Fiat Failures are seen over and over again throughout history. Let’s start with the Roman Empire. Through years of successful empire expansion, their ultimate downfall was of their own doing. To help finance their nation’s out of control spending, and to increase the wealth of those in power, Rome instituted a policy of currency debasement. Does that sound familiar?
Rome’s coin at the time was the denarius. The denarius initially began as pure silver believed to be about 4.5 grams. However, beginning with the first emperor Augustus, currency devaluation was underway. After several decades, a large debasement occurred under Nero, and the denarius saw its silver content fall to near 3.8 grams or 87% of the original value. The trend of devaluation continued with subsequent emperors as silver content became close to 50% near the end of the 2nd century. By the middle of the 3rd century, the denarius was comprised of merely 0.05% silver.
Meanwhile, around A.D. 215, the empire issued another coin referred to as the antoninianus to further steal the people’s wealth. At its inception, the antoninianus was valued at twice that of a denarius, even though it only contained 1.5 times the silver content. But even that would be short lived, as the silver content was removed over several decades to near nothing and the coin was soon made mostly of bronze. Eventually, these too were of no use, and so more coins were introduced and quickly debased into irrelevance. Literally, millions of these coins were in circulation containing no silver and Roman currency became worthless.
Another case in point of fiat failures, more recently, is the collapse of the Weimar German Mark. Once the Treaty of Versailles instituted unpayable reparations onGermany, the only way out was to print money to make payments. The result of course, was hyperinflation. In 1919, 12 marks would get you one U.S. dollar. Two years later that would jump to over 100 marks. Then two years after that 17,000 marks. Thousands became millions and millions became billions. Devastatingly, in only months, it would take 4,200,000,000,000 marks to equal 1 dollar. Enter stage right……Adolf Hitler.
Examples of this can be found all throughout history. As with many empires that have flourished and fallen before, The United States is also on the path to destruction due in part to its fiat monetary system. The peoples’ wealth has slowly been stolen, and if one is not aware of the currency debasement process, then they aren’t even aware the robbery has taken place. Will we learn from the fiat failures before our own and prepare accordingly? Or stick our heads in the sand and go down with the ship?