#798: The Roman Playbook for Destroying a Currency with Jeremy Ryan Slate

0:00 You've had a dynamic where money has become freer than free. When you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor.

0:28 I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. Jeremy, thank you for joining me. Hey, thank you for having me, man. I appreciate you inviting me on. Well, I'm very excited for this conversation. It's been a meme for the last couple of years, but men thinking about the Roman Empire and what the trajectory of modernity, how it compares to what happened in Rome.

0:54 I was telling you before we ever record how I found it. I think I remember now. I think it was a clip from your Sean Ryan episode. The Federal Reserve one or no? No, it wasn't about money because I was pumped when I DM'd you. I was like, hey, would love to have you on the show to talk about the history of Rome.

1:12 But through the lens of their monetary system, you're like, this is my favorite topic. And it's the most important. Everything else that was happening, sure, history is never monocausal. It's never one thing. But monetary policy, if you've got good money, you can make a lot of mistakes and everything will be okay.

1:27 Well, that's like one of our taglines of the show is fix the money, fix the world. So this started in this city nine years ago, moved around. I was in Texas, now in Philadelphia, but now coming up to record a pub key. But I started the show because I'm a Bitcoiner. People are looking to learn about Bitcoin.

1:43 And I truly believe that a lot of the issues that we see today as it pertains to social, political, economics stem from the fact that we've broken the money. And money is the root of everything we do as a society. Well, I'm glad this interview finally happened then, because I have been banging the drum for this for probably five years, that it's like, borders, sure, social policy, sure, but money fixes a lot of mistakes. And I think the Roman East is a really good example of that. The Eastern Roman Empire, which history likes to call the Byzantine Empire, that word didn't exist until the 16th century. One of the major reforms Constantine did is he actually fixed the money.

2:22 And that gave them 700 years without real inflation, which is pretty wild. It can fix a lot mistakes well before we get to constantine yeah sorry i'm gonna go ahead no no i think because i think it's important to like set the stage and um of how the denaria how was initially issued and how it inevitably became debased and i mean we don't have to go through the whole timeline everything exactly happened but like i guess a broad brush yeah what was happening socially in parallel to the debasement of the currency what were the justifications for it and how did it happen initially well i think just the one thing important to understand before we get into that is the idea of like what was rome because i think a lot of people get confused they hear you know

3:02 roman empire julius cedric being the first emperor which he wasn't you know rome is uh it's a kingdom first in 753 bc it becomes a republic in 509 bc and then an empire somewhere between it's debated but somewhere between 31 and 27 bc and in the west that goes to 476. so very often we're talking about monetary debasement we're actually talking about the empire so we're talking about kind of of that second century is a really good period of time to put it. And if you want to look at coinage, the reason coins existed, their main purpose was actually to pay the military. So it's important to understand when you're going to see a coin, why would you put the things on it you're going to put on it? So if you're a weak emperor, you're going to put a lot of things on it to make you

3:43 look strong because you want the military to take that coin and be like, oh, that's badass. Yeah, of course, I'll take this money. And that was a very important key component of trust. So money isn't just money. It's also an amazing propaganda tool. There is a book, if anybody gets a chance to go grab it by Zonker, I think it's called Propaganda in the Age of Augustus or something like that. But if you look up Dr. Frederick Zonker on Amazon, you can find it.

4:09 And it kind of goes over more of like the symbols and things people put on coins. So coinage is vital. Now, when you look at the denarius, the silver denarius was their kind of key type of money they used. Now they had gold coins and things, but the main things that would be used in the marketplace was the solidus. So that, or that, I'm sorry, the denarius, the solidus is the gold coin. The denarius would be in the time of Augustus, where that's about the first century AD, well, first century BC to first century AD, it's about 95% pure silver. Now what you end up seeing is by the 270s, so we're like deep into the, what's called the third century crisis at this point in time, it's somewhere between two and 4% pure. A really easy number to say is five,

4:52 because we really just don't know the exact purity because coins differed so much. But it had lost 90% of its silver content in about a 200-year period. So that shows you that debasement kind of hit a certain point and hits the gas And there a really great chart out there which shows kind of the value of Roman currency And it kind of goes across goes across just drops off a cliff and then goes flat and the thing you want to find out is why does that happen and this goes back to the military again which is a really key point so in in 193 there is commodus who is the son of marcus aurelius and he dies the calendars change since then but sometime around january of 193 and that year is what's called the year of the five emperors so the the

5:35 the guy that takes over for Commodus, which Commodus is killed, by the way, he's strangled to death by a gladiator after there's several botched assassination attempts on him, including his concubine trying to poison him with wine. They just really didn't like this guy. The guy that takes over for them is a senator named Pertinax, and Pertinax is very well thought of.

