From Currency Debasement To Social Collapse: 4 Case Studies

Tyler Durden's picture

At its most fundamental level, SocGen's Dylan Grice notes that economic activity is no more than an exchange between strangers. It depends, therefore, on a degree of trust between strangers. Since money is the agent of exchange, it is the agent of trust. Debasing money therefore debases trust. Grice emphasizes that history is replete with Great Disorders in which social cohesion has been undermined by currency debasements. The multi-decade credit inflation can now be seen to have had similarly corrosive effects. Yet central banks continue down the same route. The writing is on the wall. Further debasement of money will cause further debasement of society. Dylan, like us, fears a Great Disorder.

Selected extracts from Dylan Grice

If the authorities raise taxes explicitly and openly, voters know exactly why they have less spending power. They also know how much less spending power they have. But if the authorities instead raise money by simply printing it, they raise the revenue by stealth. No one knows upon whom the burden falls. People notice only that they can't afford the things they used to be able to afford, or they can't afford the things which everyone else can afford. They know that something is wrong, but they just don't know what, why, or who is to blame. So inevitably they look for someone to blame.

So it is with monetary debasement, as Keynes understood deeply (so deeply, in fact, that it?s ironic so many of today's crude Keynesians support QE so enthusiastically). In 1921 he said:

“By a continuing process of inflation, Governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some …. Those to whom the system brings windfalls …. become “profiteers” who are the object of the hatred … the process of wealth-getting degenerates into a gamble and a lottery .. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

History is replete with Great Disorders in which currency debasement has coincided with social infighting and scapegoating. This debasement of currency also coincided with a debasement of society. Factions grew more suspicious of one another. Communities fragmented. And one part of the community bore the brunt of the fears.

Third Century Roman inflation (and implicit currency debasement) sparked a rapid turnover of emperors as the scapegoating over the systemic debasement saw Romans turned on Christians with a great violence which lasted throughout the period of the currency debasement but peaked with Diocletian's edict of 303 AD. The edict decreed, among other things, that Christian meeting places be destroyed, Christians holding office be stripped of that office, Christian freedmen be made slaves once more and all scriptures be destroyed. Diocletian's earlier edict, of 301 AD, sought to regulate prices and set out punishments for 'profiteers' whose prices deviated from those set out in the edict.





A similar dynamic seems evident during Europe's medieval inflations, only now, the confused and vain effort to make sense of the enveloping turmoil saw the blame focus on suspected witches. The following chart shows the UK price index over the period with the incidence of witchcraft trials. Note the peak in trials coinciding with the peak of the price revolution.




Were the same dynamics at work during the French Revolution of 1789? The narrative of Madame Guillotine and her bloody role is well known. However, the execution of royalty by the Paris Commune didn't begin until 1792, and the Reign of Terror in which Robespierre's Orwellian sounding 'Committee of Public Safety' slaughtered 17,000 nobles and counterrevolutionaries didn't start until well into 1793. In the words of guillotined revolutionary Georges Danton, this is when the French revolution 'ate itself'. But the coincidence of these events to the monetary debasement is striking. The political violence was justified in part by blaming nobles and counter-revolutionaries for galloping inflation in food prices.




However, the most tragic of all the inflations in my opinion, and certainly the starkest example of a society turning on itself was the German hyperinflation.




Like other Axis countries on the wrong side of the War and now in the grip of hyperinflation, Germany turned viciously on its Jews.


It blamed them for the surrounding evil as Romans had blamed Christians, medieval Europeans had suspected witches, and French revolutionaries had blamed the nobility during previous inflations.

So I keep wondering to myself, do our money-printing central banks and their cheerleaders understand the full consequences of the monetary debasement they continue to engineer? Inflation of the CPI might be a consequence both seen and measurable. A broad inflation of asset prices might be a consequence seen, though not measurable. But what about the consequences that are unseen but unmeasurable - and are all the more destructive for it? I feel queasy about the enthusiasm with which our wise economists play games with something about which we have such a poor understanding.

And now the social debasement is clear for all to see. The 99% blame the 1%; the 1% blame the 47%; the private sector blames the public sector, the public sector returns the sentiment - the young blame the old, everyone blame the rich - yet few question the ideas behind government or central banks...

All I see is more of the same - more money debasement, more unintended consequences and more social disorder.

Source: SocGen

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Dalago's picture

"Inflation can be pursued only so long as the public still does not believe it will continue. Once the people generally realize that the inflation will be continued on and on and that the value of the monetary unit will decline more and more, then the fate of the money is sealed. Only the belief, that the inflation will come to a stop, maintains the value of the notes."  - Ludwig von Mises


Perception rather than Facts.

whatsinaname's picture

California mines and mineral museum plundered by some thieves for Gold and jewels ?

redpill's picture

It's a lot more than debasing trust, it's debasing the most inherently limited commodity a human can have: time. Money is the translation of our labor over time into a common unit of exchange. When you destroy it, you are not just destroying paper or perception, you are devaluing the human beings themselves that rely upon it. There's a word for when people are forced to labor and not compensated for it: slavery.

