Cryptocurrency: How Empires End

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https://internationalman.com/articles/how-empires-end/

How Empires End

Authored by Jeff Thomas via InternationalMan.com,

    “Experience hath shewn, that even under the best forms of
government those entrusted with power have, in time, and by slow
operations, perverted it into tyranny.”

    – Thomas Jefferson

Histories are generally written by academics. They, quite naturally,
tend to focus on the main events: the wars and the struggles between
leaders and their opponents (both external and internal). Whilst these
are interesting stories to read, academics, by their very nature,
often overlook the underlying causes for an empire’s decline.

Today, as in any era, most people are primarily interested in the
“news”—the daily information regarding the world’s political leaders
and their struggles with one another to obtain, retain, and expand
their power. When the history is written about the era we are passing
through, it will reflect, in large measure, a rehash of the news. As
the media of the day tend to overlook the fact that present events are
merely symptoms of an overall decline, so historians tend to focus on
major events, rather than the “slow operations” that have been the
underlying causes.

The Persian Empire

When, as a boy, I was “educated” about the decline and fall of the
Persian Empire, I learned of the final takeover by Alexander the Great
but was never told that, in its decline, Persian taxes became heavier
and more oppressive, leading to economic depression and revolts,
which, in turn led to even heavier taxes and increased repression.
Increasingly, kings hoarded gold and silver, keeping it out of
circulation from the community. This hamstrung the market, as monetary
circulation was insufficient to conduct business. By the time
Alexander came along, Persia, weakened by warfare and internal
economic strife, was a shell of an empire and was relatively easy to
defeat.
The Tang Dynasty

Back then, I also learned that the Tang Dynasty ended as a result of
the increased power amongst the eunuchs, battles with fanzhen
separatists, and finally, peasants’ revolts. True enough, but I was
not taught that the dynasty’s expansion-based warfare demanded
increases in taxation, which led to the revolts. Continued warfare
necessitated increasing monetary and land extortion by the eunuchs,
resulting in an abrupt decrease in food output and further taxes.
Finally, as economic deterioration and oppression of the citizenry
worsened, citizens left the area entirely for more promise elsewhere.

Is there a pattern here? Let’s have a more detailed look—at another empire.
The Spanish Empire

In 1556, Philip II of Spain inherited what was regarded as Europe’s
most wealthy nation, with no apparent economic problems. Yet, by 1598,
Spain was bankrupt. How was this possible?

Spain was doing well but sought to become a major power. To achieve
this, Philip needed more tax dollars. Beginning in 1561, the existing
servicio tax was regularised, and the crusada tax, the excusado tax,
and the millones tax were all added by 1590.

Over a period of 39 years (between 1559 and 1598) taxes increased by
430%. Although the elite of the day were exempt from taxation (the
elite of today are not officially exempt), the average citizen was
taxed to the point that both business expansion and public purchasing
diminished dramatically. Wages did not keep pace with the resultant
inflation. The price of goods rose 400%, causing a price revolution
and a tax revolution.

Although Spain enjoyed a flood of gold and silver from the Americas at
this time, the increased wealth went straight into Philip’s war
efforts. However, the 100,000 troops were soon failing to return
sufficient spoils to Philip to pay for their forays abroad.

In a final effort to float the doomed empire, Philip issued government
bonds, which provided immediate cash but created tremendous debt that,
presumably, would need to be repaid one day. (The debt grew to 8.8
times GDP.)

Spain declared bankruptcy. Trade slipped to other countries. The
military, fighting on three fronts, went unpaid, and military
aspirations collapsed.

It is important to note that, even as the empire was collapsing,
Philip did not suspend warfare. He did not back off on taxation. Like
leaders before and since, he instead stubbornly increased his
autocracy as the empire slid into collapse.
Present-Day Empires

Again, the events above are not taught to schoolchildren as being of
key importance in the decline of empires, even though they are
remarkably consistent with the decline of other empires and what we
are seeing today. The very same events occur, falling like dominoes,
more or less in order, in any empire, in any age:

    The reach of government leaders habitually exceeds their grasp.

    Dramatic expansion (generally through warfare) is undertaken
without a clear plan as to how that expansion is to be financed.

    The population is overtaxed as the bills for expansion become due,
without consideration as to whether the population can afford
increased taxation.

    Heavy taxation causes investment by the private sector to
diminish, and the economy begins to decline.

    Costs of goods rise, without wages keeping pace.

    Tax revenue declines as the economy declines (due to excessive
taxation). Taxes are increased again, in order to top up government
revenues.

    In spite of all the above, government leaders personally hoard as
much as they can, further limiting the circulation of wealth in the
business community.

    Governments issue bonds and otherwise borrow to continue
expansion, with no plan as to repayment.

    Dramatic authoritarian control is instituted to assure that the
public continues to comply with demands, even if those demands cannot
be met by the public.

    Economic and social collapse occurs, often marked by unrest and
riots, the collapse of the economy, and the exit of those who are
productive.

    In this final period, the empire turns on itself, treating its
people as the enemy.

The above review suggests that if our schoolbooks stressed the
underlying causes of empire collapse, rather than the names of famous
generals and the dates of famous battles, we might be better educated
and be less likely to repeat the same mistakes.

Unfortunately, this is unlikely. Chances are, future leaders will be
just as uninterested in learning from history as past leaders. They
will create empires, then destroy them.

Even the most informative histories of empire decline, such as The
Decline and Fall of the Roman Empire, by Edward Gibbon, will not be of
interest to the leaders of empires. They will believe that they are
above history and that they, uniquely, will succeed.

If there is any value in learning from the above, it is the
understanding that leaders will not be dissuaded from their
aspirations. They will continue to charge ahead, both literally and
figuratively, regardless of objections and revolts from the citizenry.

Once an empire has reached stage eight above, it never reverses. It is
a “dead empire walking” and only awaits the painful playing-out of the
final three stages. At that point, it is foolhardy in the extreme to
remain and “wait it out” in the hope that the decline will somehow
reverse. At that point, the wiser choice might be to follow the cue of
the Chinese, the Romans, and others, who instead chose to quietly exit
for greener pastures elsewhere.