Category Archives: Inflation

Is Mexico Going to Back the Peso up with Silver?

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A silver backed peso has been talked about for a few years but now maybe things are heating up again.  Mexico has vast silver mining capacity compared to many other countries and a silver backed peso could give Mexico a huge economic advantage.  In fact, any country backing their currency up with a precious metal would have a large economic strategic advantage because of the rampant devaluations going on around the world by each currency’s respective government (or central bank).  A precious metal backed currency would be a safe harbor.  The U.S. dollar used to be the safe harbor for the world because of the size and health of the American economy, and the America’s superpower status.  Today, things have changed, U.S. government has gone from the world’s greatest lender to the world greatest debtor.   The U.S. government is trillions in debt and is seen as totally corrupt not only by many of its own citizens but from people around the world.  The last 20 years have seen boom after boom created through monetary inflation.  Each boom has resulted in a bust that has destroyed trillions in capital through the misallocation of resources through Federal Reserve manipulation of interest rates.  This has not only affected our economy, but it has affected the economies around the world as well.  Now, America’s major export is cheap dollars sent around the world to buy goods that American’s would not be able to afford in a real world economy.    The U.S. dollar is artificially demanded because of its role as the world’s reserve currency and its petrodollar status.  Now things a changing, the tide is turning.  There is no way out. The economic day of reckoning is coming.  The U.S. Federal Government has no way to pay off its debt and its future liabilities. Governments around the world know this.  No government wants to be the first country to pull out of the dollar but no country wants to be the last either. Mexico wants out.  Mexico has a way, a silver Peso.   Will Mexico’s banking interests allow this to happen?  Will the U.S. government?  I remain doubtful, I think it will come from the east.  Either Russia or China, but who knows.

 

 

How Inflation Destroyed the Roman Empire

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There were many reasons the Roman Empire fell but, inflation and government spending were huge parts.  Government stimulus programs and public works became common then as they are today.  People today underestimate the complexity of the Roman Empire but, their bureaucracy was almost as large as ours today.  Aqueducts were often created to give people employment just like “The Community Reinvestment Act” seeks to do today.  I find this interesting on many different levels.  For one, Rome’s policies were very similar to ours today.  They even had similar names like jobs bill and community reinvestment act.    There is a book written in the 1940s called the “New Deal in Old Rome” that compares Roman governance in the later Empire to New Deal programs.  The parallels are almost bizarre.

Then, just like today, government bureaucracy and spending were only part of the problem, the much bigger problem was inflation.  Inflation was rampant and brought the Empire to its knees.  The rates of inflation increased over time at a similar rate to that at which the United States is currently.

 

What is really staggering is that the Roman Empire’s fiscal transgressions are nothing compared to the modern United States’.  Rome had to dilute its coins by recalling them every few years and watering them down with other metals, while the U.S. can simply print bills of credit to infinity with no checks in place at all.  Nero would be envious indeed of the American State’s monetary power.  Rome also centralized everything into its capital city and attempted to regulate its provinces from afar but, again this is nothing compared to the centralization that Washington DC has been able to accomplish.  For all the corruption that infected the Roman government, it is tame compared to the corruption of the American Political Class. Here is a brief presentation on Roman Inflation.

This one is a bit longer.