Numisphere Podcast - Coins, Currency, Bullion
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Numisphere Podcast - Coins, Currency, Bullion
The Fall of Roman Empire Monetary System and the Future of the US Dollar - Inflation?
Will this happen to the US Dollar?
Uncover the lessons from the past that could safeguard our economic future, as Colin Horan joins us to connect the dots between Rome's ancient currency crises and today's monetary policy challenges. We're promised a journey through the empire's fiscal collapse, focusing on the parallels between the silver dilution in Roman coins and modern fiat currency manipulation. Horan expertly navigates us through the historical narrative, from the silver-laden coins of Augustus to Caracalla's Antoninianus, and the implications these monetary decisions had on Rome's economy, public trust, and ultimately, their society.
Witness the stark consequences of ancient hyperinflation and currency devaluation as they unfold in the Roman Empire, a cautionary tale that resonates alarmingly with our time. We're not just recounting history; we're discussing the dire effects of economic decisions and the patterns that seem to recur throughout human civilization. From emperors appeasing armies with unsustainable wages to Diocletian's desperate Edict on Maximum Prices, we scrutinize the devastating impact these choices had on trade, public confidence, and the very fabric of Roman life. With Horan's insights, this episode becomes a mirror reflecting the potential future of modern economies flirting with similar fiscal perils.
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Today we're diving into the fascinating parallels between the Roman Empire's economic struggles and today's monetary policies in the US. We explore what happens when empires can no longer fuel their economies by printing money from the decline of Rome due to precious metal shortages and hyperinflation to the modern challenges of fiat, currency and global trade. We'll discuss how history might not repeat, but it certainly rhymes. Stay tuned as we draw vital lessons from the past to understand our economic future. Be sure to subscribe if you enjoy watching the Numisphere podcast, and you can always find us on Instagram or Facebook, at ahcoinco, or visit us at ahcoincocom. Welcome to the Numisphere, a podcast diving into all things in the sphere of numismatics, talking the latest news and trends of precious metals, coins, currency and more.
Colin Horan:Well, first, thank you for having me on the show Absolutely, and I think I'd like to start with the baseline of the Roman monetary system. So, starting back during the time of Augustus, in the first century the Roman coins really followed bronze denominations, silver denominations and gold denominations. The bronze denominations were the quadrants, semis, as and pondus and sestertus, and those were really used for local trade within the empire. You know, buy a loaf of bread, buy a night at a hotel or something Common like hour-dwellers in coins. Basically, yeah, small change. It was small change. Like in Pompeii, they find lots of small change from all the businesses around.
Colin Horan:Okay, and the silver denominations at the time were denarii, okay, and these coins are the staple coins within the empire itself. This is what mainly larger transactions would have been done in, of larger scale. And then you have a gold coin called the Oreus, and the Oreus was used more for international trade or for extremely large purchases, because it took 25 denarii to equal one ore Gotcha. So in the time of Augustus these coins were actually relatively pure. The denarius was in the high 90% for silver content percentages. And as the empire moved into the second century it was embroiled in expansion and more war, and some of these efforts started to slowly, over time, decrease the amount of silver in the denarii in order to strike more coins. They were would replace the percentage by something like a little bit more copper each time but how much percentage were they reducing it each time, or did it change?
Colin Horan:it changed based on the emperor's needs. Usually it fluctuate between, you know, a percent or two, maybe three. Uh, the emperor domitian actually temporarily raised the silver content in the denarii, but he's only one of the few to ever do that. But by the time you're getting to the mid second century you're already down to 80 70 from that original 90 and people start to take notice. But it's very, it's a very slow change, so not everyone has a quick notice to it, because the coins look exactly the same.
TJ O'Connor:It's funny how you say that it was basically at the whim of the emperor and according to the emperor's needs. Yes, we could almost replace that with it's. Whatever the government needs is what they can help value the dollar. I'm just trying to find those correlations.
Colin Horan:Yeah, and something with the government's needs actually comes in the early third century, where there's a new denomination that was introduced called the Antoniniatus. It was introduced by the Emperor Caracalla. It's actually valued at 2 denarii it's double worth of the denarii but it actually only contained initially 1.5 denarii's worth of silver.
TJ O'Connor:Oh wow, the other half a denarii got pocketed by the government so that's almost like a two and a half time debasement in one flow. Yeah, and at that point strike from him you're already down to 70 65 silver content.
Colin Horan:But they're already pocketing that half a denarii's worth of silver back into the government and basically releasing this coin saying, yeah, it's worth two denarii, sure, but in reality its actual value is only one and a half after they get their 25 silver out of the coin.
TJ O'Connor:Yeah, but that's just insane. I can't believe that. So tell me a little bit more. What, what, how did the empire respond to this debasement, like you were talking about how there were so few emperors that helped bring that debasement back up. What tell me about the next steps? What happens with all these different emperors leading the way, um, to that continued debasement?
