Sunday, 31 January 2010

Follow the Byzantines

The Eastern (Byzantine) Roman Empire's economy was based on agriculture but it offered two peculiarities: it had a very strict Gold Standard and the successive Emperors respected free trade. The "solidus" was the medieval Dollar for nearly six hundred years and helped to turn Byzantium into the most advanced, prosperous and wealthy state on Earth with a capital city ten times larger than any other European metropolis.

Debasing the currency is the oldest trick in the book. The Romans did it in the 3rd century to pay for their civil wars. Even the Byzantines did it in early 11th century (yes, more civil wars), marking the beginning of the end of their glory. We all know what happened to Germany after the monetary chaos of the 1920s. As Ron Paul put it in his book "End the Fed", no great civilization has ever survive after abandoning the gold standard. I guess the sorry current state of the West is just another sad example.