5:54 He's had a senatorial family for a very long time, but he reigns for somewhere around 80 days, because what ends up happening is he wants to start to try to handle some of the debt. He starts to pull back some of the pay that's promised to the Praetorians, which is something you just don't really do. So the Praetorians kill him. And they actually take the empire and put it up for auction.

6:15 And the man that ends up winning has one of the best names in Roman history, which is Didius Julianus. And he bids 25,000 sesterces per man, per guard member. And he becomes the new emperor. Now, there is a politician who's not really a general yet, but he will become one in North Africa and from an area named Leptus Magna, and his name is Septimius Severus. He's actually going to come with a legion from North Africa into Italy, have Didius Julianus killed, and then place himself upon the throne. He's going to remove those guys from the Praetorian Guard that have been a problem, replace them with his old men and what he does after that is this kind of key thing to what causes the debasement of currency so what he's going to do is double legionary pay he's going to somewhere

7:05 around double the size of the legions because he realizes i need a bigger army to control things like what just happened and when a new emperor took over they did something called a donative that was a gift they gave to the military so he gives them largest one since marcus aurelius so So we're going like four emperors before that.

7:21 So a huge gift and double legionary pay. And that's going to be a blueprint that every emperor after him into the third century is going to follow. And that's why money is going to lose value so quick. And how did they do that? They would actually clip off pieces of the coins and they would add other base metals to take apart the size and the weight and everything else.

7:43 so you're gradually seeing this silver coin become bronze on the inside with a nice type of like a aluminum foil version of the silver on the outside so that's there's lots of other causes you could say what destroys money but that's really the key one is is military pay and uh and what they were doing with it yeah it was a little long-winded so i'm sorry no no no i'm happy you said that because this is uh something i've been saying confirms uh and validates something i've been saying, but ultimately, because after that, you had the Roman army spread out throughout their part of the world, right?

8:19 Yes. And that was ultimately, I think, fast forward to the end, what led to the whimper of the fall of Rome, which was the military came back and said, hey, we just went and fought these wars. Can you pay us? They got the currency. They're like, this is worthless. Well, there's a little bit more to it than that as well, because obviously there's other things that caused the currency to collapse faster, like Severus's son, Caracalla, is in a real need for money. So he's in 212, he's going to take about 30 million people and make them citizens overnight, because now it changed the way they were taxed. He could also tax their inheritance. So he's really in a need for new money. But then also, if you look at how the

8:55 military changes, that's a really key component, too, because why would this military come back and say, hey, we're not happy with this money. And that's because for the most part, they had become less and less roman and i know elon's talked about this a lot you know it was birth rates whatever it might be and that's that's part of it but it's not the only thing it's not mono-causal in the 160s you have something called the antonine plague where about 10 of the empire dies you also have policies that had changed pre-empire and late republic into who could serve because they also had a military crisis then as well as there were more slaves coming in and the individual farmers had lost their farms, there was a property requirement to serve, so there's trouble getting

9:35 soldiers. So Marius is going to end up changing that, getting rid of the property requirements. Now he can bring the landless poor in the army. So they start, the army itself becomes really just the landless poor and even other non-Romans they could pull in. You know, even Julius Caesar had his German guard that was pretty important to him. But as you get past this Antonine Plague in the 160s, there's now an issue of where do we get more soldiers from? And that's where they start bringing in initially troops into the legions, and then they create a policy in the late third and fourth century called the Federati. And that's basically these barbarian tribes fighting under barbarian commanders, but under the flag of Rome. So when your money loses value and the people fighting