Colin Horan:well, a lot of the time people didn't notice too much until it was very too late, because, you know, they use these copper denominations for a local trade. So the copper denominations, they steadily decreased in weight as well and eventually they all got phased out. The quadrants and the semis was gone by the second century, the mid-second century and really only the sestertius will survive for any long amount of time. But eventually that does disappear too and the denarii will slowly you, you know, obviously gets debased more and more over time and these people start to lose trust in the actual currency. And we're talking about the citizens of the, you know, the citizens of the empire, yes, um, and over about a course of 50 years after the introduction of the Antoninianus. The denarii is ceremonial at this point and it contains almost no silver in it.
TJ O'Connor:It has a silver wash layer on top so we went from being up in the upper 90s right and it's purity windling down to that 75, 80 percent. Then we hacked it in half and then we went even further, to the point where we were just coding copper coins.
Colin Horan:Yes, yeah, precisely at the beginning of the third century you're at, you know, 60, 70, but by the end of it the denarii gets phased out. It was only ceremonial and it only had a silver wash.
TJ O'Connor:And even in the 260s they had the silver wash on the denarii now, what kind of impact did this have on the roman Empire's ability to commence trade throughout?
Colin Horan:Well, a lot of people. While resorting to their provincial town coinage of copper or the Roman imperial mint of copper, they eventually started wanting to barter, rather than trade, with the currency, because so much of the good currency was actually being taken out of circulation and hoarded away while the bad money continued to circulate and many vendors knew as the emperors changed so many emperors changed during the third century, it was like one every five years. They would just hoard away the good stuff and the vendors wouldn't take the bad coins.
TJ O'Connor:Now I imagine that they must have experienced some type of hyperinflationary event. Oh, yeah, yeah, tell me, was there a period during which they experienced the hyperinflation? All of this is what occurred.
Colin Horan:Yeah, all of this is hyperinflation, with the currency being devalued and that means it takes more denarii, more Antoniniani, to purchase your everyday items, as something like the soldiers pay, soldiers, pay would also exponentially increase because, with the emperors constantly rotating out Like there's one year where you have six different emperors, um, in just one single year but with each emperor they need to gain the loyalty of the army, because you, they're usually the ones that usurped at the ground.
TJ O'Connor:Okay, they need to promise the army that will up your pay they're buying them off, but upping their pay, and the only way they can afford to do it is by debasing the currency.
Colin Horan:Exactly because you only have the same amount of silver.
TJ O'Connor:Oh my, goodness, that sounds like a bad ending regardless. Right, but now I do have a question more related to the hyperinflation. I read somewhere that they experienced price increases over a thousand percent, and they experienced it pretty quickly. Yes, now there was some type of emperor rule that was put into play to cap prices.
Colin Horan:Yeah, so Diocletian's Edict on Maximum Prices, which was issued, if I can recall correctly, around 301, at the beginning of the 4th century. It was meant as a cap to merchant prices. After Diocletian did a monetary reform, it completely changed the monetary system and he tried to cap the prices of a whole range of items, like thousands of items, anything ranging from bread to clothing, all the way up to something called tyrian purple okay, which is, uh, the purple dye which is used, which is that royal color purple that they used to envision roads. You could only get it from killing snails back in Mediterranean sales. So it was really expensive. It costed like, I think, 100,000 denarii at that time, but obviously denarii is being used as a figure of measurement for a plane that doesn't actually exist anymore at that point.
TJ O'Connor:So they were measuring their prices in denarii, but at that time the denarii was already phased out.
Colin Horan:It was phased out five years prior as a commemorative, but it had already been commemorative for another 20 or so years before then, so it's almost as if they had to abandon it. Yeah, and the new currency was based off the denarii, but in like eight times bigger, four times bigger than your Denari and into Neneari. So do you think that?
TJ O'Connor:this cycle that was happening. Wasn't there a period of time in like only 49 years, that 50 plus emperors reigned? It's because of that exact thing that you were talking about, where they would have to promise the soldiers more money, but they weren't able to follow through.
Colin Horan:So these guys were getting taken out left and right and a new emperor would usurp and then come in and then they have to promise them more and it's corrupt to me doesn't vary and sometimes they're put in even more unfortunate circumstances. Uh, the emperor gallienus, in the middle period of all this, around the year 260, he actually loses half the empire to a usurper named posthumous. Okay, and posthumous takes over france and spain and, uh, britain, like that whole area there, the gauls, yeah, the gallic area of the roman empire. But more importantly, he takes over the silver mines in hispania. So gallienus loses a huge amount of silver during his reign. Right, his goes from like 30 all the way down to five to two percent. So they couldn't even source the silver. They couldn't source Even the Gallic Empire. They actually produced for a little while better quality silver coins than the actual Roman Empire because they had access to those mines. Now, that's interesting for me.
TJ O'Connor:I'm just thinking about the correlations that could possibly exist with our current economy and imagine almost if the federal reserve didn't have the ability to print more. Um, that sounds like kind of what these, the empire, was being choked up in because they lost their source of that precious metal.
Colin Horan:They could no longer flood the economy with cash, so cash became constrained, yeah, and the economy was slowing down for them and in adding to that hyperinflation, it says that they have to decrease at a faster rate with the limited resources that they have.
