Ancient Roman inflation and price controls

Walking in front of Caesar’s Palace in Las Vegas reminded me of the negative effects of ancient Roman price controls… and how they’re still hurting you today

Dateline: Las Vegas, United States

People are already arriving for our first conference here in Las Vegas tomorrow, and I’ve been walking up and down The Strip to clear my head and focus on last minute preparations.

One of the most iconic and oldest remaining casinos on The Strip is Caesar’s Palace. Long before Steve Wynn ushered in the era of themed, family-friendly casinos that brought Vegas back to life, Caesar’s Palace was the gold standard in this city.

And staring upon the statues of Roman emperors lined up along Las Vegas Boulevard made me recall a story…

The year was 284. Rome was mired in political instability. Hyperinflation had crippled the economy. The empire was cracking under its own weight, a vast land mass covering much of Europe and north Africa impossible to manage.

Even through forced requisition, the state could not maintain the resources it needed and was forced to debase its currency. Silver content in a denarius coin was a measly 0.02%. Prices skyrocketed by multiples as high as 15,000.

A new Imperator was inaugurated to save the empire. Born to a lower class family, he had risen through the military ranks and consolidated power, enough to soon declare himself the first Roman monarch and take unending power from persecuting Christians to perpetuating his own personality cult.

His name was Diocletian.

Diocletian took action to stop the soaring price of goods… and failed.

Convinced that greedy speculators, not currency debasement, were responsible for the peoples’ suffering, he imposed far-reaching price controls on all services and commodities. He said:

“For who is so hard and so devoid of human feeling that he cannot… prices are so widespread that the unbridled passion for gain is lessened neither by abundant supplies nor by fruitful years… evil that they are, they cannot endure the watering of the fertile fields…”
– Diocletian on price controls

Even with a death penalty as punishment for violating the price controls, the policy was a total failure. Rising prices got much worse as farmers forced to stay on their own lands and produce for the good of the state resorted to keeping more of their harvest for their own use. Blood was shed over small items that soon became unavailable.

Meanwhile, Diocletian knew his currency was worthless and forced tax payments to be made in hard goods or services instead. Taxes were reformed to charge based on one’s potential productivity, and the end result of all of it was uniform groups working for a socialist state.

Diocletian offers an important lesson that governments will do anything to keep the party going. As you might suspect, however, world leaders have been borrowing pages from Diocletian’s playbook ever since.

Shortly after confiscating gold from evil “hoarders” in 1933 (many of whom would move their gold to Switzerland anyway), US President Franklin Roosevelt pushed through pieces of his “100 Days” legislation in a half-baked attempt to end the Great Depression.

Just like Diocletian, he pushed through a bill that gave him supreme power to create cartels – cartels which price gouged American citizens by forcing above-market prices.

FDR’s run included fixed agriculture prices to raise farm incomes. Little was thought of the 75% of the non-farmer population that could already barely afford food.

Also, because big business, not unsound policy, was the enemy, he forced large retailers to stop passing along their discounts earned from efficiency. Every store was to charge the highest price so there were no unfair advantages.

Failure to obey was to be brought up on antitrust charges. Of course, this was in the name of “fairness”.

FDR’s reign of economic tyranny continued, letting big government limit consumer choice on everything from airline routes to oil. John Rockefeller’s Standard Oil lost market share despite huge price cuts, because it was out of favor with the government.

While Diocletian ruled as Rome’s first eastern-style monarch, FDR bullied his government into giving him king-like powers.  After Pearl Harbor, he sought to put his heavy hand on more of the economy and continued his tradition of pushing Congress to rush bills they hadn’t read through.

After all, it was a “state of emergency”.

Today, the war on terror and a desire to point fingers for ongoing economic malaise have emboldened governments to crack down on economic freedom – higher taxes, more regulation, less banking freedom, and more reporting back to Big Brother.

It’s for the good of society, after all, and if you’re not on board, you must be a terrorist or a greedy pig.

In thousands of years, things haven’t changed. Governments will use any tactic, including actions you as a business owner would be tried and jailed for,  to prop up a bad economy of their own making.

They’ll make the case that the bogeyman – be it “greedy” profiteers, the war on terror, etc. – are the real problem and take swift action against people like you to “solve” their own problem.

It’s a great way to stay in power. And right now in the United States and the west as a whole, it’s working.

The lessons learned from these rulers show us that we are doomed to repeat history as governments become more desperate. Like an addict on the street needing that next hit, they’ll act irrationally and do whatever they can to get their fix, all the while blaming their addiction on the next guy.

With all of the parallels from then to now, could the warnings signs be any more obvious?

Here at Nomad Capitalist, we believe in offshore strategies that diversify your assets and prevent you from being a slave to one country’s bad ideas. That’s why we’re meeting in Las Vegas, and that’s why I hope you’ll learn more about what we do.

Andrew Henderson
Last updated: Aug 19, 2021 at 8:55AM