That Giant Asteroid of Gold Won’t Make Us Richer – by Noah Smith (Bloomberg News – July 8, 2019)

https://www.bloombergquint.com/

(Bloomberg Opinion) — Rejoice, people of Earth! News outlets are reporting that NASA is planning to visit an asteroid made of gold and other precious metals!

At current prices, the minerals contained in asteroid 16 Psyche are said to be worth $700 quintillion — enough to give everyone on the planet $93 billion. We’re all going to be richer than Jeff Bezos! OK, now for the bad news: This isn’t going to happen. Yes, 16 Psyche and other asteroids will probably be mined for their metals.

But once those metals start hitting the market in large quantities, they’re unlikely to be precious for much longer. As any introductory economics student knows, price is a function of relative scarcity — flood the market with gold, and it will go from being a rarity to being a common decoration. Supply goes up, price goes down.

But in fact, there’s a more fundamental reason why a giant golden asteroid wouldn’t make the world fabulously rich. It’s because wealth mostly doesn’t come from big hunks of metal. It comes from the ability to create things that satisfy human desires.

A steel factory represents real wealth, because you can use it to make parts for cars, buildings and so on. A house does too, because you can live in it or rent it out.

For the rest of this article: https://www.bloombergquint.com/view/asteroid-16-psyche-and-all-that-gold-won-t-make-earth-richer

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