“Look back over the past, with its changing empires that rose and fell, and you can foresee the future, too.”
– Marcus Aurelius
What Took So Long?
The interconnectedness of monetary, fiscal, economic, political, and military matters creates the very essence of a nation. Central to this fabric is the state’s relentless pursuit to control and centralize the monetary supply.
In this context, monetary policy primarily caters to the desires of a country’s leaders and the ruling elite. At times, it may appear to benefit the wider population, but this is merely a façade of early-stage inflation, wherein demand is artificially stimulated, leading to a misleading perception of economic growth.
Ultimately, the primary goal of monetary policy is to fortify the ruling class, leaving only the crumbs for everyone else.
Nearly 250 years ago, Edward Gibbon’s The History of the Decline and Fall of the Roman Empire was published in England in 1776. This six-volume work chronicles an empire that endured for twelve centuries in the West and a millennium in the East, particularly in Constantinople.
Reflecting on the fall of the Roman Empire, Gibbon remarked that the remarkable aspect was not its collapse but the duration of its existence. “Instead of inquiring why the Roman empire was destroyed,” he said, “we should rather be surprised that it had subsisted so long.”
Since Gibbon, historians and enthusiasts have strived to understand why the Roman Empire persisted for so long.
A common explanation suggests that gradual decline, interspersed with sporadic periods of prosperity, dulled the awareness of the populace regarding the empire’s deterioration. Much like frogs in slowly boiling water, people continued their lives as if the Roman Empire would last forever.
While this explanation holds some validity, it overlooks the multifaceted nature of the issue. A deeper examination reveals that inflation was a major factor in both the longevity and eventual demise of the Roman Empire.
The Great Third Century Inflation
The timeframe from the late 2nd century AD to the end of the 3rd century AD is recognized by Roman historians as the ‘Crisis of the 3rd Century.’ During this tumultuous period, Roman society faced challenges so severe that the empire emerged transformed by the end of the 3rd century.
The silver denarius was the most commonly used coin in the 3rd century AD. Initiated by Augustus at the end of the 1st century BC, it originally contained about 95 percent silver.
This coin remained a staple medium of exchange for nearly two centuries. However, over time, its value suffered inflation.
By 117 AD, during Trajan’s rule, the silver content of the denarius had dropped to around 85 percent; by the era of Marcus Aurelius in 180 AD, it was reduced to about 75 percent, and by Septimius’s time it further fell to 60 percent, with Caracalla capping it at 50 percent.
This was just the beginning. The most drastic debasement occurred post-Caracalla, between 258 and 275 AD, amidst civil wars and foreign invasions, with silver content dwindling to a mere 0.5 percent by 268 AD.
During this era, prices surged across much of the empire, inflating by an astounding 1,000 percent.
One unexpected discovery during the 3rd-century inflation was that paying troops with debased silver coins led to immediate price increases. As the value of the denarius diminished further, the government absurdly mandated payment of taxes in kind and services instead of coins, effectively disavowing its own currency.
Guns and Butter
The size of the Roman army notably increased during this period, doubling from Augustus’s time to that of Diocletian. Similarly, the civil service sector expanded.
These “guns and butter” policies consumed the state’s financial resources, mirroring today’s America. Like our current government, the Roman state relied on frequent currency debasement, exorbitant taxation, and the confiscation of estates from those labeled as traitors.
What were the repercussions of the Roman Empire’s rampant inflation?
One of the less apparent consequences was that, while it sustained the Roman government, it simultaneously eroded the freedoms of its people. Economic freedom was the first casualty.
For instance, Constantine enforced drastic measures that coerced taxpayers into surrendering their gold reserves, enriching government officials while impoverishing ordinary citizens.
Without a doubt, the monetary policies of the late Roman Empire offer invaluable lessons.
“War,” as Randolph Bourne remarked after World War I, “is the health of the state.” The Roman Empire exemplified this, but it also demonstrated that war can be lethal to stable and sound currency. The inflation of Roman money was tied directly to its expansive military endeavors.
This experience shows that rulers prioritize their class’s interests, maintaining military and civil service structures while neglecting private citizens and workers. Politicians often placate the masses with superficial solutions, or “bread and circuses.”
Thus, while the Roman state continued, the freedoms of its people diminished.
In the early 5th century, the Christian priest Salvian of Marseille recorded observations about the collapse of the Roman state in the West from his vantage point in France (Gaul). He attributed the empire’s decline to a fundamental failure: the lack of justice for the populace.
Does the American State Deserve Collapse?
In late 1777, Adam Smith received news of General Burgoyne’s defeat at Saratoga at the hands of American Revolutionary Patriots, marking a pivotal moment for British forces in the war and signaling the beginning of their declining control over America.
Upon hearing this, Smith’s correspondent expressed grave concerns about the ruin of the British nation. Smith replied, “There is a great deal of ruin in a nation.”
Indeed, nations can endure significant damage. However, analogous to the Roman Empire in the 3rd century and the British Empire in the early 20th century, the United States appears to be veering towards ruin.
Government intervention in the economy is as ill-conceived as trying to regulate the Earth’s temperature through legislation. Despite this, governments persist in meddling daily, often with mixed intentions. The U.S. government is no exception.
Over the years, an accumulation of interventions from federal, state, and local agencies has built up like grime on a neglected kitchen window. This worsening situation pervades all corners of the economy—gas prices, food supply, reliable energy, currency debasement, excessive taxation, and more. Today, Washington seems to be racing toward collapse.
Drawing parallels to ancient civilizations might seem superficial; perhaps America’s brightest days are yet to come, and only time will tell.
What we do know, however, is that the U.S. government has pursued numerous policies reminiscent of those that contributed to the downfall of previous empires: military misadventures, currency devaluation, the elevation of a political elite, and significant erosion of economic freedom, personal privacy, and individual liberty.
If the Roman state was deemed to deserve its downfall, can we argue that the same is true for the American state?
[Editor’s note: The opportunity to safeguard your wealth and financial privacy is rapidly diminishing. I find this troubling, but I refuse to stand idly by while Washington’s interveners threaten everything I’ve built. Therefore, I have dedicated the last six months to identifying practical steps that everyday Americans can take to protect their wealth and privacy. My findings are compiled in the Financial First Aid Kit. If you’re interested in learning more about this essential publication and how to obtain a copy, visit here today!]
Sincerely,
MN Gordon
for Economic Prism
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