Asteroid Worth So Much Money… that it will sink the economy?

TDB's picture

Via The Daily Bell

Don’t you hate when so much extra wealth is added to society, that the economy tanks?

Wait, what?

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.

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GodSpeed_00's picture

Won't find one made of Bitcoin. Gold long term is going to zero.

General Fuster Cluck's picture

Sourcing iron and nickel from the Earth will always be thousands of times less costly than from outer space. The Earth has what we need. I don't see an interplanetary ore trade developing in the solar system ever.

It is easier just to prospect the Earth and find where a nickel asteroid already crashed in the Earths geological past. The Sudbury Nickel Basin in Canada is and impact crater formed 1.849 billion years ago.

Beware of those working on Asteroid mining and saving the earth from asteroid collision. Both involve developing technology and capability to move asteroids. The easiest way to mine an asteroid is to crash it into earth (not a 500 km diameter one!). Then mine under the impact crater. To save the earth from and asteroid involves changing its path slightly.

The ability to move asteroids has a weapons potential. A small space rock, say 100-200m size can pack a kinetic energy wallop like 10 times the largest experimental Nuke that the Russians tested.

A 500km iron asteroid impacting the earth would destroy all life and reshape the surface and a large part of the crust, and possibly create rings or a new moon.

rex-lacrymarum's picture

I have a feeling many misunderstand what this article is really about. It is not about the actual current cost of sourcing raw materials from outer space. It is about a hypothetical "what if" scenario, i.e., what if we could get our hands on such a huge load of iron and nickel all of a sudden. You could pose the same question by using a different example, for instance you could ask: what if a huge, extremely high grade deposit containing that much iron and nickel were found on earth? Would that be "bad"? It should be obvious that it would be a great boon. What is at issue here is whether scarcity is somehow a good thing, not the concrete circumstances by which it is relieved. 

As an aside: you should reconsider your claim that sourcing commodities from off-planet sites will "always" be non-viable - this is something no-one can know. It may well become viable at some point in the future. To see why this is so, you only have to consider the history of mining. 200 years ago, no-one would have bothered mining a gold deposit containing less than an ounce per ton. Certainly the 0.3 - 0.5 gram per ton surface deposits that get mined in open pits today were utterly non-viable propositions in the distant past. Today you even have surface mining operations like the sand dumps in South Africa that are profitably mined at recovered grades as tiny as 0.15 grams/ton. Technological progress will march on as long as capitalist economies continue to exist - and history clearly shows that resource extraction becomes constantly cheaper (and the same holds for commodities themselves, in real terms). 

Anteater's picture

But let me try to interpret their scientific illiteracy.

America's best space technology can put 100 tons 

of payload into orbit. The largest rockets ever made

lifted 209,000 pounds, ...but crashed after take off.

Lifting 100 tons out of Earth's gravitional well is

far less difficult that capturing an asteroid roaring by

in the long oblique solar orbit it's arriving in, slowing

it from 30,000 miles per hour, then establishing a

concentric planar orbit matching Earth's. Probably

use up the entire fuel supply just in intercepting it!

A heavy lift like that costs $100,000,000 per, to

capture a payload measuring in 10s of tons. NASA

has no way to detect or track such small asteroids.

NASA has no way to intercept and alter the course

of an asteroid once it whips around the sun, then is

roaring past, heading back out to Ort Cloud deep space.

Besides, such small asteroids would burn up on re-entry.

.: 'Asteroid Mining' is for fools and Right Stuff tax drones.


Doubleguns's picture

10,000 quadrillion. Yea who the hell has the money to buy it. Who the hell needs that much of it.  Why would anyone buy it if they cant use it or sell it. To look at it?

Synoia's picture

Flooding the gold market would have a similar effect as flooding the market with cash.

Not at all. Gold is just another commodity.

King of Ruperts Land's picture

Gold is not an ordinary commodity. It is horded for monetary purposes. Gold also has an unlimited demand. No mater how much gold is in the vault, more is always wanted. Since people will sell gold for token money, fiat paper money, and bank money denominated in token money, there will be enough of these kinds of money made available to buy the gold.

Now all that bank money and fiat denominated in the token dollar that is cooked up of thin air, lent into existence lets say,to buy the gold will go into circulation and cause monetary inflation. However it isn't as bad as cooked up money to bid up assets. The gold at least exists and is a real asset. A rise in house prices or a rise in the stock prices is not a real asset.

mabuhay1's picture

Any civilization that can access near space objects will have no material shortages at all. All things can be found in space, from metals to minerals to water. That our economy is based upon scarcity is a thing that would change if we ever became able to reach other planets and bodies in this solar system.

King of Ruperts Land's picture

Complete rainbow unicorn nonsense.

There is no scarcity of earths crust to mine. There is no scarcity of land to prospect. There is no lack of existing discoveries that need to be explored further. There is no scarcity of known mineral deposits that are not yet developed.

Mining is damn hard work. So you have to pay up. There are no material shortages. If you pay the price the materials are available.

The yellow metal is the one we are most often short of. Given enough of the yellow metal, all the other materials will be obtainable. Anyone who performs work useful to other men, as proven by the fact that they will voluntarily pay you for it, is a means to obtain the yellow metal. When you have the yellow metal you will find that you can throw your "Shortage" and "scarcity" nonsense out the window.

Outer space is really hard. If you take a good hard look at the reality of it by studying things such as science, math, physics, the solar system, rockets and space travel, you will see that. You should educate yourself in these things. Then you would see that your whole post is false nonsense.

Gravity and distance and the harsh environment of space make interplanetary trade in bulk commodities like minerals and ores a non starter.

Don't underestimate the gravity and distance part.

Asteroids have already crashed into planets. Find where the iron nickel deposit already exits on Earth or Mars, rather than chasing asteroids.

If men colonize mars, they might bring a a starter accommodations and a few tools, but will have to do everything else with the materials that are on mars.

SurlysonofaBitch's picture

We should already have our asses on the moon mining helium 3, at a minimum.

rex-lacrymarum's picture

It would already be done if it were economically viable. The fact that it isn't done proves ipso facto that it isn't viable yet. 

PrivetHedge's picture

I predict the market price would drop if that arrived.

How are they going to land it BTW? There's a nice place in DC I know where it could 'touch down'..

jin187's picture

Nickel and iron are already dirt cheap and plentiful. The cost of dragging it back here wouldn't even be worth the fuel used to do so. It's barely even worth digging out of the ground here on earth, which is why the steel industry is nearly dead in the US. The reason precious metals are so valuable is because they're the only ones where finding them is more expensive and time-consuming than digging them out of the ground. Maybe in 10,000 years, when we've got a trillion people on earth, and we need some more nickel at the moon colony, this asteroid will be worth something.

MonetaryApostate's picture

That's ok, the bankers have printed 143 trillion bank notes in anticipation...

DownWithYogaPants's picture

I maintain it would be good for us if we found a big asteroid of gold.  It's an extremely useful industrial metal.

We would adjust very rapidly to having unlimited supplies of gold.  Lord knows I could get used to it personally.

More of interest would be He-3 if we finally figure out fusion.  Ever notice the only methods they research are the HUGE ones that would require a power company to run the fusor?