Debasement of Currency

Debasement of currency occurs when a government or central bank reduces the value of its money, usually by decreasing the precious metal content in coins or increasing the money supply without backing by economic growth. This often leads to inflation, where prices rise because the money becomes less valuable. For example, if a government produces more money rapidly, people may lose confidence in its worth, causing prices to jump. Debasement is typically used to pay off debts or fund spending but can undermine economic stability if done excessively.