10 ms·
You can't debase fiat, there is nothing to debase, fiat currencies change this basic problem into inflation and monetary policy issues. If for commodity money t
by nathias 4y ago
You can't debase fiat, there is nothing to debase, fiat currencies change this basic problem into inflation and monetary policy issues. If for commodity money the problem of debasment gradually reduces the quality of each individual money in supply, for fiat this happens for the all of the money of this type. So the problem of money 'breaking' because of debasement becomes the problem of systemic risk where the whole economy/country collapses. This is a complete politicization of money, which you can of course argue for or against.
The argument that deflation discourages spending etc. is really besides the point as money's primary function doesn't cover 'encouragement' or 'dicouragement', these are possible only when talking about fiat money specifically.