A (Brief) 2,000 Year History Of Economic Collapses

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#history #economy #finance

Written By: Sam

Video Created By:
Svibe Multimedia Studio
Editor: Cardan
Media Gatherer: Andrea Rivas

Footage Courtesy of: Getty Images

Music Provided By: Epidemic Sound

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for most of human history, national economies didn’t really grow year over year like we expect our economies to in the modern day.

A year worse than the one that came before wasn't unusual at all, because most human industries relied on rainfall and crop yields rather than consumer confidence and BOND yields.

That’s why we’re focusing on when human error and meddling were the direct causes of financial catastrophe, rather than any REAL change in how the world operated.

And the place to start is going to be the inflation crisis during the Roman Empire.

Whereas most crashes are felt in the moment, the financial woes of the Iron Age Titans dragged out over centuries.

The resulting hyperinflation is often cited as one of the biggest reasons for the Empire’s eventual collapse. Some historians even say it was the reason the classical civilization became ancient history.

Here’s what you need to know: Rome’s currency wasn’t backed by gold in some national vault.

Modern-day currencies get their strength from something like a federal reserve bank controlling money supply, and the government asking for you to pay your taxes in that currency.

Coins are just symbols of worth.

But in Ancient Rome, coins were proof of worth.

A Roman Denarius was minted with 4.5 grams of pure silver – that’s high-grade stuff back in the day.

A single coin was approximately a day’s wage for a city craftsman.

Unfortunately, a limited supply of silver and precious metals impeded circulation. It took decades to accrue enough coinage to become a standard medium of exchange.

To increase circulation, Roman officials diluted the silver purity.

New coins were less expensive to make but were agreed to be as valuable as higher purity originals.

In other words, Roman emperors figured out that if they needed more money, they could just mint more money.

Don't say we don't get any great ideas from the Romans

But but the economists watching know what the emperors were about to find out: inflation, failure to understand supply and demand, and lack of fiscal regulation had put the empire on a course for economic collapse.

Unfortunately, the rulers needed more time to figure that out.

In the interim, minting more money meant they could overspend on public works and pet projects. Any time the bank account looked shaky they just lowered the purity of their silver coins.

In 161 AD, when Marcus Aurelius was in power, Denarius purity was 75%.

100 years later, during the reign of Gallienus, the Denarius lowered from 5% to 0.5%.

Coins were eventually bronze with just a thin silver coating.

But in 301 AD, Emperor Diocletian had an idea to save the stalling economy.

His ‘Edict on Maximum Prices’ targeted inflation by imposing limits on sales of things like pork, shovels, and slaves.

But this backfired.

A black market sprang up, and market competition resulted in bloodshed.

So, he introduced a new coin: the argenteus.

One was equal to 50 denarii.

Yet it did little to curb inflation.

One decade later, an argenteus was worth up to 100 denarii. Historians believe Roman inflation reached up to 15,000% between 200 and 300 AD.

So, what did the Roman Empire do next? The same thing every government does when it goes broke. It raised taxes.

And what did the people do when the taxes were too high? The same thing people do when the taxes are too high: they barter with goods and commodities.

With confidence in the centralized economy lost, the financial foundation of the empire was crumbling.

The military couldn’t fund its expansion or defences, and turmoil aggravated internal power struggles.

By 476 AD, the Roman Empire was over.

The good news is civilization learned from the errors of the empire and never repeated the same mistakes every again.

[jimothytimothy]

Whats your favorite economic collapse of all time sir?

[mikitz]

The thing is, there is no antidote to excessive greed and stupidity.

[sarawilliam]

When the dollar gets weak, it could mean tough times ahead economically. I'm thinking about how to protect my money from inflation. Lately, I've heard a lot about Bitcoin. With its halving finished and ETFs approved, many folks expect its value to shoot past $100k. I've got $300k saved up, and I'm tempted to invest now. But I'm worried: Is it too late to make the most profit?

[orionstark]

Saying FDR stopped The Great Depression is like saying that Lenin won WW1.

[RenfroeCharch]

i really loved the insights in this video, very well-researched and presented! however, i can't help but wonder if the focus on collapses overshadows the many instances of economic resilience throughout history. it feels like we're only looking at the failures instead of learning from the successes too. what do you all think?

