How It All Went Wrong

Rome, 260 AD. A bakery near the Forum.

The customer slides five denarii across the counter. “One loaf of bread.”

The baker picks up a coin. Takes his thumbnail and scrapes the edge. Silver flakes away like old paint. Copper gleams underneath.

He holds the coin up so the customer can see.

“Ten denarii.”

“What? Last week you charged five.”

“Last week the coins were different.” The baker sets the coin down.

This isn’t money. This is an insult.

“These are legal tender! The emperor…”

“The emperor says these are worth the same as real silver coins. But my flour supplier doesn’t accept them at face value anymore. Neither does the landlord who owns this shop. Neither does anyone who has a choice.”

The customer stares at the coins in his hand. Five coins. All he has. Not enough to buy bread.

He sweeps them back into his pouch. Turns. Walks out.

His children will go hungry tonight. Not because bread doesn’t exist. Not because he doesn’t want to pay. Because the money in his hand won’t buy what it claims to buy.

This scene is repeating across the empire. Thousands of times. Every day. Buyers with coins that don’t work. Sellers who refuse to accept them. An entire economy seizing up not because people stopped working, but because the money stopped functioning.

The empire calls this monetary policy. The baker calls it theft.

Both are right.

The Slow Poison

Three generations ago, the denarius was 95% silver. Today, it’s 5% silver and 95% copper with a thin silver wash that rubbed off in months.

This didn’t happen by accident. It happened through a pattern that would repeat across every empire in history: rulers needing money, finding they couldn’t raise taxes without rebellion, discovering they could debase currency instead.

The debasement unfolded over two centuries. Under Augustus, the denarius was 95-98% pure silver, the foundation of Roman commerce. Nero (64 AD) made the first major reduction, dropping silver content from 95% to 85-90%. By Marcus Aurelius in 180 AD, it had fallen to 79%. Caracalla cut it to 50% in 215 AD. By Claudius II in 270 AD, the currency system had effectively collapsed. His antoninianus coins contained only 2-5% silver, barely distinguishable from copper.

With each reduction in silver content, Roman behavior changed. Savings decreased. Long-term planning collapsed. The empire that had built aqueducts and roads lasting centuries could barely plan beyond the next harvest.

Prices rose. Not because goods were scarce. Because the coins were worthless.

The Pattern Repeats

Rome was not unique.

In 1069, William the Conqueror of England discovered the same temptation. His treasury was empty after years of war. He needed money to secure his conquest and build castles across the realm.

He couldn’t raise taxes. He’d just invaded, and his hold on power was tenuous. But he controlled the mints. He controlled what counted as money.

William ordered all silver coins in England “called in.” Every citizen had to bring their coins to royal mints. The King’s men would melt them down, mix in copper, and issue new coins stamped with William’s face.

On paper, the new coins were worth the same as the old ones. In reality, each new coin contained 25% less silver. The King kept the difference.

English merchants tested the new coins. Weighed them. Bit them. Discovered the debasement. And did exactly what Roman merchants had done a thousand years earlier: they hoarded old coins and spent new ones immediately. They raised prices to compensate for the debased currency. They stopped trusting the money that bore the King’s image.

Within a decade, prices had doubled. Not because goods became scarce. Because the money became worthless.

This became standard practice in medieval England. Every few decades, the King would call in the coinage. Melt it down. Mix in cheaper metals. Reissue new coins. Each time, the King extracted wealth from everyone who held coins. Each time, merchants adjusted by raising prices. Each time, trust eroded a bit more.

The pattern was identical to Rome’s. The temptation was identical. The outcome was identical.

And it would repeat across continents and centuries. The Song Dynasty in China printed paper money backed by silver, then printed more than they had silver to back it. Hyperinflation destroyed the currency. The dynasty fell.

The Ming Dynasty tried to restore sound money with silver coins, but eventually succumbed to the same temptation. More printing. More inflation. Collapse.

The Spanish Empire flooded Europe with gold and silver from the New World, triggering massive inflation that wrecked their economy despite their vast wealth. The Ottoman Empire debased its currency so thoroughly that the akçe became worthless, contributing to centuries of decline.

Different methods. Different continents. Different centuries. But the same sequence: sound money, then debasement, then inflation, then collapse.

Rulers knew this pattern. They watched their predecessors fall. They studied the history. They understood the consequences.

They did it anyway.

Because the temptation was too strong and the consequences were too far away.

Why Rulers Can’t Resist

You might wonder: if debasement always leads to disaster, why do rulers keep doing it?

Here’s the problem: the costs of debasement come slowly and fall on everyone. But the benefits come immediately and go to the ruler.

Imagine you’re a king. You need to fund a war. You have three options.

Option one: raise taxes. This is politically toxic. People hate taxes. They’ll resist. They’ll protest. They might rebel. Raising taxes costs you political capital immediately.

Option two: borrow money. But this requires trust. Lenders need to believe you’ll repay them. If your finances are shaky, lenders will demand high interest rates or refuse entirely. Borrowing is difficult.

Option three: debase the currency. Mint new coins with less precious metal. Suddenly, you have 10% more coins to spend. You can pay soldiers, buy weapons, fund your war.

And the cost? It’s spread across everyone who holds coins, in the form of slightly higher prices. Most people won’t even notice, at least not immediately.

And by the time they do, the war will be over and you’ll have moved on to the next problem.

Which option would you choose?

