Don’t you hate when so much extra wealth is added to society, that the economy tanks?
Yes, that is what The Daily Star says would happen if an asteroid made up of nickel and iron was harvested and brought back to Earth. They claim the asteroid’s materials are worth $10,000 quadrillion.
This would be enough to cause the world’s economy – worth $73.7 trillion – to collapse altogether.
They don’t bother to explain why these extra resources would sink the economy.
But let me try to interpret their economic illiteracy.
They could be under the impression that money and resources are the same thing. If that amount of fiat dollars were added to the economy, it would certainly cause the economy to crumble. Hyperinflation would be so severe that money would be worthless. Metrics of wealth would be wiped out. The economy would have to start fresh, depending on actual resources, as opposed to financial accounting tricks.
Previous work you did, represented by saved dollars, would be eliminated. It would be like current Venezuela, except much worse. To account for the influx of purchasing power, without any corresponding increase in the supply of goods to be purchased, prices would have to rise dramatically. But before prices had a chance to settle, the global supply of goods would be wiped clean, purchased by rapidly inflating dollars. Either that or people would realize that having the material resource is more valuable than having the worthless money. Either way, you wouldn’t be able to buy necessities.
But people don’t use iron, or really even nickel as currencies. They use them as materials in manufacturing.
If the asteroid were made up of gold, The Daily Star’s prediction of economic turmoil might be slightly more accurate. That is because gold is historically accepted as a currency and a store of value. Flooding the gold market would have a similar effect as flooding the market with cash. Gold stores would become worthless, and the value stored in gold would be lost.
But even then, gold has a material value, even if most of that value is based on scarcity. If the asteroid were made up of gold, it would upset the economy by removing the scarcity value from gold. But whatever the actual value of gold as a material for creating goods would be added to the economy.
It would just be very bad for anyone who currently stores value (such as the reward for previous labor, services, or goods) in gold, because the value of their savings would be extremely diluted. That is because the current value of gold is based more on scarcity than the actual usefulness of the metal.
But people don’t tend to store their value in iron and nickel. Surely iron and nickel mines and suppliers would be cast into turmoil. But that would hardly have the devastating effect on the economy that The Daily Star predicts.
There would actually be more useful materials for manufacturing. The cost of products that use nickel or iron would be drastically reduced. You would basically be paying only for the labor of processing the materials into a usable form–the materials themselves would be so abundant that their cost would be negligible.
But how exactly would this sink the world economy? By making useful products cheaper? By decreasing the cost of raw manufacturing materials?
Any decrease in jobs in the iron and nickel supply sector would likely be made by an increase of jobs in the nickel and iron manufacturing industry. Cheaper iron and nickel products would increase demand for those products, and new applications for the cheap metals would abound.
Adding material resource wealth to the economy is not a bad thing. Often, the main cost of goods comes from the manufacturing process anyway, not the raw materials. People would still be employed processing the materials into usable products.
I know The Daily Star is really just tabloid trash. But still, people see something on a media outlet and believe it.
The media is just helping to dumb down the masses. No one is supposed to do any critical thinking for themselves. You are just supposed to repeat what you hear on the news.
“No, man, I heard that adding all those resources to our planet would totally, like, sink our economy. We gotta keep the resource scarcity going, for the sake of humanity, bruh.”
Of course, this is all probably a joke by the elites. The asteroid is named Psyche. It’s all in our minds.
They are just trying to psych us out. Nice try media.