The decline and fall of the Roman currency empire | The Economist

Excerpt from The Economist:

The fate of ancient coins offers uncomfortable lessons about dollar dominance

The coins largely moved one way, from Rome to India, and goods moved the other. Whereas Romans bought Indian wares, Indians accumulated monetary claims on Rome. Evidence points to high external demand for Roman assets: the coins bore a particular pattern, came in sealed bags and travelled via Alexandria, an Egyptian province with its own currency. That upset some contemporary commentators. Pliny the Elder, a first-century Roman thinker and soldier, grumbled: “There is no year in which India does not drain our empire of 550m sesterces*.*” (A sesterce equalled one-quarter of a denarius and one-hundredth of an aureus.)

Rome’s privileged currency status rested on the same three pillars that hold up the dollar. The first is that trade deficit. If India did not drain Rome of sesterces, then Indians would have no sesterces at all—and they wanted these to settle trade, including with other non-Romans. In the 1960s Robert Triffin, an economist and critic of the Bretton Woods system of fixed exchange rates, observed that if the rest of the world wanted to make international payments and settle trade between themselves in dollars, America had to maintain a negative trade balance....