Chart Of The Day: Currency Devaluation, Old School Style
Our chart of the day comes courtesy of Dylan Grice, and his fascinating "Hyperinflation in Japan" presentation given at the CFA annual meeting in Edinburgh which we will shortly share with readers, which shows that currency devaluation is not a Ben Bernanke, nor even a central bank, phenomenon. As the chart below shows, and as most monetarists know too well, it was the Romans who engaged in the first act of voluntary currency devaluation-cum-dilution, by progressively reducing the silver content (yes, even back then currencies were backed by precious metals: and guess what - no CDOs squared, cubed, or quadratic, were conceived by the local office of Goldmanus Sachus) until such time as it hit zero... and the Roman empire was no more. Ironically, the nearly 100% devaluation of the currency in Roman times took just over 2 centuries. This compares somewhat favorable to the 97% drop in the purchasing power of the US currency since the inception of the Federal Reserve.
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