A lesson it is , pay attention cause we are right in the middle of History
Lessons of History
History offers many lessons and guideposts that can be useful to today’s leaders. Unfortunately, history also shows that prior mistakes are uniformly ignored or dismissed as irrelevant. Every generation, no matter the culture or country, believes things are different this time.
In 64 BC, Roman emperor Nero thought it clever to debase the Roman currency by putting less silver into the coins. While this allowed continued lavish spending, it built huge trade deficits with the Roman colonies and resulted in higher taxation for the wealthy. Eventually the wealthy hid their wealth or fled.
Spain looted gold from the new world becoming rich and powerful in the 1500’s. Excessive consumption drained the gold supply, so Spain turned to debt to finance its consumption and wars. Decline and bankruptcy followed.
In 1716 France decided to use paper money, falling under the spell of John Law. The idea caught on eventually leading to excesses, fraud and the break down of the financial system.
In 1862 during the Civil War, President Lincoln passed the Legal Tender Act allowing the issuance of paper money backed only by government guarantees. As expected excessive money printing lead to high inflation. In 1878, the currency was again backed by gold, and inflation was once again benign until the Federal Reserve was established in 1913.
After losing WWI, Germany was held accountable for war reparations. Having little savings, it printed the money, eventually setting off the hyperinflation of 1923 and devastating the entire middle class. This of course set the stage for the rise of Adolf Hitler.
