A Glimpse into the Future
Down the Rabbit Hole
Aug 1, 2008
"Alice started to her
feet, for it flashed across her mind that she had never before
seen a rabbit with either a waistcoat-pocket, or a watch to take
out of it, and burning with curiosity, she ran across the field
after it, and fortunately was just in time to see it pop down
a large rabbit-hole under the hedge.
"In another moment
down went Alice after it, never once considering how in the world
she was to get out again."
-Alice in Wonderland
by Lewis Carroll
Alice, with abandon, dropped
down the rabbit-hole, into the unknown. Like Alice's rabbit-hole,
filled with unforeseen adventures, the future is an unknown;
a journey we are all destined to take. Rogue waves and Black
Swan events dot the landscape. Yet we proceed, often with abandon,
through this mysterious crevice, learning, like Alice, to make
sense of what appears to be nonsense.
Lewis Carroll's tome is often
seen metaphorically; from dealing with social chaos, to navigating
through life's contradictions, to the coming of age of a young
When we look
to the future, we enter Alice's world of the unknown. Contradictions
will most certainly be commonplace as we proceed forward. Sense
and nonsense will blend together to create a world that, at times,
will be bewildering. Looking for guides, (our own Cheshire
Cat) to help us through the maze, we'll embrace politicians
who promise to ease the angst and make our journey comfortable.
We'll embrace irrelevant institutions that have long since served
their purposes. And we'll ask for rules to give order to disorder.
In our future, we'll crave,
as always, a known tomorrow; not Lewis Carroll's world of anarchy
In order to make sense of the
unknown and provide a beacon for what lies ahead, psychics, writers
and philosophers have made (and continue to make) predictions
about the future. Nostradamus was said to have foretold many
historic events through his vague and perplexing writings known
as the quatrains. The quatrains were so puzzling that interpretation
is still hotly debated. Timothy Leary, the sixties drug guru,
predicted that we would see utopian societies and space colonization.
Sylvia Browne in her book, End of Days, sees Atlantis arising,
and all faiths being unified by the close of this century. Unfortunately,
most of us won't be around by the end of the century to see if
Ms. Browne hit the mark. Another famous book, The Book of Predictions,
written in 1980 (David Wallechinsky, Amy and Irving Wallace),
included a lists of predictions, both historic and current, by
scientists, science fiction authors, politicians, and others.
The prediction of the Titanic's sinking, and Jeane Dixon's foretelling
of the assassination of John F. Kennedy were some of the more
notable prophecies listed in the book. Although supposed experts
in their fields, their predictions cast little light on what
we can expect going forward.
Studying past civilizations
may however, sheds a more commanding light on our own future.
Looking to ancient Rome, the clues are uncanny, as to what could
lie ahead for us. Monetary policy and civilizations walk in lockstep.
A culture with a sound monetary system will inevitably survive
longer and suffer fewer degradations than a culture that debases
its currency. Monetary debasement, political decline and moral
deterioration often travel the same road at the same time.
For example, in Rome, 277 BC,
the denarius was born. It was a silver coin, and for the first
250 years its silver content declined only modestly. The modest
decline corresponded with Rome's rise to become an empire. From
the original 66 grains of silver, the value had only declined
10% to 60 grains, by the time of Julius Caesar (49 BC). But soon
afterwards monetary tumult commenced in earnest.
The "aureus" - a
gold coin - was created by Julius Caesar. It was to be 125 grains
of gold. Gold was used to pay the army and support the Emperors,
silver - the denarius - was used for international trade, and
of least value, the copper coins were used by the common people
In 54 AD Emperor Nero started
to inflate and debase the value of Rome's money. Nero took 14.3%
of the silver out of the denarius coin and 11% of the gold out
of the aureus coin, replacing the precious metals with base metals.
If we flash forward to the U.S. in the 1960s, we find that, in
one fell swoop, all of the silver was taken out of our
coins and replaced with base metals. Are we Rome on steroids???
As Rome continued on its moral,
political and monetary decline, by 193 AD, the denarius had only
26 grains of silver - a 61% devaluation from the original 66
grains. Shortly thereafter, Rome's denarius stopped being accepted
in trade by the rest of the world. By 268, the denarius was nothing
but base metal with a thin silver coating
Coming back to America in 1971,
Richard Nixon ordered the dollar to be taken off the gold standard.
From that moment forward, the dollar was, and is, backed by nothing,
other than the "good faith" of the U.S. government.
The U.S. managed to do, with the stroke of a pen, what it took
the Roman's decades to accomplish - eliminate any credible backing
to their currency.
Today, central banks around
the world increasingly diversify their reserves, including cutting
holdings of American dollars. It seems like the world is growing
uncomfortable taking dollars that are backed by nothing. The
historic similarities between the denarius and the dollar should
send chills down one's spine.
Will history repeat itself?
And let us not forget our own
copper penny. Copper coins were used as the currency of the common
people in Roman times. Our copper penny held its value (100%
copper) from 1793 to 1982. Today our "copper" penny
is 97.5% zinc with a 2.5% copper coating. That's a 97.5% debasement!
Some of our future is quite
predictable. Throughout history, civilizations and nations have
come and gone. But, if one looks at the money and monetary policy
of these nations, a clear picture emerges as to what our future
holds. Since going off the gold standard 1971, our dollar has
lost over 80% of its purchasing power. It continues to be printed
in ever increasing amounts, at the whim of politicians. It's
safe to say, we will continue to see more irresponsible printing
of money, more inflation, and more references to Rome and its
decline. Unless there is a dramatic shift in U.S. monetary policy,
the U.S. and the dollar will suffer the same fate as Rome and
its denarius. It's just a matter of time.
And Alice, did she survive
her adventures? Luckily, she woke up from a very bad dream. Unfortunately,
the world is looking more and more like Lewis Carroll's novel
every day, with nonsense and sense blended together and characters
like the Mad Hatter and the Queen of Hearts dotting the landscape.
Now, if we could only
wake up, like Alice did at the end of her surreal dream!
Many thanks to Christopher
Weber for his excellent article: A
Short History of International Currencies [pdf]
can be reached by e-mail at: SanDiegoRoss@Hotmail.com
by Robert Ross. All Rights Reserved.