Monday, May 23, 2011

Inflation and the Fall of Rome

I read a great speech given by Prof Joseph Peden about the end of the Roman Empire. It was given in 1984. The parallels are rather stunning, as I have listed below.

Peden noted that “Monetary, fiscal, military, political, and economic issues are all very much intertwined. And they are all so intertwined because and state normally seeks to monopolize the supply of money within its own territory. Monetary policy therefore always serves, even if it serves badly, the perceived needs of the rulers of the state. If it also happens to enhance the prosperity and progress of the masses of the people, that is a secondary benefirst aim is serve the needs of the rulers, not the ruled”

Roman Emperor Caracalla around 2nd century AD “raised the pay of the soldiers byt 50%, and to achieve this he doubled the inheritance taxes paid by Roman citizens. When this was not sufficient to meet his needs, he admitted almost every inhabitant of the empire to Roman citizenship [sound familiar Mexico?]. What had formerly been a privilege now became simply a means of expanding the tax base”

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