Currency Debasement and Cultural Degradation
International Man: How instrumental do you think the debasement of their currency was to the eventual fall of the Roman Empire? How did it affect their culture?
Doug Casey: In ancient pre-industrial societies—just like today—you became wealthy by producing more than you consume and saving the difference.
One of the best things about money is that it allows an individual to set aside capital, the product of his labor, in a form that retains value. A farmer, for instance, can’t save fruit from year to year, nor can a baker save bread. Sound money is critical for lasting gains in wealth and economic progress. Sound money is why wealthy societies become dominant, and a reason other societies are poor and ripe for conquest and domination.
Rome provides a meaningful long-term template. The Roman government, in search of revenue, started debasing the denarius under Nero in the 1st century, taking it from 90% silver to 75%. As late as the reign of Marcus Aurelius, which ended in 180, the denarius was still about 75% silver. By the end of the 3rd century, it was pot metal that was simply plated with silver. The 3rd century was notable for numerous coups, civil wars, assassinations, and secessions. There are plenty of reasons political chaos goes hand in hand with economic chaos; they reinforce each other.
Roman coins weren’t worth saving by the middle of the 3rd century, and the collapse of the currency was a major cause of the collapse of the empire. In some ways, sound money was even more important in ancient times than it is today because they didn’t have sophisticated banking, financial markets, credit, accounting, or ways of measuring the rate of currency depreciation. Physical cash was king.
Currency inflation creates chaos, even in a relatively primitive economy like that of the Romans—where there was still a lot of barter. Once the rulers found they couldn’t depreciate the currency anymore, direct taxes went up substantially, but it became hard to collect them simply because the currency had no value. The soldiers didn’t like being paid with worthless tokens. This is why after the reign of Aurelius, the next century was a time of civil wars and general chaos. There was no new construction of roads or public buildings. Those who were able holed up at their country estates, which were internally self-sustaining. It was the beginning of feudalism, a foreshadowing of the coming Dark Ages. By the accession of Diocletian in 295, Rome had lost all touch with its republican roots and had become an oriental-style despotism.
Is Rome a distant mirror to today’s West? It’s entirely possible, even likely.
International Man: What parallels can be made today with the US in terms of monetary debasement and overall degradation?
Doug Casey: The parallels are very direct. We can just look at the pictures on the coins.
During the Roman Republic, the consuls didn’t put their images on the currency. The coins bore images of the gods, heroes, or personifications of various virtues. Julius Caesar was the first ruler who dared put his own image on a coin. It amounted to free advertising.
Caesar signed the death warrant for the Roman republic, followed by Augustus, his adopted son, who was the first actual Roman emperor. From that p
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