10:16 for you are just for that money and the promises you can keep because Rome had broken a lot of promises to these barbarians Well when the jig is up they going to turn on you And I think when you look at the fall of Rome in 476 it kind of not the you know down in flames and mashing of teeth. It's literally just a contract. The final emperor is a teenager named Romulus Augustulus. And Odoacer, who is the Visigothic commander at that point in time, basically retires him sends him to ravenna with a pension and he's we there's records of him living into the sixth century and sends the imperial regalia back to constantinople says we don't really need an emperor anymore emperor xeno is kind of like whatever i don't have time to deal with it so

10:59 it's kind of really interesting how money really is a core component of that because if you had sound money you could have survived a lot of those things and was it a frog's boiling water situation over the course? What was the awareness of the Roman public or the army as the currency was being debased? Well, one of the interesting things is the military is going to become aware first.

11:21 If you've heard of the word salary, which many people have to deal with on a yearly basis, it comes from the words salarium, which is the Latin word for salt. What happens in the third century is soldiers aren't incredibly happy with the money. So now they're adding an amount of a salt ration that you're also given in addition to your money. And because salt has so much value, it could be used for so many different things. That's where the idea of being worth your salt is coming from. And you also see, I guess to describe the third century crisis, because this is kind of a key part of it, you would have men claimed to be emperor, their legion would raise them up, and they might find something purple to put them in or take their legionary flags down,

12:03 sew them together and make that something purple to put on that man. And then that guy would go march on Rome. And in that 26 period from 235 to 284, 50 year period, sorry, about 26 different men claimed to be emperor. And that's a kind of a really key component showing you how the military felt about it. Well, if that guy becomes emperor, he can get me more than what I'm getting now.

12:23 And they would fight for that promise. And if that promise didn't come through, well, it wouldn't have to be another commander killing that emperor because they would do it themselves. And that there's numerous different awarenesses of that. But you also see, as you're getting deep into this third century crisis, so after 235, there's a strong black market that happens. Because initially in the marketplace, people are demanding more coins because they realize something's wrong with the coins they have. The silver is flaking off in their hands, so they're realizing something is wrong. So they raise prices. And what ends up really happening is a black market because they're realizing that the only way to handle this is

12:59 actually to trade goods. And Diocletian, who's one of the famous reformers toward the end of the third century, I think somewhere around 301, he's going to have his edict of maximum prices, where he's going to say, all right, this has gotten so bad, we're going to tell you how much you can charge. And there's lists you can look up, like how much you could charge for legal services, all these different things, where he thinks he can solve it with price controls. And that actually just makes the black market go harder, because people are like, well, I'm not gonna be told how much I can make. So when you look at the average person, the military is going to feel at first, but the average person is going to start realizing, I'm not going to pay that for that. I'm just going

13:35 to, will you take a sheep? Like, you know, what can I do to actually start trading in kind? Yeah. I mean, it's literally a story as old as time. If you have, and that's, again, one of the things I've been saying on this show for years in the context of Bitcoin juxtaposed to the US dollar or any other fiat currency is like, if you have the ability to hit the button to print more money, push comes to shove, and you're in that position of power, you're going to hit it.

13:58 Well, can we just call it something so people don't know what it's called? Like maybe QE, that'd be a great thing. Quantitative easing, what does that mean? Oh, don't worry about it, it just means you're printing more money. Yeah, and that's, again, bringing this into the parallels between ancient Rome and today, I think we've reached a point, particularly post-COVID, where people are recognizing, hey, something's wrong with the money.

14:19 Inflation going rampant, and I think it's setting off alarm bells in people's heads. Well, I think the struggle too, for most people, they just see prices going up and they just think things are getting more expensive and they don't realize that it's actually the dollar in your pocket. It's the greedy corporations.

14:34 No, it's the greedy corporations. You know, we're going to, we're going to eat the rich, whatever it might be. But they don't realize that it's the dollar in their pocket that every time new money is printed is now divided up and worth less. And for a lot of people, most of their dollars, I'm as guilty as anybody else.

14:49 I hardly use cash anymore. You know, most of your dollars are digital anyway. Right. So it's very easy to dilute them. So it's a lot more insidious because people go to the gas pump or they go to the grocery store. I'm in Northern New Jersey. It was like nine bucks for the good bacon last week. I'm like, that's insane.

