Editor's Note:
Romulus Augustus, the last emperor of Rome, had a lot of time to think
about what went wrong to cause the fall of the greatest empire in
history. Here, for the first time, in this exclusive essay he tells the
full story of the fall and gives Obama sage advice to our Chief
Investment Strategist, Keith Fitz-Gerald on how to avoid the same fate
in the US. Please forward this to interested friends or family members.
My name is Romulus Augustus. I was the last Roman Emperor. Though I only ruled a few years before giving up my throne on 4 September 476, I lived for at least another 25 years according to the tax records. I drew a pension until at least 507 according to Cassiodorus. And, in doing so, had plenty of time to think about what went wrong.
I have made the journey through time to offer my counsel and perspective lest your country repeat the same damning mistakes that ended centuries of Rome's greatness.
Let's begin at the top.
When I took the throne, the puppet masters held sway over the citizens. Theoretically, the citizens ruled Rome but sadly, true power was held by those who served as their representatives. The concentration of power is very real when it is the diffusion of power that best serves liberty.
Do not let your representatives take this for granted.
America, like Rome, will cross the most dangerous lines once voters figure out that they can entitle themselves. You will go from a nation of makers to a nation of takers.
We learned the hard way as our treasury became a proxy for a handout. Our citizenship changed radically and so did our elections. Towards the end, our political process was not about who would build a better future for the Empire, but who would be least likely to take away the handouts.
We tried giving the people free wheat as the progressive minds of our time thought that would change things. In reality, it made them worse.
My name is Romulus Augustus. I was the last Roman Emperor. Though I only ruled a few years before giving up my throne on 4 September 476, I lived for at least another 25 years according to the tax records. I drew a pension until at least 507 according to Cassiodorus. And, in doing so, had plenty of time to think about what went wrong.
I have made the journey through time to offer my counsel and perspective lest your country repeat the same damning mistakes that ended centuries of Rome's greatness.
Let's begin at the top.
When I took the throne, the puppet masters held sway over the citizens. Theoretically, the citizens ruled Rome but sadly, true power was held by those who served as their representatives. The concentration of power is very real when it is the diffusion of power that best serves liberty.
Do not let your representatives take this for granted.
America, like Rome, will cross the most dangerous lines once voters figure out that they can entitle themselves. You will go from a nation of makers to a nation of takers.
We learned the hard way as our treasury became a proxy for a handout. Our citizenship changed radically and so did our elections. Towards the end, our political process was not about who would build a better future for the Empire, but who would be least likely to take away the handouts.
We tried giving the people free wheat as the progressive minds of our time thought that would change things. In reality, it made them worse.
Big operations and even bigger government led to large scale
unemployment, particularly in our larger cities where people had
nowhere else to go.
In the afterlife, I hear everybody from Henry the 8th to Julius Caesar debating the merits of leadership. Even Elvis weighs in which brings me to my next point...
Politicians who focus on surviving threats from each other lose sight of the nation they serve and their people.
We never got this right. You have the chance to do so. Today...now....before it's too late.
One of our biggest challenges was the large rival factions operating outside the political structure to create controversy and misleading attacks on rivals. They were little more than privately funded corporations acting in the guise of public interest. Eventually, they split the people so effectively that everybody lost...any nobody won.
Our government became "at" the people instead of "for" the people; corruption became a way of life amongst our leaders.
This was particularly true when it came to stimulating the economy in an attempt to correct the progressively bad policies these actions created.
At some point, you will have to take your losses. We tried to avoid the issue and, although it took centuries to unwind, the role of the state in presuming that it would operate more efficiently than the private markets ultimately led to economic fragmentation.
As conditions deteriorate, you would be wise to watch carefully for the concentration of power risks becoming absolute. Know that influence peddling is just as alive in your time as it was in mine.
And it is every bit as dangerous.
High taxes and public spending rob the economy.
We learned very painfully that when money is cheap, productivity falls as do margins, even though overall business activity expands for a time.
I only wished we had learned sooner.
Beginning with Marcus Aurelius, we suffered from merciless inflation. Some of this was simply due to the fact that we stopped conquering other lands and peoples. Mostly, however, it was due to the fact that without a constant inflow of new wealth from those lands, we could not keep up our spending.
The term "pyramid scheme" did not exist in our time but I believe it applies.
Our wealthy had plenty of gold to spend but the majority of our citizens watched helplessly and hopelessly as the amount of actual money in circulation dropped to the point where it became worthless.
We repeatedly devalued our currencies swapping one for the other as values dropped. We printed money in the short term oblivious to the damage we were doing in the longer term.
We also began reducing the actual metal content in our gold and silver coins so that the actual metal made up less than 25% of its weight. In some cases, we even used tin in an attempt to maintain the silver color of coins, but that didn't fool people for long.
To compensate, merchants raised prices to the point where nobody could afford to use real money. Inflation hit very hard. Barter became the method of the day.
As hard as it is for you to imagine, salaries were eventually paid in food and clothing. Taxes were collected in fruits and vegetables. Our troops were eventually paid with rationed supplies.
The middle class was obliterated as once free men transitioned into debtors' hell, existing hand to mouth under draconian taxes that robbed them of their future.
We learned the hard way that a strong currency creates hope. And hope, in turn, creates value.
The strongest years of our Empire were driven by the concept of a better future rather than merely by survival. Taxing our public enslaved them, creating what in the Middle Ages would come to be called serfdom.
Most of our banks, by the way, failed in the 3rd and 4th centuries. Unless you are prepared to endure the same crisis, I urge you to do whatever it takes to support your currency.
