Price Controls Don’t Work Even Under Penalty of Death

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Nico Antuna Cooper is a university lecturer and works in the borderland. He is a witness to the cultural opportunities offered by Bitcoin in Latin America and the United States every day.

Inflation is reaching a level so high that even mainstream news sites care now. The average American is experiencing an increase in prices for almost everything. Consumers are paying less for almost everything, from groceries to real estate, to gasoline prices to groceries. Even the massaged CPI inflation calculations provided by the government are looking pretty bad these days. As a result, policymakers like Elizabeth Warren are proposing legislation to enact widespread price controls and prevent “price gouging” across the country, protecting the consumer from the coming storm of hustlers.

This seems like a good idea, as there is currently no federal law that makes price gouging illegal at a national level. This seems like a huge relief for average people all over the world, for those who believe in the government’s ability control the economy.

Unfortunately, a price control law does not address the underlying mechanisms causing prices to rise in the first place: currency debasement and its ugly brother, inflation. There are many other factors. When we talk about high prices, our conversation tends to revolve around gasoline, which in turn influences the price of all other commodities. The price of oil is largely set by the global supply provided by OPEC, an entity over which U.S. policymakers have no control. Remember that OPEC is a cartel and cartels, by definition, exist to control the price of a commodity, e.g., crude oil, cocaine, etc. Regrettably cartels don’t respect U.S. price control. What are price controls supposed to fix? Can they bring down prices?

Simply put, prices are so high because of global price manipulation, supply chain interruptions, and quantitative easing. These are not the solutions to price control laws. They are like trying to fix a bleeding wound with a very expensive band-aid. It won’t stop the bleeding.

Price control legislations are not new. They have precedent dating back thousands of years. As long as there has ever been inflation, there have been price control attempts. It is often the same centralizing authority that sets the price controls to curb inflation. Today is no exception. Pedants will argue that these controls are being proposed by federal government lawmakers, while the Federal Reserve Board (an independently operated agency) is causing quantitative easing. I respond by saying: one hand ishes the other .. It is important to remember that price control mandates have not worked historically. It was evident in the fall of the Roman Empire long before the Federal Reserve. Merchants could raise prices on goods and services even if they were subject to death penalty.

The denarius was the most widely used silver coin in Ancient Rome. The Romans needed to raise more money to finance the rising costs of the empire. The Roman silver mines in Rome declined in production, and tax revenues couldn’t keep up. So the Romans began debasing their currency. Slowly, initially under the auspices Nero Claudius Caesar Augustus Germanicus but eventually to massive inflation at the time of Diocletian. Each coin became less valuable as the silver content decreased.

While debasement and inflation may not be the same thing, the money became debased enough that it caused massive inflation and destroyed trust in Roman coinage. The Romans eventually minted a million coins per day , driving the prices higher in an old inflationary environment (sound familiar?) Emperor Aurelian, a commander in cavalry from the peasant classes, was elected to power. He tried to stabilize the money supply by printing a certain ratio on coins and guaranteeing a minimum of silver. However, this stabilization was only temporary and inflation rose stronger than ever within the empire. The only way to save a crumbling empire was to create money. This is an excellent video by Told In Stone on the topic.

Emperor Diocletian — (reigned 284-305 A.D.) also known for conducting the largest Roman persecution of Christians — attempted to reform the military, government and monetary system. Prices became so high that Emperor Diocletian made a famous “Edict on Maximum Prices” in 301 A.D.:

“The first two-thirds of the Edict doubled the value of the copper and billon coins, and set the death penalty for profiteers and speculators, who were blamed for the inflation and who were compared to the barbarian tribes attacking the empire. Merchants were prohibited from selling their goods to other countries and could not charge higher prices. Transport costs could also be banned.

The last third of the Edict, divided into 32 sections, imposed a price ceiling — a list of maxima — for well over a thousand products. These products included various food items such as beef, grain, wine and beer, as well as sausages. ), clothing (shoes, cloaks, etc. Freight charges for sea travel, weekly wages. The highest limit was on one pound of purple-dyed silk, which was set at 150,000 denarii (the price of a lion was set at the same price).”

The edict did not have a lasting effect. “By the end of Diocletian’s reign in 305, the Edict was for all practical purposes ignored. The Roman economy as a whole was not substantively stabilized until Constantine’s coinage reforms in the 310s.”

Pay special attention to Diocletian’s verbiage regarding “speculators” and “profiteers.” This same vague rhetoric was used by President Richard Nixon to remove the United States from the gold standard and is now being used by lawmakers to obfuscate the role of the federal government and the Federal Reserve in price increases. Speaking of Nixon, he too enacted price controls immediately after taking us off the gold standard. We all know how efficient those were.

On macro scale, price rises are not caused “speculators”; they are caused currency debasement or inflation. They are also caused today by supply chain disruptions and cartel price fixing. Not through gouging at the gas station, restaurant, or street peddler at end of line, but rather by price increases. These types of businesses make very little profit and operate on very tight margins. These are the entities that have the least influence on the price of goods and are not profiteers. Price controls, as always, are designed to make the customers feel bad and to exonerate the larger entities that really move the prices. They never work. They failed to work even at the point of a sword, Rome.

The death penalty is the worst penalty the federal government can impose. Whether it’s increased regulatory procedures or even criminal charges for people selling products at a certain price, nothing is more severe than the tried and true Roman execution methods of being buried alive, impaling and, of course, crucifixion. What makes you think that these harsh penalties will stop prices from rising?

Higher prices are due to an uncapped money supply. This Bitcoin Magazine , is a great opportunity to highlight that bitcoin is the only capped money source in history. Bitcoin is important because it can’t be inflated away like a Roman denarius and the U.S. dollars. Bitcoin will remain a safe haven from inflation unless the majority of participants agree to increase the supply in their best interests. This will not be altered by any politician, policymaker, or emperor.

And, most importantly, despite fiat-denominated currencies going higher, bitcoin will not need price controls to protect its purchasing power.

This is a guest post by Nico Antuna Cooper. These opinions are not necessarily those of BTC Inc. or Bitcoin Magazine ..

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