What Destroyed Rome Was Its Unfunded Government Employee Pensions

Unfunded Pensions Destroyed Rome

The decline and fall of Rome was driven by the UNFUNDED guarantee of PENSIONS; and like social security today, there was nothing actually put aside.

May 20, 2011

MartinArmstrong.org - The U.S. government is following in the footsteps of Rome, running the same sort of government pension scheme that led to that empire's decline, according to analyst Martin Armstrong.

Armstrong says that Rome offered pensions to its military forces in exchange for their service. As Rome became less stable, it was forced to pay its troops more for their service.

From Martin Armstrong:

The greater the threat of political instability, the higher the military pay rose. This expanded the cost of government and facilitated a spiral of inflation forcing the government to debase the coinage to increase the money supply. The Decline & Fall of Rome was driven by the UNFUNDED guarantee of PENSIONS; and like social security today, there was nothing actually put aside. It was always assumed that the state would be able to fund its promises.

During the Republican days, 25 denarii paid 52 percent of the cost of his family's annual needs for grain. By the 3rd century AD, it would take 6,000 denarii to create the same standard of living. Inflation was the RESULT, not the SOURCE, which was the fiscal mismanagement of Rome.

Rome's decision to continue to grow the size of pensions without funding them eventually resulted in rapid inflation and devaluation of its silver currency, and he argues that it the guaranteed government pensions were designed to entice people into the military.

Note the rapid expansion of the size of Rome's military, and then its fall.

The above chart illustrates the growth in the Roman Military from about 700BC through the fall of Western Europe in 476AD and showing the decline that became dominant in the East under what is known as the Byzantine Empire. This created the same problem we face today -- UNFUNDED PENSIONS AND ENTITLEMENTS.

It seems to be inevitable that government promises the moon, but never delivers.

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