Do not let Fed Chairman Ben Bernanke or any of his central banking cabal to further devalue the money you need to function.
Hold your nation together and keep your people free.
When the cost of money is low, governments will waste it and businessmen will not invest.
Lending to the government does not count because it's an implied tax that robs the private sector of the wealth needed for innovation and growth.
Stimulus is simply not sustainable. Like the drugs we took to enhance our orgies in years past, the short term fix feels great. Our markets, enjoyed periods of strong performance following each new stimulative effort, too.
But know this....
Bread and circuses will not placate the masses for long. In ancient Rome, our emperors used to pay privately for circuses, gladiatorial contests and public food as a means of distracting our population from the hopelessness of their situation.
It worked quite well for a while. But eventually people figured out the bread was rotten and that the circuses really were a colossal waste of their money and did nothing for their future.
By the time we realized that radical fiscal reform was necessary to build a stronger Roman Empire and a more balanced economy, it was too late.
Once our elite no longer saw the necessity to serve the people, much less in our military, we broke down.
Our Empire failed because we did not appreciate the need for mutual obligation and appreciation.
One last thing. Don't be so arrogant to believe that it can't happen.
Your president, Barak Obama and all your elected leaders must understand that they have been voted into office by the people for the people.
They must not fail. This is their watch.
They would be wise to treat the people who put them in power with the respect their nation asks of them and the trust embodied in their office.
In the afterlife, I hear everybody from Henry the 8th to Julius Caesar debating the merits of leadership. Even Elvis weighs in which brings me to my next point...
Politicians who focus on surviving threats from each other lose sight of the nation they serve and their people.
We never got this right. You have the chance to do so. Today...now....before it's too late.
One of our biggest challenges was the large rival factions operating outside the political structure to create controversy and misleading attacks on rivals. They were little more than privately funded corporations acting in the guise of public interest. Eventually, they split the people so effectively that everybody lost...any nobody won.
Our government became "at" the people instead of "for" the people; corruption became a way of life amongst our leaders.
This was particularly true when it came to stimulating the economy in an attempt to correct the progressively bad policies these actions created.
At some point, you will have to take your losses. We tried to avoid the issue and, although it took centuries to unwind, the role of the state in presuming that it would operate more efficiently than the private markets ultimately led to economic fragmentation.
As conditions deteriorate, you would be wise to watch carefully for the concentration of power risks becoming absolute. Know that influence peddling is just as alive in your time as it was in mine.
And it is every bit as dangerous.
High taxes and public spending rob the economy.
We learned very painfully that when money is cheap, productivity falls as do margins, even though overall business activity expands for a time.
I only wished we had learned sooner.
Beginning with Marcus Aurelius, we suffered from merciless inflation. Some of this was simply due to the fact that we stopped conquering other lands and peoples. Mostly, however, it was due to the fact that without a constant inflow of new wealth from those lands, we could not keep up our spending.
The term "pyramid scheme" did not exist in our time but I believe it applies.
Our wealthy had plenty of gold to spend but the majority of our citizens watched helplessly and hopelessly as the amount of actual money in circulation dropped to the point where it became worthless.
We repeatedly devalued our currencies swapping one for the other as values dropped. We printed money in the short term oblivious to the damage we were doing in the longer term.
We also began reducing the actual metal content in our gold and silver coins so that the actual metal made up less than 25% of its weight. In some cases, we even used tin in an attempt to maintain the silver color of coins, but that didn't fool people for long.
To compensate, merchants raised prices to the point where nobody could afford to use real money. Inflation hit very hard. Barter became the method of the day.
As hard as it is for you to imagine, salaries were eventually paid in food and clothing. Taxes were collected in fruits and vegetables. Our troops were eventually paid with rationed supplies.
The middle class was obliterated as once free men transitioned into debtors' hell, existing hand to mouth under draconian taxes that robbed them of their future.
We learned the hard way that a strong currency creates hope. And hope, in turn, creates value.
The strongest years of our Empire were driven by the concept of a better future rather than merely by survival. Taxing our public enslaved them, creating what in the Middle Ages would come to be called serfdom.
Most of our banks, by the way, failed in the 3rd and 4th centuries. Unless you are prepared to endure the same crisis, I urge you to do whatever it takes to support your currency.
Do not let Fed Chairman Ben Bernanke or any of his central banking cabal to further devalue the money you need to function.
Hold your nation together and keep your people free.
When the cost of money is low, governments will waste it and businessmen will not invest.
Lending to the government does not count because it's an implied tax that robs the private sector of the wealth needed for innovation and growth.
Stimulus is simply not sustainable. Like the drugs we took to enhance our orgies in years past, the short term fix feels great. Our markets, enjoyed periods of strong performance following each new stimulative effort, too.
But know this....
Bread and circuses will not placate the masses for long. In ancient Rome, our emperors used to pay privately for circuses, gladiatorial contests and public food as a means of distracting our population from the hopelessness of their situation.
It worked quite well for a while. But eventually people figured out the bread was rotten and that the circuses really were a colossal waste of their money and did nothing for their future.
By the time we realized that radical fiscal reform was necessary to build a stronger Roman Empire and a more balanced economy, it was too late.
Once our elite no longer saw the necessity to serve the people, much less in our military, we broke down.
Our Empire failed because we did not appreciate the need for mutual obligation and appreciation.
One last thing. Don't be so arrogant to believe that it can't happen.
Your president, Barak Obama and all your elected leaders must understand that they have been voted into office by the people for the people.
They must not fail. This is their watch.
They would be wise to treat the people who put them in power with the respect their nation asks of them and the trust embodied in their office.
