By Marin Katusa, Chief Energy Investment Strategist, Casey Research
"In the third century, greed got the best of Rome's emperors. As they spent through the silver in the treasury, one emperor after another reduced the amount of precious metal in each denarius until the coins contained almost no silver whatsoever.
"It was the world's first experience with currency debasement and hyperinflation. As people saw the value of their savings evaporate, society grew angry and demanded a scapegoat. Christians became that scapegoat, and Romans turned on them with incredible violence.
"This pattern – currency debasement leading to social upheaval and violence – would repeat many times over.
"In medieval Europe, the number of women on trial for witchcraft climbed in sync with the debasement of currency. In revolutionary France, the Reign of Terror that slaughtered 17,000 wealthy counterrevolutionaries aligns perfectly with the deterioration of the purchasing power of the assignat note.
"And in the most vile example: dramatic hyperinflation in Germany in the 1920s allowed Hitler to rise to power by blaming Jews for the country's economic woes.
"The connection between currency debasement and social upheaval makes sense – hyperinflation only occurs in times of domestic drama. For example, in 1946 Hungary experienced the greatest episode of hyperinflation on record – in the context of a small, economically limited nation wracked by the Great Depression and then Nazi occupation in World War II. Zimbabwe earned second place in hyperinflation's record books when its dollar inflated 7.96 billion percent from early 2007 to late 2008. The cause? Robert Mugabe's land-reform policy slashed agricultural output and destabilized a fragile society.
"That brings me to today… and to Iran, where that volatile mix of domestic drama and hyperinflation is pushing a fragile society to the brink of revolution.
"If history repeats itself and Iran descends into revolution, the outcome is both unclear and obvious. In the unclear category: the details of the resulting regime and how far an Iranian revolution might spread through the Middle East. What is obvious, though, are the generalities ..."