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Uriah Heap

Quantitative Easing The Roman Way

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I have just read a paper that suggests that the Roman Empire collapsed because they became too complex. One of the ways this manifested itself was fiddling with the currency, much like present day governments are doing. The Romans couldn't print money because they hadn't invented priting. But they managed to achieve the same effect by debasing the silver content in their coins. Nero was the first emperor to hit on the idea, but every succeeding emperor did the same thing. By the reign of Aurelian, the coinage was worthless.

I have put more details on my blog http://historybooksreview.blogspot.com/2010/11/quantitative-easing-roman-way.html

Edited by Uriah Heap

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Curiously realistically modelled in Rome Total war...

In that when your go for gold i.e. 100% domination your empire gets hellishly complex! And you have to constantly completely sack your OWN cities and execute 90% of the population to keep control.

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Uriah, I left a comment about this on your blog.

you said

"Now imagine that the government offers for sale special geese. The geese cost 1000 ounces of gold and are guaranteed to produce 10 8-ounce gold eggs each year. Furthermore, there is a well established market for golden egg laying geese, as one might expect. Lastly, there are no upkeep costs since the government has its own goose cages where they will keep your goose and feed it on your behalf."

"The goose is priced in these modern, rational times using Net Present Value , in which we simply discount the value of future golden eggs by the prevailing interest rate at which gold can be lent in the market. If that rate is positive, then the goose has a finite value. If that rate is zero, then the value of the goose is infinite according to NPV, regardless of how many eggs it lays and over what timeframe."

This is only true if the goose lives forever; so when you say "regardless of how many eggs it lays and over what timeframe" you mean the goose must lay eggs in perpetuity (i.e. over an infinite timeframe). So an infinite number of eggs has an infinite value. It is more interesting if the interest rate is say 5%, that the value is not infinite, even if there are an infinite number of eggs.

You said: "Both government bonds and geese expire" Government perpetuities do not expire (unless default)

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I have just read a paper that suggests that the Roman Empire collapsed because they became too complex. One of the ways this manifested itself was fiddling with the currency, much like present day governments are doing. The Romans couldn't print money because they hadn't invented priting. But they managed to achieve the same effect by debasing the silver content in their coins. Nero was the first emperor to hit on the idea, but every succeeding emperor did the same thing. By the reign of Aurelian, the coinage was worthless.

I have put more details on my blog http://historybooksreview.blogspot.com/2010/11/quantitative-easing-roman-way.html

Snipping the edges of coins was popular.

I've got a few Roman coins, from about 250AD, I think, and they sure as hell don't look like pure silver.

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Snipping the edges of coins was popular.

I've got a few Roman coins, from about 250AD, I think, and they sure as hell don't look like pure silver.

Snipping the edges off a coin would be less profitable the less silver it contained. This paper says that the amount of silver declined from the reign of Nero onwards. It would be interesting to see whether the degree of clipping declines as the degree of debasement increases. 250 would be roughly Gallianus or Valerian I think (off top of my head - will google and correct later if I'm wrong) so there shouldn't be much silver in your coins. Are they clipped at all?

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I have just read a paper that suggests that the Roman Empire collapsed because they became too complex. One of the ways this manifested itself was fiddling with the currency, much like present day governments are doing. The Romans couldn't print money because they hadn't invented priting. But they managed to achieve the same effect by debasing the silver content in their coins. Nero was the first emperor to hit on the idea, but every succeeding emperor did the same thing. By the reign of Aurelian, the coinage was worthless.

I have put more details on my blog http://historybooksreview.blogspot.com/2010/11/quantitative-easing-roman-way.html

Currency debasement as an important part of the Third Century Crisis in the Roman Empire but the reasons it became so prevalent was as much military and political as economic .Much of the coinage that was in circulation was originally minted to pay the legions or as bonuses given to soldiers when a new emperor came to the throne. Between 235 and 284 AD at least 25 emperors were proclaimed and there was almost constant civil war. This resulted in a lot of dodgy currency being minted to pay the legions backing each contender for the imperial purple.

When some semblance of more stable government was finally imposed by Diocletian and then Constantine much of the currency debasement was reversed when the former introduced the silver Argenteus and the latter the gold Solidus.

The actual collapse of the Roman Empire in the West did not occur until the 5th Century over a century after the main period of debasement .

The declining precious metal value of the coinage doubtless helped fuel inflation in the Roman world and undermined its stability but is important to remember money paid only a limited role in its economy where wealth was still mainly measured in land, agriculture dominated production and a good part of the population were unfree slaves who did not receive wages.

It is also worth noting that inflation can occur even when the coinage is not debased as the Spanish and much of Europe found out in the 16th Century when the economy suddenly became flooded with vast new amounts of gold and silver from the Americas which pushed up the money supply.

Edited by realcrookswearsuits

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Currency debasement as an important part of the Third Century Crisis in the Roman Empire but the reasons it became so prevalent was as much military as economic .Much of the coinage that was in circulation was originally minted to pay the legions or as bonuses given to soldiers when a new emperor came to the throne. Between 235 and 284 AD at least 25 emperors were proclaimed and there was almost constant civil war. This resulted in a lot of dodgy currency being minted to pay the legions backing each contender for the imperial purple.

When some semblance of more stable government was finally imposed by Diocletian and then Constantine much of the currency debasement was reversed when the former introduce the silver Argenteus and the latter the gold Solidus.

