Currency debasement is historically destructive

From about 190 AD to around 290 AD, the Roman Empire underwent what historians refer to as the “Crisis of the 3rd Century,” during which Rome had around 20-25 legitimate emperors at one time or another.  Emperor Lucius Septimius Severus, who reigned during the beginning of this crisis, had some striking advice for his sons on how to handle the future of the empire during these times: “Live in harmony; enrich the troops; ignore everyone else.”

When Caracalla, one of Septimius’ sons, became emperor, he did exactly that (except for the “live in harmony” part, considering that he almost immediately murdered his brother.)  He went about levying all kinds of new taxes in order to increase the size of the Roman military and state.
For example, he raised the pay of soldiers by 50 percent, funded by a doubling of the inheritance tax paid by Roman citizens.

When even this tax proved to be insufficient, Caracalla extended citizenship to nearly every member of the empire, simply to have a larger tax base.  However, high taxes proved to not be enough for Caracalla’s plans, and if he increased taxes any more he risked rebellion by his subjects and a possible collapse of trade.  Thus, he resorted to a secretive and insidious method to generate more revenue for the government – he debased the currency.

The silver denarius introduced earlier by Emperor Augustus was about 95 percent silver.  It had gradually fallen in value, and Caracalla brought it all the way down to only 50 percent silver.

However, after Caracalla things got worse, as the job of managing a worldwide empire became more and more expensive.  To help fund this, emperors continued to debase the currency, and by 268 AD the denarius was only 0.5 percent silver.  The result, especially from an Austrian view of economics, was predictable.

Prices throughout the empire rose by up to 1,000 percent.  The “barbarians” hired by the emperor as mercenaries would not even accept Roman coinage as payment, and insisted on being paid in gold.  Such manipulations of Roman coinage continued through to the empire’s end and directly contributed to its demise.

Last week I explained how central banking, the modern version of currency manipulation and debasement, is detrimental to an economy.  But I also posed a question – if such institutions are so destructive, why do almost all governments have central banks? The similarities between the ancient Roman and modern American governments should give us insight into this question.

At the end of the day currency debasement is simply another tax, albeit a tax which most people do not understand, and do not even know is being levied upon them.  While the Roman empire debased the currency by simply lowering the percentage of gold or silver in the currency, the American empire does so either by printing new money without any accompanying increase in production or by engaging in fractional reserve banking, via which banks lend out money that they do not have, being “insured” by the federal government.

Interestingly enough, the two governments seemed to use these practices for similar reasons.  Caracalla needed to increase war spending, and thus debased the currency to do so.  The United States has done exactly the same thing throughout its history and especially the last 100 years, and today is attempting to fund an empire that consists of soldiers in over 140 countries worldwide and dozens of nations that are essentially economic dependents.

Governments prefer this method of raising revenue to direct taxation.  If the American tax collectors actually walked up to the average worker and said that they would be taking a huge portion of this worker’s wages and giving it to bankers on Wall Street, such a worker would be furious. However, government-controlled central banks do exactly this via economic stimulus packages that create new money and then give it to these banks, directly debasing the currency and thus lowering the worker’s real wages, which are the actual value of what he takes home rather than the numerical value of how many dollars and cents he has.

Considering the expenditures that have been taken on by the federal government, such a massively inflationary monetary policy is not surprising.
It is such a policy that has caused a 96 percent drop in the value of the dollar since the founding of the Federal Reserve System in 1913.
State monopolies on anything present problems.

This is not because the people in government are naturally more evil than the rest of us.  This is because all human beings act to substitute their current state for what they perceive to be a better state.

The people in government are no different, and the means at their disposal via central banking gives them the power to act with little to no regard for other individuals, regardless of whether their intent is malicious. A state monopoly on credit expansion and currency manipulation gives our government a license to essentially unlimited taxation via currency debasement.

Thus, it should be no surprise that governments, which are made of up human beings who perceive their judgments as better than those of others, will attempt to attain whatever power they can to implement their proposed policies.  It is time to end government-run central banking, and in our country this means ending the Federal Reserve.

For more information on what this means and how to do it, contact me at or visit

Elliot Engstrom is a senior French major from Matthews, N.C.

  • Nathan Fox-Helser

    i disagree. you are wrong

  • Esme Fisher

    stimulus packages are very helpful for kickstarting the economy:`,

  • George c

    Excellent. The creature from jeckyll island reigneth supreme.

  • Curtis

    Stimulus packages are very helpful for kickstarting the economy? lol how is that working out for us now?

  • Virgil Soule

    Fractional Reserve Banking is the mechanism in which banks hold a fraction of their assets in reserve and lend out the rest. Banks do not lend out money they don’t have. The money supply was not created by the Federal Reserve, it was created by all the T-Bills sold by the US Treasury that we now call the National Debt. The Debt defines the Dollar. The currency in our pockets is only a small part of the National Debt. The rest is in money market accounts world-wide.