Currency and Falling Empires

This from Richard Cronin:

Bubba

Re: Benchmark currency for international trade and political dominance.

You’ve spurred some thinking in me about our debased currency.

In ancient times, the intrinsic value and relative scarcity of gold and silver made these metals the worldwide medium of exchange. Rome came to dominance with the Roman navy’s defeat of Carthage plus the silver mines of northern Spain. The Roman denarius held sway and the Romans were meticulous about the quality of the gold and silver that they used to mint these coins. Unfortunately, as we all know, Rome collapsed from within due to moral rot and barbarians closing in.

The Spanish Empire rose to prominence due to their seafaring skills and the gold extracted from the New World. The galleon and Spanish doubloon assured the power of Spain. Unfortunately, the Spaniards extracted so much gold from the New World that gold actually fell in value. Deflation.

Queen Elizabeth commissioned Sir Francis Drake as a virtual pirate to challenge Spanish hegemony on the oceans. The culmination was the defeat of the Great Armada, with superior British ship design as a key element.

In the ensuing years, with the Royal Navy and Britain’s colonial holdings — including the gold mines of South Africa — the British Empire rose to prominence. The British Pound was the currency of international trade, even weathering WW-I. The Royal Navy was unscathed by WW-I. America was allied with Britain and everybody was pretty happy in the 1920s.

As Lord of the Admiralty, Winston Churchill saw the necessity to move the Royal Navy from coal to oil. With no coaling stations and the higher energy density of oil, Britain raced to convert their fleet, as did all nations. Britain also aided the House of Saud to overthrow the Hashemite Kingdom on the Arabian peninsula. It’s all about the oil.

Many people do not appreciate the true proximate cause of the Great Depression. The Great Flood of 1927 (an Extreme Weather event) which destroyed the farmland of mid-America and even parts of Canada. Farmers defaulted on loans left, right, and center. Lax stock trading rules and the Smoot-Hawley tariffs exacerbated the situation. A fascinating book about the Great Flood of 1927 is "Rising Tide” by John Barry. The Dust Bowl followed (another Extreme Weather Event). In recent years, Canadian statistician Stephen McIntyre forced NASA/NOAA to admit that 1934 was the true "hottest year on record”, the depths of the Dust Bowl. This was dismissed as an anomaly. It seems that we have a lot of anomalies goin’ ‘round — from temperature records to COVID data to voting recounts.

Curiously, the records of global earthquakes in the 1930s saw a decided uptick compared to the 1940s and 1950s. Pertinent data can be found in the USGS online database. James Edward Kamis writes of Plate Climatology.

All of FDR’s socialist spit balls did nothing but exacerbate the Great Depression. The real driver to get us out of the Great Depression was the gush of cheap, abundant oil from the fields of East Texas and Oklahoma. This surge in oil was provided by greater heat driving the petroleum-produ cing reactions in the Upper Mantle. And just in time too. During WW-II America was not just the Arsenal of Democracy. We were the Gas Station of Democracy.

Hitler never succeeded in capturing the Russian oil fields and American submarines choked off Indonesian oil from reaching Japan.

Breton Woods and the U.S. Navy assured the U.S. dollar as the reserve currency for international trade.

Now we slouch into moral decay and a hostile adversary seeking to be a naval power, grab offshore oil in the South China Sea, and have the yuan displace the debased U.S. dollar. Then the Bank of China will displace the unConstitutiona l U.S. Federal Reserve. Storm clouds gather and we have a compromised dementia patient in the White House.

Bubba adds:

Great summation except for the Roman part. I seem to recall reading that, like Big Bro, the Romans had begun to replace the gold & silver content in their currency with metals of lesser values, and inflation ensued which hastened their demise. Or not. At the end of the day though, 'money' is whatever consumers & producers of goods & services want it to be. Maybe it's gold. Maybe oil. Maybe lithium. Maybe it's cryptocurrency.

I add:

Bubba you are entirely correct; Rome devalued it's currency with base metals. The result was a huge widening in the gap between rich and poor and a squeezing out of the middle class, much like we see in most Western countries today. We are making the exact same mistakes the Romans made. The so-called Barbarian Invasions were mostly peaceful immigration by non-Romans into the Empire, largely for protection and prosperity. The Romans also eschewed their traditional virtues and religion in favor of the many fads splashing against their east coast (from Asia) much as we are absorbing faddish beliefs from our east and west coasts. Rome boasted a sexual revolution much like ours, and became infamous for immoderate sexuality and heavy partying. Entertainment became the most important thing for many. So too did the welfare state (Bread and circuses). We look amazingly like late-stage Rome, I fear.

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