Inflation during the 3rd and 4th centuries

While there's no way to quantify the exact inflation levels of the third and fourth centuries, respectively, and we're involving a long period here, during which the levels probably varied, do you think it's safe to say that Roman inflation levels were comparable to Venuzuela?

Given that monetary reforms invariably quickly failed, I think it's safe to say that we're talking 50+%?

 

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Probably even higher than that.

 

Coins from 250-294 seem to stabilize, and even go larger module in some cases. Can one infer that inflation, while extremely severe, was less severe in this period than of the fourth century?

It's interesting how Byzantine coins (pre-1000 AD), even during the bad times, maintain a recognizable form, even though they may be smaller during certain times.

 

Here's an interesting link...the edict of maximum wages and prices issued in 301 by Diocletian.

http://kark.uib.no/antikk/dias/priceedict.pdf

 

When one discusses inflation, usually one is talking about, the rate of inflation per year.
For example, the most recent inflation number, the Consumer Price Index (CPI), for the USA, in January, was 7.5% per year.
https://news.yahoo.com/consumer-price-index-cpi-inflation-january-2022-210344769.html
This means that, if the rate of inflation, which was measured in January, continues for 1 year, then the prices of things, such as food, gasoline, and housing, will have increased by 7.5% by the end of 2022.
If the rate of inflation remains 7.5% per year, for the next 10 years, then the prices of things, will have increased by 206% by the end of 2031. In other words, the prices of things, will have doubled, by the end of 2031.
This seems counter-intuitive. Naively, one would think, that prices would have increased by 75% after 10 years, which is 7.5% times 10.
But, it's the "miracle of compounded interest". You have to multiply by 1.075, and do it 10 times.
Venezuela, on the other hand, in 2021, had an inflation rate of 686% per year.
https://www.reuters.com/world/americas/venezuelas-inflation-hit-6864-2021-central-bank-2022-01-08/
If the inflation rate were to continue to be 686% per year, then after 10 years, the prices of things, will have increased by 23080284457668872281971966976%, by the miracle of compounded interest.
However, Venezuela's rate of inflation has changed drastically, for various years. The following graph, shows Venezuela's rate of inflation, for every year, since 1985. In 2018, the rate of inflation per year, in Venezuela, was 65374%.

And here is a link to a table, with similar data, for Venezuela. You have to scroll down, to see the table. The inflation rate per year, is the 3rd column from the right.
https://en.wikipedia.org/wiki/Economy_of_Venezuela#Statistics
EDIT : Note that, the inflation rate, in the above table for 2021 (5500%), is different, than in the Reuters article for 2021 (686%). I'm guessing, that it's because, the inflation was measured in a different way. Perhaps the prices of certain items, such as health care or gasoline or college, were included in one measurement, but not in the other measurement. Or, perhaps different items were weighted differently.

 

The penalty for violating the Edict was Death.

 

Very interesting, sand.

Yes, I've read the Edict before; a most fascinating document. I believe Julian also used the word 'greed' when complaining about Antioch grain merchants raising their prices.

 

I just realized, that I made 2 mistakes.
1. For the USA case, my terminology was incorrect. For 7.5% inflation, after 10 years, the final price would be double (2.06 times, to be more precise), but usually that is described as meaning that the price would have increased by 100% (106% to be more precise). The increase would be (2.06 - 1) = 1.06, which is a 106% increase.
2. For the Venezuela case, when I calculated the effect of 10 years of inflation, at a rate of inflation of 686% per year, my answer of 23080284457668872281971966976% was incorrect. I made the mistake of multiplying by 686, and doing it 10 times. One has to multiply by (6.86 + 1) = 7.86, and do it 10 times. The final price would be 899,964,669.50 times the original price. This would be an increase of (899,964,669.50 - 1) = 899,964,668.50 which would be an increase of 89996466950% for the 10 year period. Still a big number, but not nearly as big as the incorrect number.

 

I don't pretend to understand the complexities of economics, but it seems that governmental price fixing invariably causes inflation. Diocletian certainly experienced that, as have many ruling authorities since. Often the results are economically disastrous. And yet many people harbor the delusion that just one more layer of governmental control will suddenly make things better. (Insert definition of insanity.)

One of the most successful ancient economies was that of the Phoenicians, who ran an enormous, decentralized, trade network unencumbered by totalitarian and expansionist thugs like Alexander "the Great." When free trade prospers, everybody is better off and inflation doesn't incessantly rob the citizen's purse of its value.

Read The Rational Optimist, How Prosperity Evolves, by Matt Ridley.

 

The inflation in the USA has very different reasons than the Venezuelan inflation.
For the Venezuelan case, it is pathetic and unbelievable that it has the most amount of oil resources in the world, among other resources (gold, bauxite...), and it is also a very fertile land, so it is impossible to understand why a large population is literarily sitting on all these resources and starving. The only ones that are well-off are those pro-regime. This is what happens when a corrupt and narco-regime hangs onto power by all means. Oops, I hope I am not going against the rules by saying this.