TJ O'Connor:It almost sounds. Uh, if I were looking to be a raider, let's say I'm attila behind, right, or I'm, I'm one of these bowser or van metal right or or the gauls, and I'm looking to get into, um, the roman empire. They're looking pretty weak, right. And at the same time, too, nobody wants to deal in their currency outside of the direct citizenship, right, because they're forced to. So trade is, I imagine, slowing down incredibly, trade slows down.
Colin Horan:International trade is on a separate note. Because they don't touch, they don't like to touch the gold. Okay, they do on occasion, but they don't change, they don't like to change the purity of it, because that's their like lifeline with international trade. Okay, um, but you know the ori value will rise and fall and eventually that does get replaced too. Um, but yeah, people make me they don't like those copper coins right.
TJ O'Connor:So it's almost as if that debasement basically discouraged the entire population away from utilizing it as a way to transact exactly.
Colin Horan:they lose trust in their government because they don't trust their government to actually provide the money that they need, and that is sound money.
TJ O'Connor:And where did the people turn to? They turned to that barter system right, which further broke down trade routes, and localized trade right, which really hurt the empire in its ability to move goods throughout the entire region. And now you have people looking to get other gold or other silver right, like the silver from spain that was just acquired from the empire, yeah.
Colin Horan:And then when rum takes it back, it didn't change a thing. It was already too late. It's too late and the world had moved over. Yeah and um. That's why diocletian's uh ed on maximum prices failed. People didn't follow it because they knew the currency was going to get devalued again. And about 10 years from then, constantino ran. His coins are only a fraction, you know, a half a fourth, the size of what Diocletian originally started with, at around 296. The currency is devalued that quickly.
TJ O'Connor:Wow. So for me now, now the light bulbs are popping right and I'm saying to myself, if we think about what was the Coinage Act back in the late 1800s it was 1873, I believe when we started to move from silver being able to be minted into coinage for US citizens. Right Now we've started to move away from the silver and ever since we basically brought on the fiat dollar right, and from that time to now we've lost more than it says to me. More than 97% of that purchase power has been taken out of that dollar, and this is done in many forms, right, but basically it's been currency debasement as we continue to print and create derivatives of the dollar. The whole system is building up this debt without much collateral behind it, and it almost feels to me like there's a huge parallel here of those last blips or days in the Roman Empire when they were just trying to shuffle around this completely based currency and the people Rejected and I can give you another parallel to church.
Colin Horan:A lot of the stuff that was happening in the Roman Empire was war. They were constantly funding wars and each of these wars of the soldiers you need to print more and more money and basically shovel all that money into, like usually fruitless wars. They don't give you really anything back other than trying to maintain the status quo right. So the more and more amount of money being struck and set out and also devalued at the same time, flooding, yeah system with courage you just have for these wars and you just have way too much worthless money. That's basically Interesting you bring that up.
TJ O'Connor:I don't know how many dollars exist in the world, but I hear there's trillions. I wonder how many of those ones are worthless. I would think quite a few. Well, yeah, I have to say I really do appreciate you bringing in this tie to history. Do appreciate you bringing in this tie to history.
TJ O'Connor:I think that, with all things, if we can look back on history and pull these really important examples from the books, from the best books that we know to be true, and put that to these situations, there's a lot of things that are on the wall for us. And I'm really curious. You know, obviously there's some huge changes here. Right, we can print mine digital facet. Right, we don't need silver mines in order to make the money now that we're on this fiat currency system. But I do wonder, can you get the dollar debased enough where the people have had enough and they turn away and they look for something else away and they look for something else? And, truthfully, that's the thing that I think everybody is wondering. Could it be that people turn away from the use of the dollar? And where would that leave us in the economy here in the United States compared to the rest of the world, and also what happens to oil trade. All of these things could be jeopardized.
Colin Horan:Like the Roman ory, the US dollar is so important. With the Bretton Woods conference, yeah to international trade. It's the staple of many international trade agreements and, like the petrodollar and all that, the US is backing a lot of important ideas in trade Right In bringing up some more relevant current events.
TJ O'Connor:Obviously, with everything that's been happening in Ukraine region, in the Middle Eastern region and the BRICS nations coming together having to find ways to adapt to the sanctions that the United States put on them, it's almost as if they have to find an alternative to using the dollar in order to get these things done. And I wonder if that same example that we're talking about, where people turn away from that denarius or they turn away from, potentially, that dollar, is that already happening? Is the world already making that momentum? And where could the United States? If the United States were a petrolem to the Roman Empire, where could it be in that journey?
TJ O'Connor:And then, if you take a look at what happened back then and how long it took to play out each of these monolies, we live in an accelerated world, like transactions are being settled, liquidity split, laws are instant. Everyone finds out about is fast. I imagine that if we get pushed to that brink, the ending will be of an acceleration unlike which has been written in the history books. So definitely a lot more questions. You brought a little bit of anxiety to me with the history lesson, but I have to say if history doesn't repeat, it won't, so there's definitely something to this. Really appreciate your input on this today. Thank you so much. Thank you for listening to the Numisphere podcast. Be sure to subscribe so you don't miss out on the next episode. You can find us on Facebook, instagram and YouTube at Numisphere. Until next time.
