Bullionism – Economics of Gold Accumulation

What is Bullionism?

Bullionism was an idea that circulated in the courts of Europe in the 16th and 17th centuries. Why is it important? It is very important as many people today have the same idea about their own lives and it keeps them poor.

The idea of Bullionism was closely connected to mercantilism. It believed that money (gold) was the only form of wealth that was important. Countries hoarded gold and accumulated gold bullion in their treasuries. Ahoy matey and stack ye gold bullion.

How did this economic theory come about? People observed that England possessed large quantities of gold, yet had no mines. They observed England be rich and drew a causal relationship that gold equaled a way to wealth.

Is your government Bullionist?

Governments operating under this absurd assumption would pursue policies that would restrict gold from leaving the country as it was feared this would reduce the tax base. What would have been better than pursuing a policy of accumulation of gold at any cost would have been a policy which would have resulted in an increase in the productive capacity of the people. The latter leads to a wealth of nations, as pointed out by Adam Smith.

Bullionist sought to control the outflow of money by the use of currency exchange rate manipulation when currency exchange rates lead to trade deficits and currency outflow.

The main point which is wrong here is, money is money even if in the form of gold has less meaning than what is actually going on in the country.

In retrospect, this seems obvious. However, countries and individuals purse this policy themselves.

The players in this precursor of political economy were: Thomas Milles and Gerard de Malynes, who was opposed by Edward Misselden a mercantilist. This was one of the first published economic controversies.

Do any countries still believe in Bullionism? China, some Americans. China is more pursuing mercantilism. They are thriving despite their misunderstanding of economics because of they a slave economy. When England switch to free trade from hoarding gold and mercantilism, it really became rich, think of the Victorian era. That wealth included a middle class, not just the ruling elite. The USA has been free trade from the beginning, and I think we are doing pretty well, despite the crisis caused by reckless government.

Having a gold standard is a different idea, in fact if used correctly can restrain government.

The way no to get rich is to bury your talents

What you can learn from Bullionist ideas on how to accumulate wealth

  • Individuals who focus on the saving money and accumulating wealth in their households rather than spending money to develop their own talents are not as wealthy. I always have no problem spending money for self investment. Instead of a large house and nice lifestyle, I prefer to invest and develop myself or my capital. It is just more fun. Invest in the stock market or your own business or the development of your own personal talents. Despite the run up gold as an investment is not the best.
  • People and governments pursue policies of symbolic forms of wealth instead of real wealth are more smoke and mirrors politics that pursue less the optimal economic policies.

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One response to “Bullionism – Economics of Gold Accumulation”

  1. James pam

    The folly of Bullionism can be seen even in the ancient text of the Bible where Jesus gave a parable about a master that gave amounts of talents/money to his servants without telling them what to do with it. Then, the one who dug the ground and hid his own ended up being purnished by the master for being so foolish by not investing his own when others did even without being told to do so.

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