The denarius was the coin of Rome 200 years before Christ. It was about the size of a nickel, and held about 4.5 grams of pure silver – just a little less than a pre-1965 quarter, and a match for two pre-1964 dimes. The problem was that Rome didn’t have a whole lot of silver coming in, so they debased the coinage to make the economy run.
The problem with keeping the currency based on pure silver is that the lack of money stops sales. So those old Roman leaders came up with the idea of putting less silver in each denarius, and stamping out more of them. So far as making trade easier, it worked. When you have more money, it’s easier to spend. Improves the gross domestic product (sounds kind of Keynesian, doesn’t it?)
By 161 A.D., the denarius was down to 3.4 grams of silver. By the year 265, the Denarius was down to 5% silver – a thin coating over brass. Maybe a quarter gram of silver left in the denarius.
About 300 AD, the emperor realized the problem of inflation – basically the denarius had no purchasing power. So he replaced the denarius with the argentius – a coin worth 50 denarius. Seemed like a good idea at the time. Ten years later, an argentius was worth 100 denarius. Not bad – a hundred percent inflation in ten years. Almost Bidenish. Or Trumpish – he’s still into deficit spending, but maybe he can beat inflation while racking up more deficits.
As the quality of money continued to decrease, Romans moved more into a barter economy. In 312, the new Emperor was Constantine – who legalized Christianity, took all the gold from city governments (now you know where FDR got the idea) and issued a new gold coin called the solidus, at 72 solidus to the pound. Still debased, but Rome basically moved from the silver standard to the gold standard. With the change to Christianity, there was a lot of gold available in the old pagan temples. Constantine got it.
In 301, a pound of gold was 50,000 denarius – by Constantine’s death in 337, a pound of gold had gone to 20,000,000 denarius coins. If I didn’t miss a couple of zeros, that’s 40,000 percent inflation over 36 years. Awesome. Constantine could have made Jimmy Carter look like a fiscal conservative.
By the time Rome fell, the Roman State had become the enemy of the Roman people. The fiscal policy was simple – continue debasing the currency and pay the army and government first. The barbarians became liberators.
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