So why didn’t the dollar collapse? Why is it still the reserve currency of the world? Why don’t we have hyperinflation? Why did gold stall and then fall last summer? Was there a food shortage? Nope. Widespread urban violence? Nope. Depression, stock market collapse, bond market collapse? Nope, nope and nope. Why not?
Because that’s not how it works. Great nations do not suddenly lose reserve currency status or hyperinflate or collapse economically—not unless they lose a war or are destroyed by natural disasters. The archetypal decline and fall story is that of Rome. It was the eternal city, supposedly, but nevertheless its gates came crashing down and its cities were trodden over by rude barbarian feet. And all of this happened just as the great classical philosophers had warned it would.
The Catos and Ciceros of Rome warned about the decline of Rome as it was first turning away from Republic and toward empire. But Rome didn’t actually ‘fall’ in a definitive sense until 498 years after the death of Cicero and 499 years until after the death of Cato. The process of lost freedoms, corruption, imperial overreach and decay, and final definitive collapse lasted almost as long as the rise of the Roman republic; the great age of political warning appeared as the midpoint of Rome’s history, not the end. The classical conservative statesmen were right, but premature. History, like Clouseau, declared, “Not now, Cato,” and delayed its judgment for half of a millennium.
And the currency markets followed the same pattern. Empire, bread and circuses, all cost a lot of money, and were partially funded by currency debasement. However, the Roman Denarius did not collapse in value overnight. The long journey from a denarius composed of 6.8 grams of silver struck in 269 BC, through the first debasement down to 4.5 grams half a century later, then under Caeser Augustus down to 3.9, under the loathsome Nero 3.4 grams, under a long series of debasing emperors down to 3 grams and finally in the mid-2nd century AD phased out of existence and replaced by other currencies, all told took about half a millennium. This is a remarkable feat considering the way that Rome, and by extension her currency, was hated by the world she had enslaved. The famous passage in the synoptic Gospels in which the religious leaders ask Jesus whether they should pay taxes to Caesar turns partly on Rome’s status and as issuer of the known world’s reserve currency. http://finance.townhall.com/columnists/jerrybowyer/2012/04/28/glenn_beck_national_decline_and_the_story_of_the_roman_empire