Diocletian and the Collapse of Money

Has it always been this way? Is this just the way it is? Is this the way it is supposed to be? And just exactly what "it" is?

While exploring Internet-land, I ran into episode 127 of a cool podcast by the name of "The History of Rome". And I got hooked. That's stuff that happened roughly 2,000 years ago. Way before the Bank of England and the Federal Reserve. And those fellows were having money problems already. 

Specifically, they were having problems with their monetary system at large. They did not quite have a system of "fiat money", though they were getting incrementally close to it, and then failing. Because they wanted to buy a lot of things, and that meant a lot of payments. And of course, some folks just wanted more money. Apparently, "it" has been "this way" for a long time.

The Romans (and the Greeks and the Barbarians) valued gold. And below gold, they used other metals such as silver, copper, and bronze. Commodity money it was. The system worked, and it worked for a long time. It worked for their economy, and better yet, if served the needs of their government.

But weighing all those pieces of metal was a bit of a drag. And you never knew whose scale to trust, if any. So enter coinage. Coins were convenient, and "the big boss" could stamp there his name and picture and advertise himself. And the mint doing the stamping got paid for the service. What was not to like?

Still, those coins were fundamentally just carefully weighed pieces of metal. Those coins were accepted because of the value of their metal. If you did not particularly fancy the picture on the coin, you could just melt it and re-stamp it with the picture of your favorite king, and you did not lose anything.

So when the Romans got smart and began substituting cheaper metals for the more expensive ones, it wasn't long before everybody began demanding more coins for the same labor, or fabric, or whatever it was the Romans were trying to buy. The Romans got to stamp more coins using the same amount of the most expensive metal, but then they had to use more coins to buy the same goods.

I am conflicted over whether to call this phenomenon "inflation". Because yes, it took more coins to buy the same goods, but it may have taken less silver (or whatever their most expensive metal was). And after all, it was a commodity based money. When you said "one pound", you meant "one pound". "Peso" means weight in some Latin languages. 

So if you were still using the same weight of metal, was that "inflation"?

 As I hinted before, I enjoyed listening to this episode, and I think you deserve the same pleasure, so I am not going to summarize the whole thing here. I got to make my point about the "inflation" conundrum, which I think was not in the podcast. But if you want to know everything the author of "The History of Rome" has to say, it is just fair that you pay him a visit. And I think both of you will benefit.

By the way, I have no relationship whatsoever with "The History of Rome" podcast. I am just sharing my musings and my experiences while feeding my Big Money Gazing obsession. Something between entertainment and gentle stimulation. Thank you for partaking, and I wish you the best in your own adventures.