Inflation, Price Controls and Rome; Tweedy Browne, TAVF

My last mention of the Roman Empire, http://wp.me/p1PgpH-vM.

The fall of the Roman Empire ushered in the Dark Ages (Wow! Now THAT is a bear market–an age of fear, despair, fiefdoms, and darkness)  http://en.wikipedia.org/wiki/Dark_Ages_(historiography)

If Only Edward Gibbon Could Have Read Mises

By Daniel J. Sanchez at www.mises.org

Monday, June 4th, 2012

Thanks to Ed Smith for pointing out this passage in the Decline of the Rome Wikipedia article:

Historian Michael Rostovtzeff and economist Ludwig von Mises both argued that unsound economic policies played a key role in the impoverishment and decay of the Roman Empire. According to them, by the 2nd century AD, the Roman Empire had developed a complex market economy in which trade was relatively free. Tariffs were low and laws controlling the prices of foodstuffs and other commodities had little impact because they did not fix the prices significantly below their market levels. After the 3rd century, however, debasement of the currency (i.e., the minting of coins with diminishing content of gold, silver, and bronze) led to inflation. The price control laws then resulted in prices that were significantly below their free-market equilibrium levels. It should, however, be noted that Constantine initiated a successful reform of the currency which was completed before the barbarian invasions of the 4th century, and that thereafter the currency remained sound everywhere that remained within the empire until at least the 11th century – at any rate for gold coins. According to Rostovtzeff and Mises, artificially low prices led to the scarcity of foodstuffs, particularly in cities, whose inhabitants depended on trade to obtain them. Despite laws passed to prevent migration from the cities to the countryside, urban areas gradually became depopulated and many Roman citizens abandoned their specialized trades to practice subsistence agriculture. This, coupled with increasingly oppressive and arbitrary taxation, led to a severe net decrease in trade, technical innovation, and the overall wealth of the Empire.[8]

The passage of Human Action in which Mises discusses the decline and fall of Rome was recently featured as a Mises Daily.

Tweedy Browne Annual Report:

http://www.tweedy.com/resources/library

_docs/reports/TBFundsAnnualReportMarch2012.pdf

Third Avenue Value Funds 2nd Qtr. Report: http://www.thirdave.com/ta/documents/reports/TAF%202Q%202012%20Shareholder%20Letters.pdf

One response to “Inflation, Price Controls and Rome; Tweedy Browne, TAVF

  1. By the way, the Tweedy Browne Quarterly Letter has an excellent analysis of the valuation of Facebook and its growth.

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