How to fund a war and pay for the soldiers’ salaries with a limited supply of gold and silver? Solving this challenge made the Romans the source of inspiration for most governments and central banks today. The solution proposed by the Romans was to debase the coins in circulations. Had the Romans kept the amounts of gold and silver in the minted coins unchanged, they would not have been able to increase spending and wage more wars.
The purity of the Roman coinage decreased massively, and less purity meant more silver coins resulting in more spending and waging more wars. More coins of poor-quality channeled wealth away from the ordinary Romans. Also, the scarcity of the precious metals left the government with no options but to increase taxes on the Romans to sustain the empire. Hyperinflation infiltrated the empire and led to its collapse. What started with the Romans continued to cause most of the wars and financial crises, and it is one of the most ever ignored problems of our time.
If the central banks agree the return to the gold standard, how long they will keep it.