An Economic Mystery

After Spanish invaders conquered the Mayans and Incas in the 16th century, a huge flood of gold started flowing from the new world into Europe. But Europe did not face massive inflation, as you would expect. Instead, there was actually a persistent shortage of gold. How was this possible?

Well, the answer was, the gold almost immediately found itself sent down the silk road to China in exchange for tea, silk, and other luxuries. So did China face massive inflation? It did not! It also had massive gold shortages. Why? Well, because almost all of the gold quickly found its way into Buddhist temples to decorate the massive Buddhas and the like. In fact, when Buddhism was eventually suppressed in China, it was so the Emperor could finally get at all that gold.

This is the time when the idea of the massive gold Buddhas took hold, at least in China. There was in fact a period where massive Buddhas really were covered in gold.

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