4 ms·
>Debased currency - a problem every large state eventually faced - is a consequence of deflation Inflation in the monetary supply, not deflation, leads to the
by TeaBrain 2y ago
>Debased currency - a problem every large state eventually faced - is a consequence of deflation
Inflation in the monetary supply, not deflation, leads to the debasement of a currency. An example is how the influx of gold from the conquistadors into 16th century Spain led to inflation, due to the increased supply of this means of exchange resulting in the debasement in value of a given unit of this means of exchange.
Edit: I'd remembered wrong. It was silver, not gold, that Spain experienced an influx of.
- lmm 2y ago> Inflation, not deflation, leads to the debasement of a currency. An example is how the influx of gold from the conquistadors into 16th century Spain led to inflation, due to the increased supply of this means of exchange resulting in the debasement in value of a given unit of this means of exchange. No, that's not debasement - in fact it was the opposite, the huge supply of silver (not so much gold) meant those Spanish coins were good-quality bullion. Inflation happened, and while that can commonly be caused by debasement, that wasn't the cause in this instance.
- deleted 2y ago[deleted]
- Aloisius 2y agoEm. Spain, famously, didn't debase its currency. The gold escudo was 22-karat for basically it's entire existence,.
- TeaBrain 2y agoI was more thinking in terms of the modern conception of currency debasement resulting from the increase in the monetary supply, though I think I must have just been thinking of the real, not the escudo. Several years ago, I read a couple of books on the conquistadors, where the details of the devaluation of silver was discussed, but it's been a while since the information was fresh in my mind.