The Roman Citizens welcomed the Barbarian Invaders as Liberators from the Oppressive Roman Regime
The Roman Empire pushed its borders out for centuries. And when they did their legions conquered new territories. And other civilizations. Allowing them to send a lot of spoils back to Rome. Providing the necessary funds for the empire. With this lucrative stream of wealth flowing back to Rome they could leave the economy alone. And did. Economic activity was pretty much laissez-faire. Then something happened. The Romans had conquered pretty much all of the known civilized world. And they stopped pushing their borders out. Putting an end to that lucrative stream of wealth flowing back to Rome.
This created a problem. For the empire was never larger. With a greater border to protect than ever before. And more territory to administer. Which meant more soldiers. And more civil servants. Neither of which worked for free. Which changed how the Romans handled the private sector economy. They began to tax and regulate the hell out of it. To raise the funds to pay the costs of empire.
Things got so bad that some people just started disappearing. So the Romans introduced something that would evolve into European feudalism. They forbade people from leaving their jobs. Ever. They even forbade the children from leaving their father’s profession. While they were doing this they were debasing their coins. The gold a little. As it paid the soldiers and the civil servants. And the silver a lot. The money of the common people. Who weren’t as important as the soldiers and the civil servants. Until their silver was nothing but worthless slugs. Causing prices to soar. And the economy to collapse back into the barter system. Hastening the fall of the Roman Empire. As the Roman citizens welcomed the barbarian invaders as liberators from the oppressive Roman regime.
The Spanish brought back so much Gold and Silver from the New World that it actually Depreciated the Money Supply
Europe met Asia on the Bosporus. The straits that connected the Black Sea and the Mediterranean Sea. And it was where the Silk Road brought the exotic goods of the Far East into Europe. Which the Europeans just couldn’t get enough of. Making the Mediterranean powers the dominant powers. For they controlled this lucrative trade. Until, that is, the European nations made better ships. Ships that could cross oceans. And were bigger than the ships that plied the Mediterranean. So they could bypass the Mediterranean powers. And sail directly to the Far East. Fill their large holds with those goods the Europeans couldn’t get enough of. Getting rich and powerful. And shifting the balance of power to these European nations.
But the Europeans just didn’t go east. They also went west. And bumped into the New World. The Dutch, the French, the British, the Portuguese and the Spanish all had colonies in the New World. It was the age of mercantilism. Colonies sent raw materials to their mother country. Who manufactured these raw materials into finished goods. And shipped them from the mother country on the mother country’s ships through the mother country’s ports. For the name of the game was balance of trade. Which meant you imported lower-valued raw materials and you exported higher-valued finished goods. And because the value of their exports was greater than the value of their imports there was also a net in-flow of gold and silver. Which was what mercantilism was all about. Trying to accumulate more gold and silver than your trading partners.
And the Spanish hit mercantile pay-dirt in the New World. Gold and silver. Lots of it. So they loaded it up on their ships. And sent it back to Spain. Where it entered the European money supply. And none too soon as the Europeans were cash-starved. Because of all those exotic goods the Europeans couldn’t get enough of. While those in the Far East had no interest whatsoever in European goods. Which meant that European gold and silver went to the Far East to pay for those exotic goods. Leaving the Europeans starving for gold and silver. But thanks to the New World, they were able to reverse that net outflow of gold and silver. In fact, so much gold and silver arrived from the New World that it actually inflated the money supply. Which actually devalued the currency. And because the currency lost purchasing power prices rose. Making food more costly. And life more difficult.
President Andrew Jackson joined the Hard-Money People and refused to renew the Charter of the BUS
Responsible nations have chosen gold and silver as their currency as it is difficult to increase the money supply and cause inflation. Because mining these precious metals, refining them and minting coins is very costly. Unless you discovered a New World with gold and silver paving the streets. But that didn’t happen every day. The irresponsible government, though, figured out a way to make that happen every day. By just getting rid of the responsible gold and silver. And replacing it with paper notes. Fiat money.
Fiat money dates back to 11th century China. To the Song Dynasty. Which allowed the government to spend more money than their taxes raised. Especially during war time. But printing money devalued the currency. And when you make the currency worth less it takes more of it to buy the things it once did. Reducing purchasing power. And unleashing price inflation. Making food more costly. And life more difficult. During the American Revolutionary War there was so little gold and silver available that the Continental Congress turned to printing money. And they printed so much that they unleashed a punishing inflation. Causing prices to soar because the money became so worthless. People wouldn’t accept it for payment. So the Continental Army had to take the provisions they needed. Leaving behind IOUs for the Continental Congress to make good on. Later.
Of course, not everyone suffered during times of inflation. Speculators did very well. For their friends in the government’s central bank could print money and loan it to them on very favorable terms. The speculators then used this cheap money and bought and sold assets. Pocketing handsome profits in large part because of that inflation. As the currency depreciation raised prices. Including the prices of the assets they were selling. So the rich got richer during periods of inflation. While the working class just lost purchasing power. Which is why President Andrew Jackson joined the hard-money people. Those who favored gold and silver over paper currency. And refused to renew the charter of the Second Bank of the United States (BUS). Being one of the first world leaders not to choose destructive inflationary policies. Instead choosing policies that favored the people. Not the state.
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