Heinlein, Robert A – Expanded Universe

One Augustan denarius equalled in gold at today’s London fix ($385/troy

ounce) a nominal $3.83, or about 3/~~ of a gram of gold. This tells us nothing about

purchasing power; it simply says that the Augustan denanius was a solid silver coin

almost the size and weight of the solid silver quarter we used to have before the

government foisted on us those sandwich things. How much olive oil or meal that

would buy in Rome around 1 A.D. can be estimated from surviving records-but all the

gold in Rome could not buy an aspirin tablet or a paper of matches. No way to

compare. And hard money was not supplemented by printed money, bank checks, and

transactions that take place entirely inside computers-but I can’t go into how those

phenomena affect purchasing power without writing a book twice as long as this one

on fiscal theory (which I am quite willing to do but nobody would buy it).

What Augustus did was to stabilize Rome’s money by defining it in terms of

two commodities, each intrinsically valuable, each stable in supply, each almost

indestructible, and he defined also the legal ratio between the two coinages-an

effort to circumvent Gresham’s Law, unknown then but Augustus appears to have had a

gut feeling for it. (Not Bill Gresham-the other one. Thomas Gresham.) But a

bimetallic standard has its problems; the free economy ratio tends to drift away

from the legal ratio, and Gresham’s Law begins to work. But this happens very slowly

with

hard money and is not the disaster that printing-press inflation is, or the debasing

of hard~ money.

Caesar Augustus died in 14 A.D.

His corpse was hardly cold before the vultures got to work. Tiberius,

Caligula, Claudius, Nero-even Claudius did nothing to stop the robbery. Titus

attempted an Augustan return to honest money in 80 A.D. but he died in September the

following year; his successor was a disaster even as Caesars go.

“Put not your trust in Princes.” Debasement of the currency continued under

every Caesar for the next two centuries. Diocletian (reign: 294-305) inherited a

worthless denarius; he returned Rome to the bimetallic standard at a level barely

below that of Augustus. But he increased enormously the bureaucracy, instituted the

harshest of taxation to pay for his “reforms,” and decreed price-fixing-which worked

just as it always does.

On his retirement (not assassination~!]) debasement was resumed while taxes

stayed high, and Rome was on the skids. The decline and fall of the denarius and of

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Rome paralleled each other.

I’m tempted to discuss France’s incredible inflation and collapse thereof

during the French Revolution (and three more French inflations since then), and the

inflations of several other countries in other centuries. But they are monotonously

alike and differ from debasement primarily in the fact that the invention of paper

“money” permits the corruption of legal tender to get utterly out of hand before the

people notice it. In Germany in the early twenties people used to take wheelbarrows

to the grocery store-not to fetch back groceries but to carry money to the grocer.

But the early stages of disastrous inflation feel like “prosperity.” Wages and

profits go up, old debts are easier to pay off, business booms.

It is not until later that most people notice that prices and taxes have

gone up faster than wages and

profits, and that it is getting harder and harder to make ends meet.

There is a strong emotional feeling that “a dollar is a dollar.” (Hitler

called it, “Mark is Mark!”) But you can reexamine it in terms of prices on bread, or

how many minutes to earn a dollar. And don’t forget taxes! If you aren’t working at

least the first three months of each year to pay taxes before you can keep one

dollar for yourself, then you are on welfare, one way or another. You may not think

you are taxed that much- paycheck deductions and hidden taxes are extracted under

anesthesia. Try dividing the Federal Budget by the number of wage earners not on the

public payroll, then take a stab at where you fit in. Don’t forget the same process

for state, county, and city. There are Makers, Takers, and Fakers, no fourth