Fall of Empires - Rome and US
This post is going beyond the scope of the page - entrepreneurship But it is wise to watch this video and learn from this. Paraphrasing Churchill, we say that going deep into history makes us fully understand and much more so the future We gain more insight into the currency management, money and credit and how they affect local business. Even the military, and strong local and central govts.
The Roman empire
This Maloney compares the Roman empire and the current US situation. There are parallels and we must be aware of the perils we are facing so that we can avoid the mistakes of the past civiization that has collapsed What must we do as individuals and entrepreneurs to avoid the doom and steer clear of the challenges posed by the debased monetary policy
1. Rome started with stable monetary policy, stable currency that was backed by pure gold
2. But the Punic wars (war with Hannibal) and massive military structure all over the empire and massive infrastructure caused the central govt (the Republic) caused to engage in deficit spending
3. This led to the debasement of the currency, like removal of edges of the coin, melting them and minting new coins or simply inflating the value of the coins
4. To appease the masses, the top brass of Rome, the emperors led in Circus and Bread programs. Circus - the regular spectacle at the coliseum featuring gladiators and the Bread - a welfare program where about 20% of the population get wheat ration daily. Where did Rome get the money for these
5. This lead to strong govt to collect taxes, made the central govt corrupt - due to cronyism. To curry favors from the emperor and the senate
6 Led to the strong influence of the military over the govt
These led to disorder chaos and eventual falll of the Roman empire It was not the war with Vandals that brought that Rome, the monetary system did and imploded the empire
Similarity with the US
1. The US started on a similar footing with Rome with stable currency/money in the beginning
The US Constitution prescribed only Gold and silver as the legal tender in the settlement of debt
and other obigations
- Clause 1 Proscribed Powers
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Because of this the US dollar became merely a certificate of deposit of gold or silver The US dollar or silver can be redeemed through the US dollar
2. US has to engage in deficit spending due to its involvement in two World Wars
3. In 1944, just as the world war II was coming to an end, there was this Bretton Woods agreement that led to abandoning of the gold standard (perhaps to speed up war recovery through printing of loca currency and deficit spending by countries) and instead making the dollar the world currency pegged
(reserve) pegged at $35 dollars per ounce. This led to the establishment of the IMF and IBRD
So how then the value of currency determined - by comparing the value of currency against a basket of currrency that keeps fluctuating on a daily basis
4 Due to the deficit and massive spending due to Vietnam war Nixon on August 15, 19711 declared at least temporarily that redemption convertibility of US dollar to gold was to be no longer allowed. And strict price control for 90 days. It is to be noted that inflation or price of goods going up is not the product of manipulation by traders who are just out to make a living but because of wrong monetary policy and is merely a result of debasement of currency brought about by lack of a gold standard, and/or rise in money supply. Nixon is not only famous for Watergate scandal and or Vietnam war, but for the disruption/debasement of the US monetary system
5 The same effect of strong central govt bureaucracy, and close military govt collusion There is too much lobbying going at Washington (we do not know about corruption) Former two termer Pres Dwight Eishenhower, a former 5 star general and supreme commander of Allied Forces in Europe during WW 2 wars of growing military industrial complex in the US
Strong central govt, large bureaucracy has stifled business growth and operation some simply gave up, moved elsewhere We saw migration of business from California which has very bureaucratic business policy to Texas Or move of many companies to offshoring (as in China or Bangladesh, Vietnam or other low labor cost, low regulation countries
The law of maximum (price ceiling) do not work, especially of the govt has been medding in the economy The rise in price is not due to goods hoarding and price manipuation, but due merely to mismanaged debased economies
6. Bread and circus - US has become a welfare state
1 Food stamps, subsidy, Pandemic ayuda
2 Sports spectacle - NBA, Baseball, football, reality shows
Iit is instant gratification in US where booze and drugs are common We see many streets in US where the pitiful drug addicts are seen aimlessly roaming the street even in Philadelphia the birthplace of the US
QE (quantitative easing) stimulus package are another term for injecting more currency into the system, Inflation is a function of having more currency in ciruculalton
The US is not experiencing hyperinflation because it is world wide currency as per Bretton Woods The world soaks up the bulk of nes printed money. But wait till people see its debased value. The Australia, UK, Canada proposed setting up of trade pact (and its currency) and that of BRICS signal danger to US economy and currency All ready KSA and China are proposing alternativie to Petro dollars as payment of oil Russia prefers to be paid in rubles thus propping up its currency.
Philippines
1 Too much debt coupled with debasement of currency (printing of more money)
2 Very strong military Huge expenditure on the military (led by Pres Duterte)
3 Beginning of welfare state leading to number 1
4. Very strong govt It is very hard to get an appointment even with a loca govt chief And can make things very difficult for you to get a permit A development permit approved by M and VM Sanggunian can cost you 7 numbers
5. All ready we see signs of Bread and Circus: the street dancing, LGU participation and spending on festivals and fiesta, CTTP, the many ayuda program during the Pandemic. All ready the meteoric rise in foreign and local borrowings
So what can be done:
1. Fix the monetary system (return) to more stable measureable value standard (which was killed by Bretton Woods agreement and Nixon edict of 1971.
Cryptocurrency is supposed to fix this but it is a currency not money, because it is not store of value Its vaule is speculative and many have collapsed. Crypto answers the cirteria of fungibility and that of being free from govt intervention
2 Centrally managed economy or monetary system govt intervention too much meddling in business as pricing and supply ends in disaster. We should let free economic system return. Even abolish centra banks They commit mistakes and sometimes throw the economy in disarray They are supposed to be setting money supply and interest in sycnch with actual reality of the economy
The govt must provide the environment for business to prosper.
Lessen reign of strong bureacracy on business
3. Make love not war. Stop the current wars and military build up the arms race
4. End welfare state and or providing bread and circus
We have to do something now Mismanaged currency leading to inflation has caused civil unrest and even revolution and even rise of dictatorship as was the case of Hitler Inflation stea the wealth of the middle class (the value having been taken away)
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