It's-a where you keep de water heater

Pardon me for a moment while I commit libertarian heresy.

We libertarians, we love precious metal currency. You don't have to go far online to find libertarians decrying modern worthless fiat money--paper tickets and cupro-nickel tokens--which are responsible for the ever-escalating inflationary forces that ruin economies, stealthily tax wages and savings, and temporarily prop up unsustainable government programs until the bottom falls spectacularly out of the whole system. And ancient Rome, the Eternal Analogy, gives us vindication in this belief.

From General interwebs

At left, a denarius of Vespasian from around AD 70, probably about 80% silver, give or take. At right, a double-denarius* of Diocletian from around AD 300, 2% silver if any.

Republican denarii had traditionally been nearly pure silver, and remained so until Nero sneakily** debased the coinage to around 80% in an attempt to cover his severe budget crisis. Over the next quarter-century, successive emperors would pretty randomly shift between reestablishing the integrity of the denarius and plundering it for quick cash, so that the purity of any given coin of that period can now only be established by core drilling and chemical testing.

After the first century, though, Rome settled into a slow decline in the integrity of its currency, the silver content gradually decreasing until, by Diocletian's time, the denarius was just a base-metal token with a symbolic trace of silver, or none at all, and the terrible inflation showed it. Under Julius Caesar, you could bring your standard one-modius bucket (about two gallons) to a Roman grain merchant and expect to fill it with wheat for about three sestertii, 3/4 of a pure-silver denarius. After Nero, the same bucketsworth cost about two of those 80% denarii of Vespasian. By Diocletian's time, his emergency price controls attempted to fix the price of a modius of wheat at 100 denarii, suggesting that it was trading for much more on the open market. Debasing the currency had caused an average inflation rate of at least 20% per year, so ruining the currency that--after those price controls worked as well as you'd expect--Diocletian ended up scrapping the centuries-old Augustan currency system entirely in favor of a new system based on the argentus, a roughly 80% silver coin. But the damage was already done, the economy now unrescuable, and Diocletian's successors reresorted to debasing the argentus to pay their bills. Inflation continued even faster than before, and before you know it, sic transit Roma invicta.

I've joked that while the Romans were stupid enough to let their emperors gradually debase their currency into worthlessness, we enlightened moderners had the wisdom to let our emperors do it all at once.

From General interwebs

At left, a 1964 US quarter, 90% silver as it had been from the very first coins of the Republic. At right, a 1965 quarter made entirely of copper and nickel.

America's broken 20th century political philosophy was fundamentally unsustainable, and the only way to pay for it was to follow in the footsteps of the Empire, refusing to learn from the past and replacing good money with worthless tokens--first tyranically seizing the people's gold in the 30s, then debasing the rest of our coins into worthlessness, leading to elevated inflation and a gradual slide toward catastrophe.

...

But this analysis, as much as I hate admitting it, is just not accurate. See, that high average rate of inflation in Rome wasn't spread evenly across the centuries between the initial debasement and Diocletian. Up to the mid-third century (by which point the denarius had been debased down to around 40-50% silver), the rate of inflation since the earliest records from the Republican era seems to have been about 1% per year***--very stable by today's standards. It wasn't until the late third century that inflation exploded to such an extent that it so badly mutated the average.

The debasement of the currency up to that period was done explicitly to inflate the money supply, but it didn't seriously inflate prices. By design or (much more likely) by chance, the increase in currency supply closely tracked the growth of the Roman economy: as the supply was increasing, the demand increased commensurately, keeping the value of the money stable. Had the emperors not increased the currency supply through debasement, they would actually have caused deflation, with its attendant woes. The hyperinflation that began in the late third century was caused by a lack of confidence in the currency, not by its debasement.

The active principle in preventing predatory inflation wasn't the silver per se, but popular resistance to inflation, as expressed through resistance to debasement. The emperors who needed to hide their incremental adventures in alloying could only increase the supply of money by so much at a time. The modern American government can print as many paper (or, for that matter, electronic) dollars as it wants, while a 30% silver denarius still requires you to have that silver on hand. Those late-Roman coins made with no silver at all during the period of hyperinflation? They were struck in such huge quantities that metal detectorists still pull them out of the ground in hoards of tens of thousands. You can buy some of them today for
under ten bucks.

A well-run government practiced in exercising restraint can theoretically walk the line, keeping the increase in supply of a fiat currency proportional to the growth in the economy; failing that, a vigilant and informed populace can refuse to tolerate irresponsible money-printing. But most libertarians don't regard well-run government practiced in exercising restraint or vigilant,
well-informed populations as sustainable resources. As in all things, any informed libertarian resistance to fiat currency must be a matter of balancing negatives on both sides: a commodity-based currency means regular deflation, but inhibits irresponsible overprinting of
money; a fiat currency allows you to avoid deflation, but requires you to trust your government or your citizens to be perpetually responsible and vigilant. There may be an intelligent case to make for precious metal currency, but simply condemning fiat currency through analogy with Rome ain't it.



[* - The Augustan currency system was clearly designed to confuse tourists. The most common coins were the small copper as, four of which make a large brass sestertius, four of which make a small silver denarius. But if the portrait of the emperor is wearing a radiate crown, the value is doubled to a dupondius, a quinarius argentus, and a so-called antoninianus, respectively. None is clearly marked with its denomination, and you can only tell by looking at the coin's size, material, and crownedness. Even so, the quinarius inscrutably breaks the pattern by being a tiny silver coin with a radiate crown. Some of the coin names that refer to numbers (denarius, quinarius and sestertius, referring to "ten", "five" and "two and a half") don't match up with their values, because their names are based on the pre-Augustan system in which an as was one-tenth of a denarius. This is why I love making my Cthulhu Invictus players deal with authentic currencies--converting their Roman money to Alexandrian drachmae on arrival costs slightly more sanity than looking Hastur in the eye.]

[** - Using a process of "surface enrichment", in which a copper-alloyed coin blank was soaked in acid, dissolving the copper in the surface and leaving a respectably deep layer of pure silver that would fool eyeball and touchstone tests. Later emperors would use additional "brightening" techniques to hide the ongoing debasement until the pretext became too strained to continue.]

[*** - Sitta von Reden's Money in Classical Antiquityhas a good, concise, well-cited discussion of the timeline of classical inflation and its underlying evidence, for those (like me) who can't bear to wade through the original German research papers.]