Meditating on Ancient Banking: Part II

There’s a Lot More the Ancient Romans Can Teach Us About Modern Banking

My travels in Italy are still ongoing, and I decided to come out of the countryside and head to the capital for a few days. It’s been about 10 years since I last visited Rome, and, of course, my life has changed quite a bit since the last time I was here. I decided to stay in a hotel right in the center of the Roman ruins; I can see all the monuments on the tourist Top 10 lists from my room.  Admittedly, for someone who has spent most of their time in Italy in rural areas, Rome’s a unique experience for me.

Rome’s topography is famously marked by seven hills. One of the most famous, if not the most famous, is Capitoline Hill. Today, the hill is well known for its piazzas and museums, but it actually has immense historical significance for money and banking - and lessons for us.  And that’s why I want to share this with you…

Meet the World’s Earliest Doom-Pundits

The word ‘Capitolium’ was named as such because ‘caput’ means ‘head’ or ‘summit.’ There was a temple dedicated to Jupiter there, the Temple of Jupiter Optimus Maximus “Jupiter, the greatest and the best.” It was perhaps the largest, most important temple in the ancient city (though, as we’ll see in a second, not the first). Fitting for one considered the king of the gods in the Roman pantheon.

Back in the day, temples were centers for storing wealth, and the priestly class was heavily involved in financial affairs. Of course, in many cases, less than scrupulous members of the priesthood were able to prey on the ignorance or superstitions of the populace to solicit donations and fill their coffers.

This reminds me of a lot of the “doom and gloom” prophecies in today’s financial community; they’re a dime a dozen… almost in inverse proportion to their “prophecies” that unfold accordingly. The worst part is, even when these pundits are wrong (which, to be clear, is continuously) there never seems to be any real recourse.

Modern doom-pundits take credit cards, whereas their ancient predecessors took coin or grains. 

Students of monetary history know the inexorable connection between finance and agriculture, especially in ancient times. Thus, it may not come as a surprise that before Jupiter was installed as the main god of Capitoline Hill, there was a temple dedicated to Saturn there. Saturn was also an important deity in Rome’s pantheon. Saturn was considered the god of agriculture, wisdom, and yes, even accounting. In fact, much of the Roman treasury’s wealth was stored in this very temple dedicated to Saturn. I think Saturn might appreciate the wisdom of paying attention to the unfolding events in the currency markets of 2024 (that’s AD, by the way)…

Bringing Us Back to the Present

A few weeks ago, I warned about a coming currency crisis, specifically with respect to Japan. Lo’ and behold, we’ve seen the Japanese yen continue to collapse against all major currencies. It hit a new all-time low against the euro, and even a multi-decade low against the dollar. The Bank of Japan hasn’t confirmed this, but it’s highly likely they intervened in the crisis. Saturn would be furious; Japan’s central bankers are displaying a lack of wisdom in conducting monetary policy.   

Global markets are demanding more from the BOJ, and their bluff is being called.

Although I write to you from the Roman ruins today, I don’t see the genesis of the next financial crisis coming from Europe, but rather, from Japan. The bottom line is this: Once the BOJ’s hand is forced, the mean reversion (the tendency of price to return to its long-term average) in the Japanese yen could take down markets across the world. Stay tuned on this - I’ll be back stateside soon - but I’ll keep monitoring the situation in the meantime.

Read Part 1 HERE