KFLCC Kingdom Economics

Money and the Rise and Fall of Empires

D EBASEMENT OF C URRENCY Several decisions that Roman leaders initiated have also been repeated by former U.S. Presidents and their administrations. Because of government inflation, the Romans began to debase their currency. After 300 BC, the Romans had a gold surplus and began minting gold coins for use in their empire, especially throughout France, Spain and Britain. Silver coins were used in the local and regional areas, with the images of the emperors, gods and goddesses minted on one side. Brass and copper were also used throughout the empire for coins of lesser value. As time passed, debt increased and inflation ensued, meaning the coins were minted in smaller sizes and the amount of silver was reduced and mixed with a copper alloy. The reason given for the reduction in silver is threefold: inadequate state finances, the eventual lack of the precious metals (silver and gold), and inflation. The same type of debasement occurred in the United States. At one time our fiat currency (which is paper money that derives its value from government regulation and law) was backed by both gold and silver coinage. The Federal Reserve was required to have forty percent gold backing of its Federal Reserve demand notes, keeping them from expanding the money supply beyond what was allowed by the gold reserves held in their vaults. With the Great Depression, nations temporarily forsook the gold standard. Eventually we came off the gold standard completely, and it was no longer possible to redeem paper currency for the precious metals. After 1972 the silver half dollars were a mix of alloy and silver, and the quarters and dimes that were once 90% silver are now clad with an alloy. With copper prices rising, in 2012 it cost the U.S. Treasury 2.41 cents to create one copper penny. The Treasury lost $60,200,000 just in 2011 from copper prices exceeding the value of the penny. The old bronze penny that once held ninety-five percent copper is now 97.5% zinc and only covered in 2.5% copper. N ATIONAL D EBT Another monetary parallel of America’s economy to ancient Rome was the level of debt incurred. By the time of Emperor Commodus (AD 180 to 192), the money supply in the Roman government coffers was virtually depleted. Many Americans are unaware that, since 2009, our national debt has increased by

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