[sherilynn]

What ends depressions and what brings civilization back? I am looking at 536 A.D.--plague and volcano-caused "nuclear winter" wiped out populations everywhere to bare minimum. What then? What did they do to bring it back, to share the wealth left, to preserve the infrastructure that enabled trade? I'm having some trouble finding information about how humans start over when it all seems hopeless.

[edgarLV]

If you have zeros in you bank account, then when everyone is in panic, you don't have nothing to worry about. 👍

[kdZA]

18:09 "hey where are you taking those files to?"

[jfraklin]

This is the first time I’ve ever heard the “Tulip mania” book referred to as satire, any sources on this?

[shanescott]

I think the primordial sin of our economy is lending and speculation

[tml]

The 2008 housing crisis was also created by Congress rules which most of the lenders followed. A lot made out like bandits but they did it within the rules congress put in place

[samuelrokk]

Its crazy I just realized we have videos of the Roman empire.

[robertmitchell]

The Madness of Crowds

Extraordinary Popular Delusions and the Madness of Crowds, an 1841 book by Charles Mackay

[akinmytua]

To be honest, this is why I have a box of cash for emergencies.

[WhoKnewSecrets]

How can something as small as coin edges cause inflation?

[David-fmgo]

With regards to the Long Depression, there is scholarship that challenges the methodology of the data used by NBER, and thus the notion of an 1873-1879, much less an 1873 to 1896 Long Depression is disputed. There are multiple facets to this, and some of them differ depend on who you talk to and what their ideological predispositions are. However, on its surface, the idea that the US economy spent 20 years shrinking in the late 19th century, doesn't make logical sense. The population doubled and real per capita income grew or remained constant. There was massive development of rail, steel, and other industries.

Also, the US went back and forth on monetary policy in the period between the Civil War and McKinley. Grant, Hayes and Cleveland, were in favor of Gold. Lincoln, Harrison and Bryan favored more lose monetary policy. US politics polarized on currency in the 1890s with Silverite Republicans and pro-Gold Cleveland Democrats flipping parties in many cases. Adopting the Gold Standard would not put a floor to deflation, it would put a ceiling on inflation. According to the monetarists, external factors that increased the global supply of Gold (Cyanidation in the 1870s and the Klondike Gold Rush) served as the functional equivalent of monetary stimulus, and thus ended both contractions.

Getting back to the multiple facets of the period via ideological perspective
1. Monetarist perspective - Monetary supply (because of the Gold policy of 1873) did not keep up with population and economic growth, causing prices to fall and worsening economic contractions in the period.

2. Populist Perspective - This is why third parties cropped up, who referred to Grant's gold policy as "The Crime of 73", because the two major parties were dominated by pro-Gold factions. (Republicans would develop a strong silverite faction and under Harrison would flirt with bimetallism when the GOP was trying to woo the votes of the populists. With the takeover of the Democrats by WJB, they became the preferred vehicle of pro-inflation politics, while Republicans became the vehicle of the hard money types with McKinley's nomination.)

3. Austrian Perspective - Tight money allowed for the natural growth in productivity and output to reduce prices through efficiency and thus increase real wages and standards of living.

4. Keynesian Perspective - Lack of countervailing economic stimulus during the slumps, meant that contractions were lengthened along with periods of unemployment.

5. Socialist Perspective - Economic Inequality (which was vast in this period) lead to economic instability.

6. Progressive Perspective - Incorporates the previous two at later points, but also would note that there was a lack of regulation on financial excess leading to excessive speculation and monopolies to form.

Keep in mind that it is possible for multiple of these to be true at the same time.

[longlakeshore]

Gambling. You missed the psychology of gambling.

[brandinoyyc]

My bank can't crash because it be the government

[DaveE]

Someone recently told me about how “wars stimulate economies” and I’m like “no they don’t, but stimulus money spending does, war just leaves behind trauma and killing and imperial colonial bullshit that we still have to fix”

[fatherofhusbandto]

I believe if you waited just another month or so you could have added 2024 as well..