Does Inflation Lead To Civilizational Collapse? A Look At Rome
With the US national debt at $34 trillion and climbing, USD reserve status under pressure, inflation destroying standards of living, and the Biden administration stoking costly war on several fronts, perhaps it’s time for more thoughts on the Roman empire.
In a Tuesday thread posted to X, user ‘Culture Critic‘ (@Culture_Crit) posted a deep dive into the unraveling of the Rome in the 3rd century. Let’s jump in;
When Augustus slowed the expansion of the empire, wealth stopped flowing from conquered lands into the treasury. Managing expenditures (construction, armies, bureaucracy) became increasingly difficult.
Whenever costs exceeded tax income, emperors minted new coins to cover it. Mining precious metals increased the supply of gold and silver coinage.
Things remained pretty stable for two centuries…
But the army was an immense burden. In the mid-2nd century, it was 70% of the entire budget — half a million soldiers were on the payroll.
Then, crisis struck.
Frontiers across the empire came under attack in the 3rd century. Military expenses soared as entire provinces were being abandoned and their tax yields lost. Plus, the mines were drying up…
When soldiers’ wages could no longer be paid, “debasing” the currency was the only option.
Emperors issued new denarius (the silver coin troops were paid in) with less and less silver content — i.e., further increasing the money supply.
Nero had already begun clipping coins and diluting silver purity in 64 AD. The state soon got addicted to solving its problems this way — and lining the pockets of political insiders at the same time.
The denarius was down to 60% silver purity by the 3rd century AD. Of course, prices inflated with it.
Still, the state kept spending to maintain the illusion of prosperity, until things got really bad…
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