[발췌] What is Debasing the Currency (Financial Terms Dictionary)

출처: https://www.financial-dictionary.info/terms/debasing-the-currency/


※ 발췌 (excerpt):

Debasing the currency refers to the all too common historical process of lowering a currency’s actual value. In the past, this phrase commonly came to be associated with commodity money made principally from either silver or gold. Should the sum total of silver, gold, nickel, or copper be reduced, then the physical money is called debased. Even venerable institutions like the Roman Empire, with a thousand year history of growth and stability, have stooped to such debasing of the currency.

Reasons that a government chooses to debase the currency in this way center around the financial benefits that the government is able to reap. These are done at the citizenry’s expense though. Governments that lowered the quantity of gold and silver in their coinage found that they could quietly mint more coins from a given fixed quantity of metal on hand.

The downside to this for the general population centers on the inflation that this in turn causes. Such inflation is yet another benefit for the currency debasing government that then finds that it can pay off government debt or repudiate government bonds easier. The populace’s purchasing power is significantly reduced as a result of this, along with their then lowered standard of living.

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In present day times, debasing the currency is accomplished in more subtle means. Since currencies these days are made of only paper, involving no metal, debasing the currency simply involves printing additional paper dollars. With the advent of electronic banking, even this printing press operation is no longer required. The government simply creates money on a computer screen, literally conjuring it out of thin air.

They are able to accomplish this in one of two ways. [:]

One way that they do this is via the Federal Reserve, which buys treasury securities by simply crediting the receivers’ bank accounts with electronically created money. The Federal Reserve then has tangible assets in Treasury bills that [it is] able to trade or sell when it wishes.

Another way that this creation of money that debases the currency is able to be performed is through the Fractional Reserve Banking System. ( ... ... )

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CF.출처: https://www.merriam-webster.com/dictionary/debase

Debase is often used to talk about someone's lowered status or character. People are constantly blustering about the debased tastes of the ordinary American, and especially the debased music of America's youth. A commentator might observe that both candidates had managed to debase themselves by the end of a political campaign. Debase has a special meaning in economics: From time to time, governments find that they need to quietly debase their countries' currency by reducing the percentage of valuable metal in its coins; if they don't, the metal may become more valuable than the coin and people will begin melting the coins down and reselling the metal.