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Fiat Currency: Storm Trooper Of Inflation Fiat Currency: Storm Trooper Of Inflation May 8 Nike Air Max Thea Print Natural Hvit Svart , 2014 | Author: Wallace Eddington | Posted in Business
Inflation is an old scourge. History reveals its devastating consequences time and again. The same story is ever repeated: armies that allow rulers to rule, and armies need money to buy the weapons and pay the troops. However, once you have an army, and rule a society, commandeering its money supply is as simple as it is elementary. And, thus, inflation follows like the predictable hangover after a night of inebriated excess. The Roman Empire showed us how it’s done.
Between the regimes of Augustus and Diocletian Roman troop numbers more than doubled: from 250,000 to 600,000. An indication of the degree to which inflation funded this massive military is the fate of the Roman currency, the denarius. It was so utterly debased by a long string of Roman rulers that Dame Nike Air Max Thea Print Natural Grå Rosa Tilbud , when Diocletian came to power, the formerly silver coin was reduced to a copper plated token. By A.D. 268 it had fallen to one five-thousandth of its original value. Roman trade was already deteriorating into barter. Meanwhile, the middle class was rapidly eroding.
Diocletian recognized the heavy toll of centuries of inflation through the abuse of the fiat currency. In an effort to build up the Empire’s coffers, he decreed payment of taxes be in goods. Furthermore, in an ill-conceived effort to address the effects rather than the cause of Rome’s chronic economic malaise, all manner of price, wage, production and anti-hoarding regulations were imposed.
The most dramatic of these regulations was his A.D. 301 Edict, which prescribed the death penalty for violators. Though much bloodshed resulted, the Roman economic implosion through inflation continued to run rampant. In that A.D. 301 Edict Dame Nike Air Max Thea Natural Grønn Hvit Tilbud , Diocletian fixed the price of gold at 50,000 denarii per pound. By 337, the year of Constantine’s death, a pound of gold brought 20,000,000 denarii!
What is generally considered the final century of the Roman Empire (at least the Western Empire) was characterized by economic decay and social deterioration. Roman’s abandoned the market economy in droves. Being forced by law to treat a coin as having a value which it simply did not made rational economic activity almost impossible – without breaking the law. Some fled the country. Others entered voluntary serfdom – escaping the cash economy. The feudal system of Europe is frequently explained as a consequence of the collapse of a sophisticated economy after the fall of Roman civilization. In fact, though, feudalism emerged in the very bosom of Rome. It was the rational response to a monetary economy crippled by a coercively mandated currency verging on worthless.
One always wants to avoid overly simple explanations for major historical events, but there can be no question that the fall of Rome has to be in some serious measure attributed to the centuries of economic malaise incurred by the debased fiat currency. Indeed, the common practice of portraying the barbarian invasions as a conquest is a bit misleading. For the majority of the Roman lower class – a category into which much of the middle class had fallen – the sackers of Rome were not conquers Dame Nike Air Max Thea Print Rød På Salg Norge , but liberators: bringing liberation from the denarius.
When seeking insights into the modern world that may be drawn from the history of fiat currency, this story of Rome tells us much. A good generated out of the market for common benefit is corrupted by power and coercion . All rhetoric notwithstanding, rulers self interest lead them to transform the currency from a market-valued good into a bit of make believe. For, in the end, this is what fiat entails. The money is legally required to be treated as being worth something it simply is not. Reminiscent of the parable of the Emperor’s new clothes, the commoners are directed to simply pretend the patently false is somehow actually true. All this is done so that the rulers can cream off the real value as wages for their soldiers and fees for their arms dealers.
Naturally, rising prices run rampant as producers and merchants attempt to adjust reality to the devalued money which they’re legally coerced to treat as having a make-believe value. If the rulers respond with price controls, as so often happens, the next step for producers and merchants is to compromise the quality or quantity of their goods, to save the value they’re losing when forced to use the money as though it had a value it that the market does not afford it.
If wage Nike Air Max Thea Print Natural Rød Norge , price, quota, etc., regulations are coercively imposed in an effort to suppress these natural market adjustments, as happened with Rome, the very collapse of the official monetary economy can follow. Black markets spring up everywhere and those simply trying to improve the quality of life for themselves and their families, through voluntary exchange, are forced to abandon the monetary economy in a variety of different ways.
Back when our money was composed of coins, creating fiat currency was an elaborate and labor intensive exercise of re-minting coins of reduced precious metal composition. Today, when our money supply is whatever the central bank (the Federal Reserve in the U.S.) says that it is – simply adding zeros to a computer screen – inflation is so easy that massive abuse is virtually irresistible.
All through this discussion Herre Nike Air Max Thea Print Blå Hvit Salg Norge , though, we must not lose sight of the fact that money is just a commodity, no less subject to forces of supply-and-demand as any other commodity. Increases in the supply lower per-unit demand, causing price to fall. And that falling price is the collapsing purchasing power of our money.
It’s a grave mistake to suppose that carrying your dollars in your wallet, or locking them in your home wall sHow To Opti.
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