You can get a lot of insight into modern economic activity by looking at history. Times may change, but people don’t.
Ephesus is an ancient city located outside the Turkish city of Kusadasi, was once a thriving centre for travel and commerce, with an estimated population of 250,000. The city dates back to 10th century BC.
The architectural, engineering, town planning and construction skills of the ancient Greeks and Romans never cease to amaze me. You are constantly asking yourself, ‘How did they do that?’ or ‘Who would have thought of doing that?’
As my family and I recently wandered through the ancient ruins — past the public bathhouses (hygiene was recognised as being crucial to the health of the city) — we stood at the top of the main street…paved in marble.
On either side of the street were columns.
Our tour guide explained the columns would have supported roofs over shops…an ancient shopping arcade.
Halfway down the street, we stopped. The guide pointed out the terrace houses located on the hill, as shown in the picture below.
In their day, the terrace houses were prime real estate. Location, location, location.
The houses were owned by the city’s wealthy. Located right in the city centre, and built on the side of the hill, the owners had commanding sea views.
Down a few steps and they were in the heart of the shopping precinct. The Celsus library was a short stroll along the main street…a focal point of the city (see photo below).
Apparently, the library also had a secret tunnel to the building across the road, which housed the ladies of the night (and day).
The facade of the Celsus library was two stories high. Corinthian columns created the effect of grandeur. Our Turkish guide said the architecture was typically Roman…grand on the outside, but bland on the inside.
A little further on, we arrived at the Great Theatre (pictured below)…with a capacity for 25,000 people. In modern times, Sting and Elton John have both performed in the Great Theatre.
In its day, the city’s noblemen would gather in the Great Theatre to debate, and vote on, matters pertaining to the city. Only landowners were permitted entry into the Great Theatre.
Our guide told us it was the Great Theatre’s seating capacity that provided the clue to the city’s population. The general rule of thumb is that 10% of a city’s population was wealthy.
What struck me from our tour of Ephesus was how the story in the ruins relates to modern society.
Prime real estate is always owned by those who have the most wealth.
The Celsus library is a metaphor for today’s share market. Looks grand on the outside, but, inside, it lacks any depth or real value, and leads to a house of disrepute.
The 90/10 wealth distribution rule has not changed over thousands of years. The top 10% — give or take a few percent — have always enjoyed the majority of the wealth.
Human nature has changed very little over the centuries…which is why we have cycles in markets.
Our actions and reactions are repetitive…albeit with slight variations.
Human nature being what it is, an extended period of outperformance tends to ignite animalistic instincts, with investors borrowing to participate in the rising market.
A classic ‘buy high and sell low’ investor reaction.
In inflation adjusted terms, the level of margin debt in the market today is more than the previous two peaks of 2000 and 2007.
Central bankers can temporarily distort markets and alter the duration of cycles, but all empires eventually succumb to market forces.
The market is holding up thanks to central bank intervention, but for how long?
The ruins of this market will be a study for future generations on how central bankers thought they were gods, and how society was foolish enough to believe these false prophets.
Editor’s Note: All images sourced by the author.