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In The Spanish Empire, Silver, & Runaway Inflation: Crash Course World History #25, it is claimed that

"In ..., the silver was pouring into Spain, and because they were collecting same taxes as 60 years before, that lead to inflation..."

If you watch the video, a similar situation happens in China; the government forces people to produce silk, and that lead the price drop, but that somehow also leads to inflation even though now the government has lots of silk which is quite valuable.

So, what is the reason for the inflation in both cases ? and how taxes related to the inflation in the Spanish case ?

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  • $\begingroup$ I dont understand that part about China(I havent seen the video yet). But I allways tought that what happened in Spain was basically in increase in the monetary base. I think if they had raised taxes upon the conquest of the new world that would have sterilized some of the incoming precious metal. $\endgroup$ – Grada Gukovic Jul 21 at 3:45
  • $\begingroup$ ?? Me nix verstehen! What yo say? $\endgroup$ – Grada Gukovic Jul 21 at 5:08
  • $\begingroup$ why would increasing taxes stabilise the economy of Spain in such a gold rush ? $\endgroup$ – onurcanbektas Jul 21 at 5:10
  • $\begingroup$ I think it would keep M in check by keeping some of the incoming precious metal out of circulation in the royal treasury. $\endgroup$ – Grada Gukovic Jul 21 at 5:15

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