Wednesday, May 02, 2012

Ron Paul's Alternate Universe

"The Byzantine Empire had a gold standard for a thousand years and they did quite well and they didn’t fight wars."

Didn't fight wars? Justinian, Belisarius, Narses, Basil the Bulgar-slayer and Harald Hadrada, independent contractor. Which empire did they fight for in his universe?

Quite well? A territorial high point ca. 550, followed by 900 years of decline? Also, when they name Byzantine politics after you, it may not be a good thing.

And yes, the Byzantines used gold coins for about a thousand years. For the first 700 years, they were about the same weight and purity, after which there were repeated cycles of debasement.

More importantly, the gold coins weren't used for everyday transactions: a single gold solidus was four months' compensation for a lawyer's indentured servant. Most people did most of their buying in copper coins, which were repeatedly devalued starting in the seventh century.

The effect was similar to Kruggerands keeping their weight, but greenbacks dropping in value relative to gold. Not what I suspect Paul thinks he means by the gold standard.

1 comment:

David Friedman said...

You might be interested in the discussion of gold and silver coinage by Carlo Cippola in the chapter of _Money, Prices and Civilization in the Mediterranean World_ on the dollars of the Middle Ages.