 

Post deleted.

I started to try, to calculate the inflation rate per year, for the Roman Empire, in the 3rd and 4th centuries AD.

But, then I realized, that I need more time, and more information.

Maybe, I'll try again, in the future.

 

It doesn't cause inflation, it just fails to contain it. Blanket price controls are a response to inflation that is already getting out of hand, and they tend not to work because the market pressures causing the inflation are still there.

Targeted price controls, however, are often helpful, but they're generally used for other reasons, not for containing inflation.

 

What has surprised me is the lack of literary sources complaining about inflation in antiquity. For us it is a major topic of discussion but for them it seems that other topics were of more concern to them. Martial (circa100 AD) complains of poorly constructed housing and getting one's heels trampled on in crowds. Tacitus ( also circa 100 AD) bemoans a plethora of virtue among German barbarians and a dearth of the same among the Roman people. Neither seem concerned that their denarii have 15% less silver in them than when they were born. During the Fourth Century, presumably a time of rampant inflation, the burning interest issues seem to more theological than financial (except for paying taxes which seems common to all times and places). Whether the Holy Spirit proceeds from the Father and the Son or only from the Father seems to occupy more time and interest than how much silver was in those folles in the market place. My reading of original sources makes me wonder if much of the population understood what was going on or was as much concerned about something that simply was not as bad as we imagine it was, or perhaps that whatever the coinage was, what it weighed or looked like, did not much matter as long as it passed current for bread at the bakery shop. Our major worries may not have been theirs.

 

Agreed. What I find interesting is the transition from Roman provincial coinage of high quality, struck by the koine Greek speaking cities, to base metal antoniniani during the reign of Gallienus. What I recall reading is the provincial elites, who were responsible for remitting tax shortfalls and also covering civic expenses like repairing temples, basilicas, and gymnasia were bankrupted during the middle decades of the third century by the flood of nearly worthless coins. But I suppose to the populace so long as one could buy a loaf of bread for an antoninianus the main concern was barbarian invasion.

 

Or by the fourth century could barter have surpassed a monetary economy in areas outside the cities? Thus, it wouldn't be as important if the AEs crashed.

 

My impression is that a large portion of the population was trying to scratch out a living on a little piece of land and probably did not touch money that often.

Expanding on that, I have been struck by the way the Romans and the British maintained the quality of the gold coins, which where used by the wealthy and the powerful. The silver could be debased down to nothing but copper with a thin layer of silver covering it and the copper coins could get smaller and smaller. The gold remained remarkably consistent.

I suppose you might say that the rich and powerful took care of each other.

 

Price controls contain measured inflation in the short-term and cause more inflation in the long term.

By prohibiting price increases, measured inflation will not increase as it would in the absence of price controls. However, prices are signals of scarcity and contain incentives for production.
If prices are held artificially low, this reduces the incentive to produce more of the affected goods and services. All equal, less goods means higher prices. Hence, underlying inflationary pressure builds up and eventually breaks free once price controls are lifted.
This is a great problems of reform oriented governments that deregulate economies. The deregulation seems to create inflation, making the policy unpopular. In reality, the deregulation only reveals the inflation pressures that accumulated under the price control regime.

 

We need to distinguish inflation from hyperinflation. Despite the name, these are very different phenomena.

The US is currently experiencing inflation. At 7.5% the rate of inflation is the highest since the early 1980s. It means that the dollar is loosing 7.5% of its purchasing power per year. Since the inception of the Federal Reserve in 1913, the dollar has lost about 97% of its purchasing power. However, the dollar is still highly sought after in the US and worldwide. The reason for this is the balance sheet of the Fed. Money is on the passive side of the balance sheet and on the active side, backing the money, are bonds (mostly US Treasury bonds). As long as people believe that these bonds are good, the dollar will not experience hyperinflation.

Hyperinflation is a situation, where the central bank balance sheet's active side consists of poor debt, i.e. debt that cannot be repaid by the debtor. This is the case of Venezuela. Their currency is backed by unpaid debt, which means that the debt and the money backed by this debt is more or less worthless.

In the Roman empire, there was no central bank and no government bonds. The money was backed by its intrinsic value, i.e. the content of precious metal in the coin. The inflation can be calculated by the drop of the amount of intrinsic precious metal in a coin of the same denomination, i.e. a denarius.

 

All I know is it was BAD.

Just look at the coins from the beginning through the end of that period.

They start out kinda silvery (~45% pure) but eventually they turn into little scraps of copper.

It’s actually sad because the last antoninianus on the bottom row looks like a mere “as” (1/16th of a denarius) from the early Empire.

 

Sorry, multiple post.