Debasing the currency always destabilizes the governing authority.
During the late second century and early third centuries AD several Roman Emperors attempted to inflate the Empire’s wealth. They recalled some of the outstanding gold coinage, secretly melted it down, and reissued it with leaden cores. In each case, this tactic was nearly catastrophic. The secret became instantly common knowledge among the Roman citizenry who reacted by refusing to accept the Empire’s coinage in exchange for goods and services. This in turn meant that the Emperor could not pay or provision his own armies. Each time the Roman debasement was attempted, all bogus coinage was again recalled and reissued with the lead removed.
Since the United States completely abandoned the gold standard in 1971, the buying power of the dollar has plunged by 96 percent. In 1971 an ounce of gold sold for $35. By 2011, an ounce of gold sells for $1,500. Instead of melting our coinage and adding lead, the US debased its currency by issuing trillions of new dollars.
During the Bush (GW) years, 2000-2008, the entire US economy grew in real terms from $10 trillion annually to $14 trillion. This increase was roughly the size of the entire economy of China. Yet, due to trillions of fiat spending and the wholesale debasement of the US economy during the post-Bush years, the International Monetary Fund predicted in 2011 that the size of the Chinese economy will eclipse that of the American economy by 2016.
Law #1: No nation has ever survived once its citizenry ceased to believe its culture worth saving. (Hanson’s Law)
Law #2: In battle, free men almost always defeat slaves. (Herodotus’ Law)
Law #3: Appeasement of a ruthless outside power always invites aggression. Treaties made with ruthless despots are always fruitless and dangerous.
Law #4: If a people cannot avoid continuous internal warfare, they will have a new order imposed from without.
Law #5: When a free people, through taxation, is deprived of its ability to acquire wealth and property, collapse is presaged.
Law #6: To hold territory, a state must be populated by those loyal to the central authority. When immigration overwhelms assimilation, the fall is predicted.
Law #7: With the loss of fiscal solvency comes a loss of sovereignty.
Law #9: When a civilization accepts the propaganda of its enemy as truth, it has reached the far side of appeasement and capitulation is nigh.
Law #10: Declining civilizations will always face superior firepower from ascending civilizations because sovereignty is only temporarily uncontested.
Read more about these laws in my book.