Dalago's picture

Thank God For Ron Paul because today we KNOW who to hang from the gallows.  The Federal fucking Reserve and all other central banks!!!!

ATG's picture

34 Senators signed on to Full Audit the Fed and it's now up to Dirty Harry:


Meantime, just bot open long Oct SPY calls:



ratso's picture

Europe didn't "turn viciously" on the Jews because of inflation. Anti-semetism was a centuries old characteristic of both western and eastern Europe (and still is) long before the Weimar Republic.  The financial crisis was just an excuse for extracting revenge on the apparent Jewish financial enemy.

123dobryden's picture

nothing against jews generaly, but in case of weimar collapse no one can say that when they attacked them it was for no purpose...


And as always jewish little folk took all the blame, the real enemies escaped as they all were very well connected a rich from sucking germans wealth for centuries

ratso's picture

Sounds like you have something against some Jews more specifically. 

strannick's picture

Why do they call it currency debasement? Cause your currency ends up in da basement.

francis_sawyer's picture

Who junked that [strannick]?... That was funny as shit...

markmotive's picture

Our free ride has dissappeared. That's what happens when EROEI falls below 1.

Empires will collapse.

walküre's picture

The article was written from an overly simplistic world view. Hitler didn't invent "Shylock".

Why is every textbook and every opinion on the French Revolution suggesting that it was all bad? The people were starving and the cause for their problems was a class of useless and parasitic aristocrats who eventually found their demise at the hands of an executioner. Sure, they could have put the 17,000 to use and given them a shovel to dig but that wasn't their fate. The people wouldn't have any mercy. Although I think that number of 17,000 seems exaggerated.

Ideally we'd want to level the playing field and strip the bankers bare of their ability to create ficticious wealth for themselves from thin air. Wealth that we all have to abide by and respect and accept in return for our good talents and services. That is the problem with the oligarchy and they just may not agree with this point of view. You'd think though that after doing hard time for 3 years they would have gotten it (1789 - 1792)?

Randall Cabot's picture

The Rothschilds were actually behind the French Revolution and they and their property came out unscathed-they evidently got their man Napoleon into power who gave jews full rights.

sschu's picture

Why is every textbook and every opinion on the French Revolution suggesting that it was all bad?

The guillotine

The Terror

Starving peasants


Euro wars

Death in Russia

Not to mention the entirely destructive ideas of collectivism that emanated from the French Revolution that have manifest in such evil ways as Pol Pot, the Cultural Revolution and starving Ukrainians.

Good from the French Revolution?  Where exactly?

His point is right on.


Randall Cabot's picture

Well, it did get rid of one group of scumbags. but unfortunately they were replaced with a worse group of scumbags.

Randall Cabot's picture

jew supremacist capitalists funded jew supremacist bolhsheviks and during WWI jew supremacist bolsheviks were rightfully blamed for the strikes in German factories while jew supremacist capitalists were rightfully blamed for cutting off German access to materials-remember the "stab in the back" rubric? The starving hopeless Germans in the 1920s rightfully blamed the jew supremacists for their plight. And starving, hopeless people don't need an "excuse" to extract revenge on their oppressors ifone uses the jew supremacist principle of "collective punishment" that was inflicted on Germany after WWII.

ratso's picture

So - here we have it - right in your face virulent, irrational antisemetism.

PiratePawpaw's picture

Selling gold to buy Facebook.

BigJim's picture

Oh noes! Anti-semitism! *runs screaming from the room*

We have virulent (virulent! *LOL*) Anti-Everything here, chum. Anti-Capitalists, Anti-Socialists, Anti-Blacks, Anti-American-Citizenisms, Anti-Muslims, Anti-Arabs..

Interestingly.. I don't recall seeing you go out of your way to point out the Anti-Arab diatribes. That's a form of Anti-Semitism, too, isn't it?... I mean, yer average Arab is a lot more Semitic than yer average Israeli, half of whom are blue-eyed blondes (at least if the adverts in Haaretz are anything to go by).

I guess the only form of 'virulent' anti-something that bothers you is the Anti-Jewish stuff. Hmmm.  

ratso's picture

You are wrong monkey breath.  Anti-Arab triabes are no less toxic than Anti-Semitic ones.  I call them all when I see them.  Your intervention seems to condone what has been said by trying to attack the messenger for not having been able to decry every loathsome message on this board.  My question to you is why do you not respond to the everyday hate speech on this board? Why is it tolerated and left unaddressed and denounced for what it is - destructive to meanful human discourse.  THe hate speech on this board is a form of ignorance disguised as some sort of snobby, clubby attitude that suggests that as long as it is directed at the President, minorities or the poor it is okay.  Great stuff you have going here.

There often execellent posts put up by Tyler and others. 

The stiffling, inane coments like yours just detract.


BigJim's picture

 ...My question to you is why do you not respond to the everyday hate speech on this board?

Because it's everyday here, and responding to every little piece of it would mean spending most of my waking life policing a site where the vast majority of readers are perfectly capable of researching the truth or otherwise of allegations made by other posters. And because anti-semitism is so frowned upon culturally in the West that it's not a serious threat, whereas, anti-Arab and anti-Muslim racism is rife, is gaining increasing traction, and is a cover for warmongers to get popular support for attacking Iran, which will almost certainly result in the deaths of tens of thousands of innocent people.

