The Denarius and Dollar in Decline

14 Mar

One of the earliest pieces of economic data I ever learned was that, in Jesus’ time, a denarius was the wage paid to a worker for one day of work. Originally, the denarius was a silver coin, produced by Rome, which received its name because it was worth 10 ases; an “as” was a bronze coin. In today’s measurement, the average denarius weighed about 6.8 grams at its inception in 269 BC. It later went down to being about 3.9 grams of silver during the time of Christ. In the late 1st century, Nero further debased it to 3.4 grams. As this chart shows, after that time, lowering the percentage of silver by mixing other metals in the coin itself was the primary means of its debasement.


While many comparisons can be made, one of the most interesting is the comparison of the decline of the denarius to the decline of the US dollar, which has a similar chart:


What is the most important thing this chart shows? It is the decline of the dollar due to the creation of the Federal Reserve.

And how is this similar to the decline of the value of the denarius?

By the end of the reign of Didius Julianus, the denarius almost got back to 90 percent of its original silver content. But roughly one-hundred years after his reign, the denarius’ silver content, its essential source of value, was nearly all gone. In the case of the dollar, due to the departure from the gold/silver standard and the advent of the Federal Reserve as our source of money instead, our dollar has taken roughly 100 years to lose over 90 percent of its value.

What is the difference? If you could have saved your denarii from 200 AD to 300 AD, you would have still had a good amount of silver. I’m no expert on the savvy of the Roman coin shops, but I imagine you would be able to trade those old silver denarii for goods and services pretty close to that of when you had acquired them. But if you saved dollar bills from one hundred years ago in a bank account, you’d have lost over 90 percent of your purchasing power. At least Romans had metal currency; paper currency is only worth the metal you can get for it. Otherwise, it’s just paper. The departure from a metallic standard for currency production is the chief means of a government’s deception of its citizens and trade partners. It is also an ominous sign of that government’s gradual downfall.

By the way, have you heard of how Obama wants to change the metallic composition of our coins? It’s not really a surprise if you’re a student of history. But what are you going to do in response to it?


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