If you’re a rational, self-interested ruler, you choose debasement every time. It’s free money, from your perspective. It’s politically invisible, at first. And it solves your immediate problem.

The fact that it destroys the currency over time doesn’t matter to you personally. You need money now. The collapse will happen years or decades from now, probably under a different ruler.

Not your problem.

When rulers control money, they inevitably corrupt it to serve their immediate needs.

And citizens pay the price.

The Shift from Market to State

For most of history, this corruption was limited. Yes, rulers debased coins. But they couldn’t go too far.

Why?

Because people could refuse to use the coins.

If a king issued coins that were 50% copper and only 50% silver, merchants could weigh them. They’d quickly realize these coins were worth less than the king claimed. So they’d demand two of the new coins instead of one of the old coins. Or they’d refuse the new coins entirely and insist on payment in old coins, or in raw silver, or in goods.

The market acted as a check on government.

Citizens didn’t have to accept bad money. They could reject it. They could switch to better money. They could trade using foreign coins if those were more trusted.

The king’s face on a coin didn’t make it valuable. The metal content made it valuable. And the market priced metals accurately.

This meant that even corrupt rulers were constrained. They could debase a little, but not too much. Go too far, and people stopped using your coins. Your currency would collapse, your economy would fail, your power would crumble.

But over time, this check weakened.

Governments grew stronger. They passed laws mandating which coins must be accepted. They banned foreign currencies. They made it illegal to refuse the king’s money. They prosecuted “counterfeiters,” which often meant anyone who minted coins without royal permission, even if those coins were pure silver.

Gradually, money shifted from a market phenomenon to a state institution.

Instead of people choosing what to use as money based on quality, governments told people what they must use.

And once the government controlled what counted as money, the government could manipulate it however it wanted.

By the time most people realized what was happening, it was too late.

The Invisible Tax

Imagine you save 100 gold coins. Each coin is one ounce of pure gold. You’ve worked hard for that gold. You’ve earned it. It’s yours.

Now the king declares that from now on, “gold coins” will be half gold and half copper. He melts down 100 ounces of gold, mixes it with 100 ounces of copper, and mints 200 coins. Each coin is now half an ounce of gold and half an ounce of copper.

He takes those 200 coins, gives you 100 back, and keeps 100 for himself.

Your 100 coins now contain 50 ounces of gold total, not 100. You’ve lost half your wealth. The king took it.

He didn’t rob you at gunpoint. He didn’t break into your house. He simply changed the definition of what a “gold coin” is.

And legally, it’s not theft. It’s monetary policy.

This is what debasement does. It’s a hidden tax. Rulers extract wealth from citizens without calling it a tax. They don’t have to vote on it. They don’t have to justify it publicly. They just do it.

Quietly. Gradually.

And by the time people notice, their savings are gone.

The cruelest part is who suffers most.

It’s not the rich. The rich can protect themselves. They own land, which doesn’t debase. They own businesses, which adjust prices. They own foreign assets. They can move their wealth into things that hold value.

It’s the poor and the middle class who get destroyed. The farmer who saved copper coins for ten years. The soldier who set aside his pay. The merchant who trusted the king’s currency.

These people have no escape. Their wealth is in coins. When the coins are debased, their wealth vanishes.

And it’s been happening, in various forms, for thousands of years.

The Long Decline

Rome didn’t fall in a day. It declined over centuries.

And at the heart of that decline was the destruction of its currency.

By the third century, the denarius was worthless. Prices had risen a thousandfold. Inflation was so bad that merchants stopped accepting coins at all. They demanded payment in goods or gold.

The government tried to fix this by issuing price controls. The Edict on Maximum Prices in 301 AD declared maximum prices for thousands of goods and services. It didn’t work. Merchants simply stopped selling at the legal prices. Goods disappeared from markets. Black markets flourished.

They tried forcing people to accept worthless coins. That didn’t work either. You can’t force people to trade real goods for fake money. Trade collapsed. Cities shrank. People fled back to the countryside to live off the land because money no longer worked.

The empire fragmented. Provinces stopped paying taxes because the currency was worthless. The legions went unpaid and mutinied. Barbarian invasions, which Rome would have easily repelled in earlier centuries, succeeded because the empire could no longer fund its defense.

Rome fell for many reasons. Overextension. Corruption. External pressure.

But one of the most important, and most overlooked, was the failure of its money.

The same pattern played out in China, in medieval Europe, in the Ottoman Empire, in Spain after it flooded Europe with gold and silver from the New World.

Again and again, the corruption of money preceded the collapse of civilization.

Sound money built empires. Corrupt money destroyed them.

The Lesson We Ignored

For thousands of years, humanity learned this lesson. Rome fell. Medieval kingdoms collapsed. The Ming Dynasty crumbled. The Spanish Empire declined despite its vast wealth. The pattern repeated so many times that anyone with eyes could see it.

We studied it. We wrote about it. We taught it in universities. Professors nodded gravely about Rome’s mistakes. Students wrote papers analyzing the pattern. Economists warned about the dangers of government control over currency.

We knew what happened when rulers controlled money. We knew what happened when money was debased. We knew the inevitable outcome.

The evidence was overwhelming. The lesson was clear. The pattern was undeniable.

For thousands of years, humanity learned this lesson.

And then we did it anyway.

Not partially. Not cautiously. Completely. Deliberately. Globally.

We removed the final constraint. We severed the last connection between money and physical reality.

We learned the lesson perfectly. And then we chose to ignore it.