Whereas... a few people casting aspersions on Jews - who are now virtually a protected species - is small beer in comparison.

The stiffling, inane coments like yours just detract.

LOL, projection much, ratso?

Kobe Beef's picture

Read the history of the Russian Revolution. Read the History of WWI. Read the history of the Weimar Republic. The information is there, you just have to read deeper than the B'nai B'rith/ADL version of history. The revolutionary Bolsheviks, traitorous trade unions, and oppressive usurists bedeviling Germany were all spearheaded by Jews. As are the official propagandists who've whitewashed these important facts from the historical record.

You cannot understand modern history while clinging to the "Hitler was Pure Evil, brainwashed an entire nation, exterminated 6,000,000 Jews out of Insane Hate, and anybody who says otherwise is an anti-semite" meme.

You don't have to agree with me, Randall Cabot, Big Jim, or anyone else on this site, but you do need to educate yourself. You can call it Hate Speech or CrimeThink, but you cannot call it ignorant, until you read.

Keltoi's picture

My, what a broad brush you paint with.

Randall Cabot's picture

jew supremacist bolsheviks in Germany during the WWI period: Karl Liebknecht, Rosa Luxemburg

jew supremacist capitalists who funded jew supremacists bolsheviks during the WWI period: Jacob Schiff, James Loeb, Louis Henrsheimer, Otto Kahn 

Kobe Beef's picture

+1. Name the names. That way those who would really like to learn something, can go look 'em up. The  ideologically oriented can just keep accusing you of CrimeThink. Ignorance is Strength!

The list of Jewish Bolsheviks can be found here:

And more analysis here:

Snake's picture

At least in Spain, in the early X and XI centuries, jews are identified with money lenders.  See, for example, The Song of my Cid, also known in English as The poem of the Cid, the oldest preserved Castilian epic poem recopilated in (circa) 1207 AD.

TheMadNumismatist's picture

Just connecting a few thoughts here, but look at Yugoslavia just before there descent into genocide. The economy had been humming along quite nicely, until about 1988 when inflation hit 217%

Doode's picture

Bullshit - everyone is complicit! It starts at the very top.

Withdrawn Sanction's picture

everyone is complicit!

Rubbish.  There are very specific people who are responsible here.  This notion that "it's everyone's fault" is sloppy reasoning and represents the dangerous flip side of the "every kid's a winner" in the faux self-esteem movement. 

A Lunatic's picture

It's them evil Iranians what done this Uncle Billy............

Zadok's picture

Depending on your indicators, your children are only valued at between 10-30% of what their parents were in 1980.

Totentänzerlied's picture

That would explain the quality of public education of late.

ratso's picture

Gee, does anyone in their right mind think that these four examples can be compared to the US of A in the year 2012.  IF you do, try some mellaril.

Raymond Reason's picture

This collapse will be the epic ending of the fractional reserve banking epoch. 

Skateboarder's picture

Not that anyone learns anything these days. A stronger, meaner, more fractional system will prop up in its place. "If there's any hope, it lies in the proles."

Raymond Reason's picture

The new system won't work if the proles keep their money in their mattresses.  A lot of rubles, hryvnias, and dinars are under the mattresses. 

NotApplicable's picture

Which is why they will ALL be debased into nothingness before their global replacement IOUs are unleashed.

Hyperinflation does a currency destroyer good.

explodinghead's picture

Try it will just be a reset and usher in a global fractional reserve currency.  Things will get so bad the Sheeple will beg for a solution..any solution.

saturn's picture

Nothing will change unless money ceases to be the means of distributing power.

LMAOLORI's picture



saturn you deserve alot more up votes for that comment

Badabing's picture

Social Collapse: 5 Case Studies

USA 2012 the reign of Obama

Dr. Engali's picture

Believe it or not there is the occasional Obama lover on the site. Of course they will never openly admit who they are.

francis_sawyer's picture

I think Obama is a fucking idiot & I junked it... Why?... Because if you're going to pin the whole epoch on Obama as being equivalent (as case study number 5), you might as well pin the Ryder Cup meltdown by the US on Obama as well...

NotApplicable's picture

You'd think he'd been a better leader and worked on his short game, but nooooooo!!

Carl Spackler's picture

You cannot blame the Ryder Cup meltdown on Obama.  He cannot even hit a green in regulation from the back tees, so he has nothing to offer.

And virtually all touring pros are capitalists who built their careers themselves (i.e. , they don't vote for Democrats or -worse yet- Socialists)!

But Obama spends more time on the links than on the economy or foreign policy or education or energy policy or Afghanistan, and he is still a complete hacker. 

Likstane's picture

I down arrow anyone complaining about a down arrow.

Please don't down arrow me.

HoofHearted's picture

Anyone have a link to the original paper by Grice?

BigJim's picture

 Gee, does anyone in their right mind think that these four examples can be compared to the US of A in the year 2012.  IF you do, try some mellaril.

No way! I heard mellaril was anti-semitic.