The measure of value can lose value without losing its name. A note still says one hundred, a deposit still records one hundred, and a debt may still be discharged by handing over one hundred, while the provisions obtainable for that sum steadily diminish. The previous plate distinguished a harmless renaming from a change that reaches real claims. Debasement is the latter viewed from the holder's pocket: the unit survives while its command over goods is impaired. In a metal coin the impairment may begin with less precious metal behind the stamp. In a paper or deposit currency it appears as declining purchasing power. These are related monetary problems, but neither the mechanism nor the result is identical in every case.
A lighter coin does not automatically buy less in the same proportion as its lost metal. Its acceptance depends on the terms on which it passes, the availability of substitutes, and the arrangements that support it. Yet conflicting valuations create an obvious incentive. Suppose a full-weight coin contains metal worth twelve units, a lighter coin contains eight, and both discharge the same ten-unit obligation. If payment at that valuation is available, the debtor parts with the lighter coin and keeps or sells the heavier one. The good coin is withdrawn from that use because it is undervalued there. This is the conditional logic behind Gresham's law. Allow the heavier coin to command a premium, however, and it may circulate beside the lighter one; there is no general law that the worse object must drive out the better wherever people are free to price the difference.1
Inflation moves the question from metal content to the purchasing power of the unit itself. Let a basket initially cost 100 and later cost 125. The holder of 100 units can now buy four-fifths of a basket. If his wage also rises by a quarter at the same time, that particular real wage is unchanged; if it is fixed, his loss is immediate. A nominal borrower may gain at a creditor's expense when inflation outruns what their contract anticipated, but the gain depends on the actual terms: indexed payments and newly repriced loans alter the bargain. There is no need to imagine an equal loss descending upon every pocket. The damage travels through the pattern of receipts and commitments, rewarding some positions while exposing others, with especially little room to move for those paid late and paid in fixed sums.2
At the extreme, the erosion can turn into flight. If people expect money to buy substantially less tomorrow, they try to exchange it today; sellers shorten the period for which a quote holds; workers and suppliers seek faster payment or another unit in which to bargain. A balance that once bridged the interval between sale and purchase becomes a thing to shed before the interval has elapsed. The earlier Collapse makes this acceleration its central image. The mechanism is intelligible without assuming that every inflation must reach it: declining willingness to hold the currency can intensify the pressure created by its issue. Nor does renaming a million old units as one new unit repair that willingness. Removing zeros from the account does not change the policy or the claims that made the zeros multiply.3
The public budget matters because an issuer spending newly created money obtains real goods from those willing to take it. But the amount printed and the real resources obtained are different quantities. In a hypothetical interval, an issue of 20 units when the price index is two buys ten units of goods; an issue of 30 when the price index is five buys six. More nominal revenue can thus yield less real command. This is not a calibrated path for a historical crisis. It shows why a government cannot assume that multiplying its notes indefinitely multiplies the resources available to it. As recipients demand compensation for holding a deteriorating currency, the very method used to finance the shortfall can weaken the base on which that financing depends.4
Ending the collapse accordingly requires more than a declaration that confidence should return. In his study of four European hyperinflations, Sargent associated stabilization with changes in fiscal and monetary regimes that made a different future credible. The historical argument concerns those episodes; it does not establish that every price rise comes from a budget deficit or that every stabilization is painless. Its enduring question is whether the announced restraint can survive the pressures that defeated the old one. If the treasury's obligations remain unfinanceable under the new arrangement, or the monetary authority must repeatedly abandon it, yesterday's promise acquires a fresh design while tomorrow's difficulty remains. Confidence is not a resource that officials can summon independently of the arrangements people are being asked to trust.5
Debasement is therefore both a change in money and a redistribution through money. The coin that is spent, the balance that is held, the wage that arrives after prices have moved, and the obligation written before anyone expected them to move occupy different places in the loss. At its worst, the shared measure ceases to hold still long enough for people to coordinate their lives through it. The remedy must make the next promise credible, and the damage already done cannot be reversed by restoring the label. The Ledger follows with the deeper account of the obligations that circulate as money. It asks what people trust when they accept them; debasement has shown how far the injury reaches when that trust, or the purchasing power it supported, gives way.