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Membership comes with other benefits, such as the ANS Magazine and weekly virtual lectures and discussions. See Membership for more information. Everyday money for everyday people It was once again the Greeks, known for their exceptional knowledge of mathematics, accounting, and economics who came up with new monetary standards addressing the issue of denomination.
Each of the three monetary standards of Ancient Greece — Attic, Athenian, and Corinthian — had different denominations of their drachmae, splitting them into smaller units called obol. These small fractions of silver minted during the Archaic period of Ancient Greece were ideal for everyday trading.
They represented a lesser value, which allowed coins to be used for smaller everyday purchases, while silver drachmae were used for more significant exchanges such as the purchase of clothing, livestock, or tools. The denomination of large, valuable coins into smaller obols made coins a crucial part of the lives of regular citizens. Thanks to denomination, money could be used by everyone who worked hard enough to earn it, and not just by the privileged elite.
Minting techniques went through further innovation during the Classical and Hellenistic period of Greece —31 BC , and some of the most valuable coins come from these two periods. Worth mentioning are the beautifully crafted Syracusan tetradrachma coins c.
During the Hellenistic period, the portraits of living people appeared on coins for the first time in Greek history. A Syracusan tetradrachm c. Obverse: Head of the nymph Arethusa, surrounded by four swimming dolphins and a rudder. Reverse: a racing quadriga with charioteer crowned by the goddess Victory in flight. The Ancient Greeks and Romans were neighbors, enemies in battle, and regular trading partners. However, it took the Roman Republic a bit longer to invent coinage of the same quality and standards as the Greeks.
Shortly after, in c. For the first time, Rome had its own principal currency — a silver coin called a Denarius pl. This revolutionary currency had several advantages compared to its predecessors. It was funded by a tax on property and war loot, and each Denarius represented the value of 10 bronze nuggets.
Several other coins existed during these years, but the Denarius eventually became the primary currency and method of exchange across the early Roman Republic. For the first time in history, a coin currency was accepted across the whole territory, and the Denarius could be used as payment in all parts of the early republic.
This is a monetary practice of lowering the intrinsic value of commodity money, i. These debasement cycles were mainly caused by the abundance of silver and gold generated from the ever-expanding Roman territory, but also by increased minting. Debasement provided the Roman Republic with a short economic boost enabling the government to create more money to spend and pay debts. This resulted in inflation for Roman citizens, decreasing their purchasing power and wealth. A warning sign about the importance of sound money.
Some of the most powerful and famous Roman emperors such as Julius Caesar, Marcus Brutus , or Augustus Caesar quickly discovered the additional potential of minting their own coins. In addition to being a medium of exchange and store of value, coins were also used as a propaganda tool. Caesar minted coins with his portrait to increase his popularity and allow regular citizens to see what their emperor looked like.
In addition to his picture, Brutus minted the coins with two daggers on the reverse side. In fact, it got even worse during the times of the Roman Empire. The debasement continued during the period of the Julio-Claudian dynasty when the first brass orichalcum sestertius coins were minted in Rome in 27 BC. Orichalcum is believed to be an alloy consisting of copper, zinc, and other heavy metals.
Rome moved from intrinsic money, known as sound or good money, to the coinage that was based purely on fiduciary value — bad money. The trend of minting coins built on their face value rather than the value of the used metals continued. In 64 AD, Nero even further reduced the weight and purity of precious metals used in Roman coinage. The uncontrolled debasement, combined with other factors, pushed the Empire down to its knees, and in AD the Crisis of the Third Century began.
Only after the crisis, Rome realized that a new set of rules has to be created to prevent such a disaster from occurring again. In AD, the Roman emperor Diocletian , better known for separating Rome into the Western and Eastern Empire, reformed the Roman coinage system and set strict minting rules to prevent uncontrolled debasement. Graph displaying the debasement of Roman coins over the centuries. Data from Walker, D.
Parts I to III. The Sasanian Empire — AD , which was the last kingdom of the Persian Empire before the rise of Islam, had also developed its own coinage.
A fiat currency system drives efficiency, commerce, and trade. Together with an effective banking system, it allows goods to be bought and sold without the transfer of tonnes of precious metal. The purchase and sale of valuable assets, including landed estates, were facilitated by the transfer system. The Romans were no more immune to these risks than Venezuelans are today.
For almost three hundred years the relative value of the Denarius and Aureus remained constant. Over time, however, the gold and silver needed to mint new Roman coins became more and more difficult to source. As the problem became more acute, so too did the temptation to cheat by debasing the coins, particularly the silver Denarius, by increasing the amount of base metal. More coins could be issued for the same amount of silver, leaving more money for the central authorities to spend. Having long enjoyed relative price stability, through a combination of wage increases paid to Roman soldiers, currency debasing and increases in public expenditure, by the end of the second century AD inflation had begun to disrupt the Roman economy.
Just as in Venezuela, the negative consequences of this soaring inflation and dwindling confidence in the fiat currency were significant. The variable rate of exchange meant everyday commercial activity in urban centres became more difficult. It had the equivalent effect of ten pound coins being worth a ten pound note one day and a five pound note the next. Citizens no longer knew the value of their money. Economic activity declined. Like in Venezuela, the breakdown in confidence was compounded by civil unrest.
In Rome, the civil war in AD led to a reversal of key currency reforms that had consolidated the mints and stabilised the currency by centralising control. Centralised monetary control of the currency was lost and manufacturing and trade went into decline. In both cases, soaring inflation, dwindling confidence in government and civil unrest precipitated the collapse of the banking system and, ultimately, economic collapse.
These typically rely on decentralised control rather than a central banking system. But when the denarius collapsed, so did the Empire, and the disastrous downturn triggered 1, years of economic depression. Had the Romans switched to cryptocurrency, however, this may have been prevented. Similar to modern-day Venezuela, the Roman empire suffered from irresponsible public spending. It became more and more expensive to source gold and silver for new coins, leading the Roman Senate to increase the amount of base metal.
This caused rampant inflation and a collapse in investor confidence and consumer trust. A civil war in AD, which culminated in key currency reforms that abandoned the centralised control of the money supply, eroded the breakdown in public trust even further. The Roman Senate tried time and time again to reverse the economic development throughout the second half of the third century AD.
Jan 30, · [ad_1] Two currency crises two thousand years apart. Modern-day Venezuela and the Roman Empire have more in common than you might think. Both know too well the . May 07, · Dr George Maher author of ‘Pugnare: Economic Success and Failure’ examines the cryptocurrency revolution taking place in Venezuela and asks whether digital currencies . The relative value of these coins was set by government decree despite the changing value of gold and silver. Like the Bolívar and most other modern currencies, the Roman currency was .