, is made out of a metal famous for inspiring lust: gold. Unlike gold discoveries of the past, there\u2019s no rush to harvest Psyche. NASA&#8230;<\/p>\n<p class=\"read-more\"><a class=\"btn btn-default\" href=\"https:\/\/www.rationalargumentator.com\/index\/blog\/2019\/07\/gold-asteroid-economic-effects\/\"> Read More<span class=\"screen-reader-text\">  Read More<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[419,7,6],"tags":[5695,852,1666,5691,687,5697,5705,5704,5692,5693,5694],"class_list":["post-8066","post","type-post","status-publish","format-standard","hentry","category-business-2","category-economics","category-history","tag-75-5-trillion-asteroid","tag-aluminum","tag-asteroid","tag-david-youngberg","tag-gold","tag-gold-asteroid","tag-hall-heroult-process","tag-precious-metals","tag-psyche","tag-psyche-asteroid","tag-psyche-asteroid-worth"],"_links":{"self":[{"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/posts\/8066","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/comments?post=8066"}],"version-history":[{"count":4,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/posts\/8066\/revisions"}],"predecessor-version":[{"id":8083,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/posts\/8066\/revisions\/8083"}],"wp:attachment":[{"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/media?parent=8066"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/categories?post=8066"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/tags?post=8066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}