What caused romes economy to weaken how did inflation affect rome?

Answer 1

The decline of the Roman economy started in what had been called the crisis of the 3rd century, during which:

a) There were constant invasions across the frontiers of the empire which massively overstretched the army.

b) There was a string of usurpations with as many as 35 usurper emperors and two part of the empire broke away for a short time.

c) There was runaway inflation.

Hyperinflation was caused by many years of debasement of the Roman coins. The silver and gold content of silver and gold coins had been continually decreased by many emperors to have more coins to finance their expenses and to increase the size and the pay of the army. This devalued the coins. The coins eventually came to have virtually no value. They had as little as only 5 % of precious metal. This led to inflation. The usurper emperors made this worse by issuing their own coins, which increased the supply of money. Inflation became runaway and went out of control. Its effects were:

1) A breakdown in trade. It became difficult to exchange goods with a worthless currency.

2) Agricultural production on the large landed estates became localised. These estates decreased their sales of crops to the cities and concentrated on production for local barter.

3) The urban economy collapsed. Manufacturing in cities shrunk because their goods, which were for long-distance trade, could not be traded.

4) Many people migrated from the cities to the countryside and the population of the cites shrunk.

5) The owners of the large estates employed the migrants from the cities as servile labour. These people lost their rights and became tied to their landlords.

6) Distresses peasants, who were leaseholders on the large estates, were leaving their land in search for better opportunities. They were often turned into servile labour in the large estates as well.

6) The tax revenue of the state decreased, while expenditure increased as the size of the army increased. The mentioned invasions also led to greater reliance on a much expanded cavalry, which was even more expensive.

7) Taxation was increased and was raised in the form of demanding goods, which did not help the economy. Emperor Diocletian resorted to confiscating goods. Taxation remained a big burden on the people for the rest of the history of the empire.

Constantine I managed to bring inflation under control by scrapping the silver coins and amassing large quantities of gold to create a viable gold coinage. However, this benefitted only those who could afford god coins. The masses had to make do with copper token money (the follis) which had been created because the previous coins had collapsed. The follis was very vulnerable to inflation. The overall result of the crisis was a decline of the economy of the empire which became fragmented and localised. Trade did not regain its previous levels, the economy remained less based on money, and the widened gap between the rich and the poor who had to rely of the vulnerable follis became irreversible.