What is Currency Debasement?
The Intentional Destruction of Your Savings
Quick Definition
Currency debasement is the deliberate reduction in the value of a currency by increasing its supply or reducing its intrinsic content. Modern debasement occurs through money printing, lowering the purchasing power of existing currency.
Historical Context: Rome's Lesson
Ancient Rome debased its currency by reducing silver content in coins. The denarius went from 95% silver (reign of Augustus) to 0.5% silver by 270 AD.
Result: Hyperinflation, economic collapse, and the fall of the empire. Every civilization that has debased its currency has followed the same trajectory.
Modern U.S. Dollar Debasement:
- 1971: Nixon ends gold standard (dollar backed by nothing)
- 2008-2014: Fed creates $3.7 trillion (QE)
- 2020-2022: Fed creates $4.8 trillion in 18 months
- Purchasing Power Lost: 1971 dollar now worth ~$0.15
Why Governments Debase Currency
- Finance deficits: Print money instead of raising taxes (politically easier)
- Reduce debt burden: Pay back loans with cheaper dollars
- Stimulate economy: Force spending by making saving unprofitable
- Hidden taxation: Steal wealth without passing a law
For Retirees:
Debasement transfers wealth from savers to debtors. Retirees with cash savings lose. Government (largest debtor) wins. Your $500,000 nest egg maintains its nominal value but loses 85% of its purchasing power over 30 years.
The Math of Debasement
Simple Scenario:
• Total dollars in existence: 10 trillion
• Your savings: $100,000 (0.001% of total supply)
• Fed prints 5 trillion new dollars
• Total dollars now: 15 trillion
Your $100,000 is now 0.00067% of total supply—a 33% invisible haircut.
Debasement vs. Inflation
Debasement = Cause (increasing money supply)
Inflation = Effect (rising prices)
The Fed focuses rhetoric on "inflation" because it sounds like a natural phenomenon. Debasement is the accurate term—it reveals deliberate government policy.
Counter-Debasement Strategy
Gold supply increases ~1.5% annually (new mining). Dollar supply increased 40% in 18 months.
Governments can debase fiat currency infinitely. They cannot debase gold—its scarcity is enforced by geology, not politicians.
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