Seigniorage loss and the fall of the Roman Empire

Early in the 20th century, the United States took over from the United Kingdom the role of the preeminent economic and political power. Since the last turn of the century, some people are seeing hints that the United States may be losing that role (but it is not clear who would take it), often seeing parallels with the fall of the Roman Empire. We do not know, however, why the Roman Empire fell. There are several explanations, and several may be necessary for the fall. But there is no smoking gun that the United States should particularly look out for.

John Hartwig has an interesting suggestion: the Roman Empire fell because it lost the steady revenue from seigniorage. Of course, it is difficult to get detailed data from this period, thus Hartwig proceeds by formulating a four-sector (C, I, G, gold mining) model where the government gets a substantial fraction from minting gold and silver and issuing at a value substantially above cost. About 165AD, gold deposits were exhausted and Rome had to tax significantly more to sustain itself, thus switching from one type of tax to the other. Forced to mint low quality coins, inflation sets in but this does not bring sufficient revenue. In addition, the center of the Empire being used to import goods from the periphery suffers from a lack of productive capacity once there is no new gold to pay for imports. All in all, the Roman Empire lost the benefits of holding the keys to the world currency. This is something the US has definitely been benefiting from, through seigniorage and through low interest rates, and one motivation for the creation of the Euro has been to capture this rent. But it is so far hard to find evidence that the dollar is losing its status. The US thus seems safe on that front.