15:05 But you see these prices going up astronomically and you just really think things are getting more expensive when it's actually your dollar has been devalued to such a point. And then they try to fix it with different policies like universal basic income hasn't happened yet, but that's been a big topic.

15:21 We had our COVID checks. We had our COVID checks, which once again drives inflation, makes the dollar in your pocket worth less. Or there's been the latest thing of if we win the election in November, Trump says he's going to give everybody $5,000. Well that kind of concerning because that would destroy the economy again and dilute the money further make the inflation problem worse And you even look at I trying to think what the thing I was going for here is You look at kind of how money is diluted and it becomes a real problem.

15:51 It becomes because people just don't understand. Oh, minimum wage is the thing I was looking for. You like states like California passing a $20 an hour minimum wage or 15, New Jersey, $15 an hour minimum wage. They don't realize that actually takes a problem way above the point where you can solve it and makes that problem worse, like when it's actually a monetary problem.

16:11 Yeah. And we talk about this a lot in Bitcoin, the Cantillon effect, too, like the mechanism through which money is created. I'm sure you've heard the meme, the K-shaped economy. obviously the wealth inequality has gone up but the mechanism from dollars being created either via the commercial banking system via new loans or the federal reserve via just the over printing of the currency via treasury buybacks or quantitative easing buying treasuries printing money to buy those assets mortgage-backed securities whatever it may be the people that get access to that money first benefit they just take it and they buy assets financial assets typically real estate assets hard assets that go up and by the time that money matriculates down to

16:53 the lower rungs of the economic ladder the prices have already risen right the ability the amount you're getting paid maybe get like a two and a half to five percent uh income increase on year on year by the time you've that's manifested in your bank account prices have gone up and you're already behind well i think the struggle too is i think even like the way the tax system is set up um you know the people with the most money get the most benefit and the people the least money to get the most benefit it's the people in the middle that actually are a lot of small business owners that are actually driving the economy they get hit the hardest right with self-employment taxes a lot of different things as well so it becomes hard for them to survive so it's like

17:27 the system continues to kind of just grind people out and there's not a ton of ways out yeah and so like bringing back this back to parallels sure going back backward in time to ancient rome i I mean, you mentioned Constantine. Based off of what you've studied in Rome and the debasement of their currency and the negative consequences that had on the Roman Empire, you mentioned Constantine.

17:55 What did he do to fix the currency? What was the benefit of that? So I guess to kind of go a little bit before him, too, is kind of important because emperors realized that currency was a problem. and there's a number of attempts to actually fix that. You know, I mentioned Caracalla before. He mints a coin called the double antinianus, which is basically about one and a half size of the denarius.

18:21 And they're like, oh, it's so good, it's worth two of them. But they're kind of like, well, the weight's about one and a half. He's like, no, no, it's two, it's two. So you have an attempt to fix currency there because people were losing faith in currency. You go down the road toward the end of the third century crisis, around 275, Aurelian, the empire had broken up at that point in time where you have kind of the hollowed out center. You have the West breaks off and forms what's called the Gallic Empire. The East breaks off and forms the Palmyran Empire. And in a five-year period, he reconquers the West, reconquers the East, and they issues a new coin, hoping that people will have faith in this coin.

18:55 And he's assassinated some term around that time period. So he doesn't have time to actually fully institute a monetary policy. You go further and Diocletian is going to attempt to issue new gold and new silver coinage. And people just didn't have faith in it. Like there was a real crisis of confidence. So when you look at what Constantine did, the two prongs of it, even, even though there's other things you could put attention on, he did, but the two prongs of actual monetary policy is pretty important because you have a crisis of confidence in kind of the central central part of the Roman Empire, right? Where people are pulling further away from being involved in the state because it's not really benefiting them. So Christianity is actually a really key

19:36 part of that because now people are brought into kind of one worldview again, right? Because Rome is interesting where you had your 12 traditional Roman gods, but you could bring in gods in different places. You might have Sol Invictus, which is a god that Aurelian worshipped and Constantine earlier in his life worship, which is from North Africa. You might worship, um, Isis from Egypt or Apollo from, uh, Greece. And a lot of these things were acceptable.