The actual collapse of the Roman Empire in the West did not occur until the 5th Century over a century after the main period of debasement .

The declining precious metal value of the coinage doubtless helped fuel inflation in the Roman world and undermined its stability but is important to remember money paid only a limited role in its economy where wealth was still mainly measured in land, agriculture dominated production and a good part of the population were unfree slaves who did not receive wages.

It is also worth out that inflation can occur even when the coinage is not debased as the Spanish and much of Europe found out in the 16th Century when the economy suddenly became flooded with vast new amounts of gold and silver from the Americas which pushed up the money supply.

All very good points. The Roman currency was nominally based on silver but was effectively a fiat one. The point of the debasement wasn't the dilution of the silver. There was still exactly the same amount of silver in circulation. The problem was that there were many more coins. I suppose it is even possible that some of the instability was caused by the troops trying to maintain their standard of living by extracting more money from the emperors and replacing them if they didn't get what they wanted.

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A slight inflation is a great thing historically. For example Spanish gold from the new world pumped money into the long stagnant European economy, and some argue helped set off the renaissance. Spain experienced 500% inflation over the course of the 1500's. The money supply in Spain probably expanded by 20 times or more, as the real Spanish economy grew tremendously through the years in addition to the 500% inflation.

A gradual debasement of the coinage is sensible to fulfill the monetary needs of a growing empire, and growing productivity.

Thats what I notice is missing on the sky is falling posts on the interent is a sense of proportion. They talk of the US debasing their currency and hyperinflation. While back in reality the USA annual inflation is running at 0.9%.. the lowest rate since the 1950's.

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A slight inflation is a great thing historically. For example Spanish gold from the new world pumped money into the long stagnant European economy, and some argue helped set off the renaissance. Spain experienced 500% inflation over the course of the 1500's. The money supply in Spain probably expanded by 20 times or more, as the real Spanish economy grew tremendously through the years in addition to the 500% inflation.

A gradual debasement of the coinage is sensible to fulfill the monetary needs of a growing empire, and growing productivity.

Thats what I notice is missing on the sky is falling posts on the interent is a sense of proportion. They talk of the US debasing their currency and hyperinflation. While back in reality the USA annual inflation is running at 0.9%.. the lowest rate since the 1950's.

I agree entirely. And the Romans did inflate gently for a very long time without problems. I don't know if we can assume that the increase in coinage was directly in proportion to the reduction in silver content, but if it was the period of the 5 good emperors would have roughly matched the Bank of England's inflation target.

The other message is that although hyperinflation is a bad thing it didn't actually destroy the empire. It was barbarian invasions that did that.

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I agree entirely. And the Romans did inflate gently for a very long time without problems. I don't know if we can assume that the increase in coinage was directly in proportion to the reduction in silver content, but if it was the period of the 5 good emperors would have roughly matched the Bank of England's inflation target.

The other message is that although hyperinflation is a bad thing it didn't actually destroy the empire. It was barbarian invasions that did that.

Strange thing is even hyperinflation doesn't bring down countries. For example Argentina recently with the 5,000% inflation.

My theory is hyperinflation tends to favour the young and ambitious. While deflation favours the old and accumulated wealth. Those old won't launch a revolution if their wealth is devalued.. but the young and ambitious will launch a revolution if they are unemployed for too long.

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Guest UK Debt Slave

I have just read a paper that suggests that the Roman Empire collapsed because they became too complex. One of the ways this manifested itself was fiddling with the currency, much like present day governments are doing. The Romans couldn't print money because they hadn't invented priting. But they managed to achieve the same effect by debasing the silver content in their coins. Nero was the first emperor to hit on the idea, but every succeeding emperor did the same thing. By the reign of Aurelian, the coinage was worthless.

I have put more details on my blog http://historybooksreview.blogspot.com/2010/11/quantitative-easing-roman-way.html

Bill Still talks about the collapse of the Roman empire in his movie, The Secret of Oz

According to Bill, the Roman empire was actually built on fiat money, cheap bronze and copper coins.

It was the introduction of gold coinage that brought about the collapse because of deflation, followed by inflation later on

This always seems to be the way..............the deflation comes first

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The Romans couldn't print money because they hadn't invented priting. But they managed to achieve the same effect by debasing the silver content in their coins.

Mixy Mixy

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Any links to any of these papers?

As the paper is copyright it would be completely wrong to suggest googling the authors name and a few key words like complexity and sustainability on the off chance that someone has put an illegal copy on a web service like say Scribd. Whatever you do, don't do that.

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I agree entirely. And the Romans did inflate gently for a very long time without problems. I don't know if we can assume that the increase in coinage was directly in proportion to the reduction in silver content, but if it was the period of the 5 good emperors would have roughly matched the Bank of England's inflation target.

The other message is that although hyperinflation is a bad thing it didn't actually destroy the empire. It was barbarian invasions that did that.

Another viewpoint is that the Germanic invaders met with little resistance due to the poor moral of the Roman army, in turn due to the poor economic situation.

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Another viewpoint is that the Germanic invaders met with little resistance due to the poor moral of the Roman army, in turn due to the poor economic situation.

Well anything is possible, but the soldiers did tend to do pretty well out of the empire. And when the barbarians met head to head with a well led Roman field army, they were usually toast. If the morale of the army was low it was probably because they often weren't well led.

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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