Cheap new cash = property boom. Nothing has changed in 2,000 years!

He “made money so plentiful, that interest fell and the price of land rose considerably, And afterwards, as often as large sums of money came into his possession by means of confiscations, he would lend it free of interest, for a fixed term, to such as could give security for the double of what was borrowed.”


One may be forgiven for thinking the writer is referring to the current monetary policies being pursued across the globe. The author however was Suetonius and he was referring to Augustus over two thousand years ago. The similarities of course is that if you pump new cash into an economy and lend it at virtually no cost, it will inevitably be invested in other asset classes and drive up prices. It was blindingly obvious two millennia ago as it should be today.


There are however a number of worrying differences. Fractional banking and fiat currencies hadn’t yet been developed and the Romans at that stage didn’t need to resort to debasement, at least of their currency. After 31 BC, Augustus (albeit still just Octavian [sic] then) was busy plundering Egypt’s treasures and shipping it back to Rome and it was this that was being lent out to his cronies to make a fast aureus in property or buy their way into the senate – well okay, that part hasn’t changed much!  The main difference however is that the Roman property boom at the end of the first century BC was based on the injection of real treasure into the economy.  This time, new credit is being created to service previous credit as a means of keeping the previous bubble inflated while they try and ship the worst of their bad debts off their books and for Government’s to pretend that their budget deficits are not facing a demographic time-bomb. So will this new credit that is being so liberally extended across virtually every major trading zone ever get repaid? At least Octavian’s insistence of a 50% equity cushion meant that he at least stood a good chance of getting repaid.