20:02 And the only time real worship of Roman gods was enforced is when things weren't going well, they would try to restore what's called the peace of the gods or the pox de orm by forcing everyone to, um, sacrifice to Roman gods. So that had been their way of, of trying to bring people, I guess, back on the same page. And it's not incredibly successful because there's a lot of persecutions of Christians, Jews, and other different religions in that time period because they would not sacrifice. And so Christianity is kind of a key point of giving people something to believe in again. And that's kind of pulling the doctrine and the theology and everything out of it and just seeing that it was important to have people on the same page. That's one side of it.

20:41 And Constantine was a driver of that. He was a driver of that. It's not the official religion of the empire during his life. He's going to pass the Edict of Milan in 313, which basically takes Christianity and makes it no longer illegal, but it won't become the official religion of the empire until 380 under Theodosius. But that's one of the first core things he's doing is getting people, I guess you could say, on the same page. Now, if people are on the same page, it's going to be easier to introduce a monetary reform.

21:07 So what he ends up doing now is since Christianity is being favored and a lot of pagan temples are closing, he's now taking in a lot of the gold from a lot of the places that, you know, the different temples and things that are out there. So he starts bringing gold into the center. And around 314, he mints a few hundred gold coins. And he's going to mint gold coins every single year until sometime in the late 320s. He dies in the 330s. So over that period, he's able to gradually put them on a gold standard. And that gold coin that he puts them on, the solidus, is going to go until about the year, I think it's like 1054, somewhere around there, without inflation. So, and I guess to understand as well, it doesn't mean that the denarius or that silver

21:52 denomination disappear. That becomes kind of a two-tiered economy, right? Where there's gold that's kind of keeping everything stable. Silver is still used quite a bit, but now there's gold that people have faith in because this currency is stable. So that's a really key thing that Constantine does. And interestingly enough, I don't think the monetary policy really gets any play out there. Everybody just talks about Christianity because it's such a dramatic change.

22:15 and that is an important change, but the currency changes is vital. And it's kind of coupled with a lot of the different things he does. He also, the Praetorian Guard had been responsible for killing somewhere around 17-ish different emperors. And he actually disbands them and actually closes down the Castro Praetoria, which is like their home base where they go to hang out.

22:35 This is like the deep state of... You could say that in a lot of ways. The Praetorian Prefect, who the person in charge of the Praetorian Guard was very often seen as the most powerful man in Rome And if you even look at the second emperor Tiberius he dealing with he a weird guy He kind of doesn't want to be emperor, but he does want to be emperor.

22:58 And later in life, he decides he just doesn't want to live in Rome anymore. So he goes and lives in the island of Capri. And there's still some of the ruins there too. And you can see his palace. It's kind of interesting to look at, but he makes like this sex palace on Capri and kind of like leaves alone Rome to his Praetorian prefect Sejanus.

23:15 And he only comes back to Rome when he feels that Sejanus has gotten too powerful and his own life might be threatened and has Sejanus put to death. So the prefect and the Praetorian guard is in terms of a power center, you could see it as kind of a power behind the power. So Constantine's gonna realize this is a real problem.

23:31 I've seen how many emperors they killed. I remember a hundred years ago when they auctioned off the empire to Didius Julianus. That's something that needs to go. We need to believe in something. we need sound money. And if you look at the Eastern Roman Empire, you know, I think it's an oversimplification to say that it's just money and something to believe in that saves the East.

23:50 It's also geography as well. They'd had some of the richer tax bases. Constantinople is insanely hard to attack because of where it's located. And in Rome, in the West, emperors had actually moved out of the city of Rome and were up in the kind of northeast in a place called Ravenna because it was surrounded by swamps and it was a little bit easier to defend.

24:11 They couldn't really defend Rome anymore. So geography plays a big part in it, but I think without currency, without shared belief, you don't really have something to save. And when Constantine was slowly instilling a, or installing a gold standard, what were the externalities on the Roman economy or the, that lead to peacetime, that were people less perturbed than they were before?

24:39 Did they recognize that the currency was actually? So that's hard to say. I don't know a lot about that part,