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Every Empire Tries It

The good news is that history always repeats itself – so we can see what’s coming down the pike. The bad news is that history always repeats itself – so we can see what’s coming down the pike.

Sigh.

Take this little snippet from the very clever book, the Traveler’s Guide to the Ancient World: The Roman Empire, which is a "travel guide" to the City of Rome and its environs from the year 300 AD. Note the following quote on pages 20–21:

"The consequences of the barbarian threats that first developed 60 or 70 years ago…" [ca. 230–240 AD] "were that emperors needed to be near the frontiers and required money to pay their troops on campaign. Many emperors, in need of cash, simply reduced the silver and gold content of the coinage – effectively making enough coins to pay their soldiers, but decreasing their actual value. Civilians have felt the cost of a devalued coinage: an overall rise in prices. Indeed it has become difficult to persuade the local aristocracies to pay for the restoration of temples, theaters, and amphitheaters in many of the cities of the empire.

"Most Romans hope that the introduction of maximum prices and wages will curb inflation – now realized to be a negative effect of the debasement of the coinage."

Every empire tries it: the debasement of the currency in a dishonest and desperate bid to get something for nothing in order to pay for the spiraling costs of empire. Today, we call it Keynesian Economics, and it is still carried out by modern imperators and their senatorial lackeys who use currency debasement as a "hidden tax" to fleece the plebs to pay for imperial expansion and to take care of their friends and patrons. Of course, every empire thinks it will avoid the fates of every other previous empire: "This time, it will be different, it can’t happen here."

But the reality is that honest money just works better all the way around, for everyone. It is a fact of history and mathematics that no one, not even a mighty imperial government convinced of its own omnipotence, can actually get something for nothing nor create wealth out of thin air. There is no philosopher’s stone, and there is no free lunch.

When "super-powers" begin debasing their own currency by circulating debt and fiat "legal tender" unbacked paper under the color of "money," it is a clear-cut sign that the empire is in decline.

I would recommend that citizens of Rome save in honest Barbarian money or pure gold coins, and not squander their grain allowances at the forum buying fancy consumer goods that come into the empire via oriental trade routes. Maybe even better yet, try to find some solid businesses to invest in beyond the Euphrates and the Rhine.

Of course, hindsight is 20/20.

January 5, 2009