Debasement

Debasement is when a government or ruler reduces the precious metal content in its currency, such as gold or silver coins, to produce more coins without increasing their intrinsic value. This practice effectively lowers the coin's worth and can lead to inflation, as people lose confidence in the currency's stability. Historically, debasement was used to fund expenses or cover deficits, but it often devalued the currency's purchasing power over time. Today, it’s generally replaced by monetary policy, but the principle remains important in understanding how governments manage currency and inflation.