
Hyperinflation and Trust in Ancient Rome - bookofjoe
https://notesonliberty.com/2019/09/16/hyperinflation-and-trust-in-ancient-rome/
======
H8crilA
Detailed descriptions of ~50 debt crises that had happened in the past
century, both deflationary like the 2008 subprime crisis in the US and much of
the world, and inflationary like the 1930s Weimar Republic hyperinflation can
be found in Ray Dalio's book "Principles for Navigating Big Debt Crises". The
main determinant of whether a debt crisis becomes deflationary vs inflationary
is whether the debt is denominated in local currency (and can therefore be
managed/socialized via money printing, like QE after 2008, or the Roosevelt's
Executive Order 6102 in 1933 with the follow-ups) or in a foreign currency
(when the debtor country cannot do so). Only borrow in a currency in which you
earn! This applies to governments too.

There's also a good 30 minute video on the topic:

How The Economic Machine Works:
[https://www.youtube.com/watch?v=PHe0bXAIuk0](https://www.youtube.com/watch?v=PHe0bXAIuk0)

~~~
littlestymaar
> How The Economic Machine Works:
> [https://www.youtube.com/watch?v=PHe0bXAIuk0](https://www.youtube.com/watch?v=PHe0bXAIuk0)

First sentence “The economy works like a simple machine, but many people don't
understand it − or they don't agree on how it works − and this has led to a
lot of needless economic suffering”.

Seriously?

~~~
qubex
As an economist, any suggestion that the economy is simple, mechanistic, or
easy to understand horrifies me... and those who perpetrate such views tend to
be the ones who cause the most harm by simplifying things down to the point
that they are meaningless and drawing vast, general conclusions from basically
anecdotes.

~~~
airbreather
Given you are a self acknowledged economist, I am aghast that you feel the
empirical track record of your ilk entitles you to comment.

~~~
qubex
Yeah... I consider it an error of youth that I’m now stuck with.

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ncmncm
In " _Debt_ " by John Graeber, I was astonished to learn that currency was
invented more than 2000 years after money. It was a military logistics
invention: soldiers were issued coins, and taxes collected in coins, so that
to be able to pay taxes, the governed had to meet the material needs or other
wants of soldiers.

The metal value of the coins only mattered for trade with foreigners.

~~~
knocte
But still, the way to inflate these coins (i.e. devalue them) was to include
less and less precious metals in the material used to produce them. (There is
a mention about this in the great TNW talk by Stefan Molyneux:
[https://www.youtube.com/watch?v=r9cAXh1QAW0](https://www.youtube.com/watch?v=r9cAXh1QAW0)
)

~~~
dredmorbius
Molyneux is at best an idiot, and at worst, a white nationalist neofascist.

 _A libertarian internet commentator and alleged cult leader who amplifies
"scientific racism," eugenics and white supremacism to a massive new audience,
Stefan Molyneux operates within the racist so-called “alt-right” and pro-Trump
ranks._

[https://www.splcenter.org/fighting-hate/extremist-
files/indi...](https://www.splcenter.org/fighting-hate/extremist-
files/individual/stefan-molyneux)

That aside, his economic doctrines are at best a random splatter pattern.
There are vastly better uses of your time and attention.

~~~
knocte
I indeed hate some of his content, but that talk is great. Otherwise you're
doing a strawman.

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KevinKallmes
Hey all! OP here, loving the discussion of hyperinflation theory.

If you are interested in this sort of history, please feel free to see my
other work here, and if you have other topics you would like to see, post
below! History of inventions:
[https://notesonliberty.com/2017/08/22/inventions-that-
didnt-...](https://notesonliberty.com/2017/08/22/inventions-that-didnt-change-
the-world/) [https://notesonliberty.com/2017/06/16/paradoxical-
geniuses-l...](https://notesonliberty.com/2017/06/16/paradoxical-geniuses-let-
us-burn-the-ships/)
[https://notesonliberty.com/tag/auftragstaktik/](https://notesonliberty.com/tag/auftragstaktik/)
[https://notesonliberty.com/2017/02/23/rules-of-warfare-in-
pr...](https://notesonliberty.com/2017/02/23/rules-of-warfare-in-pre-modern-
societies/) [https://notesonliberty.com/2017/04/10/how-to-take-over-
syria...](https://notesonliberty.com/2017/04/10/how-to-take-over-syria-roman-
edition/)

------
golergka
> Given that the silver content of coins decreased by over 95% (gold content
> decreased slower, at an exchange-adjusted rate shown in Figure 1) from
> 160-274 AD but inflation over this period was only slightly over 100% (see
> Figure 2, which shows the prices of wine, wheat, and donkeys in Roman Egypt
> over that period as attested by papyri). If inflation had followed the
> commodity value of the coins, it would have been roughly 2,000%, as the
> coins in 274 had 1/20th of the commodity value of coins in 160 AD.

This assumes that customers would have been able to accurately determine the
percetange of gold in coins. Was it the case? Or could Emperors have silently
defrauded the population without it knowing that the coins don't actually
contain as much gold as they used to?

Also, it implies that a person that hypothetically did that analysis could
have and would have communicated it to others. But communication channels most
likely were under heavy imperial control, and a person that would discover
that would much more likely use this information to his advantage rather than
telling it to everyeone around.

~~~
Nasrudith
There would be some signs with things like density and hardness of the coin
even if the apocryphal legendary streaking of Archimedes didn't happen yet.

Also the thing about inflation is that it doesn't matter if it was real or not
(although signs of debasement would show with foreign trade) - even if they
could pull new pure silver out of their togas it would still affect monetary
supply - although it would retain strength relative to trading partners until
their own supplies stabilized.

I am reminded of Japan and how it was attractive to Portuguese traders - they
would load ships full of silver to exchange with gold because the two were
essentially equivalue in Japan at the time but gold was worth far more in
Europe.

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jonnycomputer
The author points to trust in the currency as the culprit, and I agree, at
least partially. But the emperor's ceasing to accept coin to pay taxes would
have decreased demand for currency substantially, and thus its value.

If the emperor demands his coin to pay taxes, you either obtain his coin or
answer to the emperor.

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kunkelast
So, digital unregulated and decentralized payment solutions, like Bitcoin, are
the solution? What about those people who can't make their own financial
plans, because they are just too stupid for that? They need government to help
them. And those people are in majority.

