Inside today’s Daily Journal…

Editor’s note: Last month, Porter published a new version of his best-selling book The End of America. The new edition, 2029: The End of America, describes America’s continuing economic, political, and cultural decline. Using the generational framework of the Fourth Turning, his new book describes the underlying forces that are destroying America’s way of life. Here’s an excerpt from the book that explains the root cause of these problems and explains why the final crisis will arrive in 2029.

You know what a country looks like when it runs out of money.

You’ve been living through it for the past 20 years. You’ve just been trained, by the media, to ignore it – not to believe your “lying eyes.”

But you can see it. You saw it in March 2023, when Silicon Valley, First Republic, and Signature Bank all collapsed, with over $500 billion in deposits evaporating in 36 hours. You saw it in the price of eggs, of insurance, of the small house three doors down – things that all now cost twice what they did in 2019. You see it every morning when you look at your pay stub and then look at your grocery receipt and do the math your government refuses to recognize.

None of this is new. It is not new to America. It is not new in the human experience. This – the debasement of the currency – is the oldest story in economics. In fact, I would posit that the lie of paper money is the entire reason the pseudoscience of modern economics, with its focus on econometrics, exists. It is the science of alchemy, the science of lies.

We’ve been told – by our leaders and by our economists – that it’s different this time. It’s different because the dollar is the world’s reserve currency. It’s different because America has the strongest military. It’s different because oil is priced in dollars.

But, of course, it isn’t different at all. This is the way it always happens.

Let me show you.

In 211 BC, in the midst of the Second Punic War, Rome struck its first denarius silver coin.

This was money. It weighed 4.5 grams and assayed between 95% and 98% pure silver. This monetary standard held – astonishingly – for nearly three centuries. Through the conquest of Greece, the wars of Marius and Sulla, the dictatorship of Caesar, the civil wars that followed his murder, and the long reign of Augustus, the denarius stayed honest.

A Roman legionary was paid in denarii. A Syrian farmer selling wheat in the market at Antioch accepted denarii without weighing them. A merchant in Gaul took denarii in exchange for tin. The coin moved frictionlessly through the empire because men who had never seen the emperor’s face trusted his coin. That trust was the empire. Not the legions. Not the roads. Not the aqueducts. The money. Everything else Rome built rested on a sound currency: it enabled an unprecedented amount of global trade and thus created more wealth than the world had ever seen.

But then, slowly at first, Rome stopped keeping its promise.

In AD 64 – the year of the Great Fire – Nero called in the old denarii and restruck them. He cut the weight from 84 coins per Roman pound to 96 and dropped the fineness from roughly 98% to about 93.5%. It was the first debasement of any consequence in more than 250 years.

The emperor needed money to rebuild the city and his endless spectacles. The easiest way to get it was to call in the old coins and strike new ones with a little more copper mixed in. The soldiers didn’t notice. The farmers didn’t notice. The merchants in Gaul didn’t notice. The silver content fell by five percentage points and the empire went on functioning as though nothing had changed.

Domitian briefly raised the fineness back toward the old standard in the 80s AD but soon, the debasement continued. Under Trajan, in AD 107, the silver content was quietly cut again, from roughly 93.5% down to about 89%. Under Marcus Aurelius – the philosopher-king, the Stoic, the man whose Meditations we still read in graduate seminars on leadership – the coin fell to roughly 79% fine to pay for the Marcomannic wars. Under his son Commodus, the weight was cut again – by one-eighth – and the fineness slipped to around 70%.

Then came the Severans. Septimius Severus doubled the size of the army and the legionary’s base pay and paid for it the only way he could: by cutting the silver content of the denarius to roughly 50%.

In AD 215, his son Caracalla tried something new. He minted a coin called the antoninianus, which claimed to be two denarii but contained only about 1.6 denarii worth of silver. It was a 52% fine coin weighing 5.1 grams that bought 25% more than the silver in it justified. It was the ancient world’s first explicit, legislated fiat premium. The state declared, by edict, that the coin was worth more than the metal it contained.

How do you think that worked out…?

The floor gave way. Under Gordian III in the 240s, fineness was already below 50%. Under Gallienus, in the 260s, the antoninianus became a copper slug with a thin silver wash – roughly 2% to 5% silver, and even that mostly cosmetic, applied to the surface so the coin would look like silver until it wore off in a few months of circulation.

In a little over 200 years – from Nero’s first cut in AD 64 to the bottom under Gallienus around AD 268 – the Roman silver coin went from roughly 98% silver to under 5%. And the men in Rome who ordered the debasement – every single one of them – told the same lie.

These lies should sound familiar to you. This is temporary. This is necessary. We must “break the glass” to save the country.

The cycle was finally broken, after the fact, by two emperors who understood that the empire could not be held together without an honest coin. Aurelian in AD 274 tried to standardize a new coin guaranteed at 5% silver – marked XXI on the reverse, an explicit promise of one part silver to 20 of bronze. Twenty years later, in AD 293–294, Diocletian carried out the full reform: a new pure silver coin called the argenteus, struck at 96 to the pound and roughly 90% to 95% fine – the first honest silver coin Rome had issued in more than two centuries.

But it did not work for long. By AD 301, Diocletian had to double the argenteus’ face value to keep up with inflation. Within a few years he was issuing the Edict on Maximum Prices and threatening death to merchants who charged what their goods actually cost.

And here is the part of the history that 99% of economists never understand. By debasing the coinage, the political class built an economy that could not function on honest money.

The legions had to be paid. The grain dole in Rome had to be distributed. The client kings at the frontier had to be bribed. But with a broken exchange system, there was no honest way to afford the obligations of the Roman state. The only way to keep the machine running was to debase the coins. And that, in turn, created still more demand for graft. It wasn’t long before the entire empire ran on graft.

Sound familiar?