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On the subject of coin debasement, debasement of the metal content of coins is not necessarily indicative of inflation. It could also be indicative of price stability in a growing economy with fixed metal supplies, or a monetization of the economy under fixed metal supplies. Inflation is price increases measured in the unit of account. If the unit of account is "weight of silver" then debasement of the currency would be associated with inflation. But if the unit of account is "coin of the realm," then the silver content of those coins matters not at all to the question of inflation.

Typically, there would be three levels of economic activity in pre-modern times: Local rural activity, which was almost purely barter and credit based, with no monetary transactions to speak of. Urban production and long distance trade within the same jurisdiction, where the coin of the realm is used, and international trade, where precious metals was frequently used. Computing the rate of inflation under such a diverse mix of units of account is a decidedly non-trivial (and highly political) exercise even with access to modern comprehensive trade and price data. You can fuggetabout doing it for the Roman empire.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 10th, 2012 at 01:39:51 PM EST
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