TBT #5: Rome and the Debasement of Currency

There are a great many things we have learned from the Romans. Roads, sewers, hot baths etc. A lot of it is good stuff. We have, however, picked up some bad habits from ancient Rome. Debasement of currency to be exact.

The chart above shows how the amount of silver present in the Roman currency as time went on.1 As you can see, the currency was debased by using less silver in the coinage. It’s a primitive form of inflation. At the time, the Romans never had a printing press and paper money, but they could use less and less gold and silver in their coinage in order to increase the money supply.
Mises had a thing or two to say on currency debasement and ancient civilizations. “Knowledge of the effects of government interference with market prices makes us comprehend the economic causes of a momentous historical event, the decline of ancient civilization.”2 That is what the ancient Romans were trying to do, price control. The Romans did something called “coin clipping” where they would clip off the edges of a coin and put it back on the market at face value instead of it’s real value.3 That, or they would mix base metals like copper in with the gold and silver.5 Wars are expensive, and even back then, they had to inflate the money supply in order to expand and maintain their empire. This of course leads to economic collapse somewhere down the line.
It wasn’t just war that caused this; the supposed “good” emperors lived lavishly and by the time Trajan was in power, the empire was stretched to its limits and the treasury was practically empty. Emperors like Nero debased the currency in order to keep up with the demand for it.4 This temporarily appeases demand, but now there are coins that claim to be worth a certain amount, but are actually worth less than that, floating around in the market. This is a recipe for economic disaster and chaos and it’s the only outcome that this type of State intervention in the economy produces.
Rewind to a time before all of this debasement of the currency and you have two coins that were rather popular with the Romans. The denarius and the aureus. It was a gold and silver standard not unlike what the United States used to have prior to leaving the gold standard. As I said earlier, as Rome began to expand and the politicians began to use the treasury to curry favor with their sponsors, they resorted to debasement of the currency in order to pay the bills.5
Chris Horlacher says “When Julius Caesar first began minting large quantities of the aureus it was 8 grams of pure gold. By the second century it had declined to 6.5 grams and at the beginning of the fourth century it was replaced by the 4.5 gram solidus. The purity of the coin itself was never debased, but the ever decreasing weight was a sure sign that government spending had been outpacing revenues for centuries.”Revenue that cannot keep pace with spending was one of the main causes of the Roman Empire collapsing? That sounds rather familiar… Like the USD maybe…Once again, look at the chart above and you can see that this is completely true.

“No Roman was aware of the fact that the process was induced by the government’s interference with prices and by currency debasement.”2 Indeed these days, it seems no American is aware that our financial woes are due to the United States Government’s intervention in prices and complete debasement of its currency. The Roman’s fell slowly and they were still using gold and silver up until the end. We have the potential to fizzle out much quicker as we don’t even base our currency on anything other than the promise of value the State offers. This promise is done with the barrel of a gun too, as we are forced to use this debased currency and nothing else. Then as it is now, the currency is debased at the expense of the commoner to benefit the elite ruling class.

History repeats itself and it’s just sad. Like the Romans, the United States thinks it is the greatest civilization that has ever existed. “Land of the Free!” and home of the financial nightmare and ticking bomb known as the USD. At some point, I hope that all of us take a lesson from history, to learn what was done right and wrong. If modern civilization is too arrogant to open a history book, it will be it’s downfall.

1. “CHART OF THE DAY: The Roman Coin Chart That Doomsayers Love To Pass Around” By Joe Weisenthal

2. “Currency Debasement and Social Collapse” By Ludwig Von Mises

3. “How Currencies are Debased” by Chuck Clayton

4. “Economic Reasons for the Fall of Rome” by N.S. Gill


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