Yglesias highlights the latest wonktastic trend that just wont die this week: comparisons of monetary policy in USA to that of Roman Emperor Diocletian.

Diocletian, besides being a the first emperor of Rome to retire by his own will to grow cabbage in the Balkans, also enacted some pretty odd monetary policies.


Then, just when the Emperor Diocletian has brought political stability back and is in fact making progress on solving the underlying problem, he decides to do something weird:

At any rate, the received wisdom is that, overall, the overwhelming/unprecedented increase in the money supply (especially ‘silver’/bronze issues) in the reign of Diocletian, eventually brought about pronounced price increases (Schwartz, 1973; Duncan-Jones, 1982; Harl, 1996). But, this is not the full story; though the second part of it, is perhaps not widely known or recognised for its inflationary impact: In 301, Diocletian apparently issued a Currency Edict, effective September 1st, doubling the face value of the silver and cop- per issues (Erim et al., 1971; Whittaker, 1980; Bagnall, 1985; Lo Cascio, 1996; Rathebone, 1996; Harl, 1996; and the literature mentioned therein). Perhaps he hoped to raise the purchasing capacity of his (military and administrative) staff or make the possession of these coins more attractive and influence the ‘unfreezing’ of the out- standing precious metal (gold) that was held in private stores.

Whatever it is he hoped to accomplish, the result was a final large one-time increase in the price level that left the legacy of Diocletian the Inflator.

As Yglesias notes, it’s not that changing levels of currency has never happened before ( he points to France in the 1950’s). I would also add Turkey with the new Lyra, which aided in pricing changes.