"To pay for this discrepancy, emperors pursued a policy known as debasement: gradually shaving off the silver from the coins until the value of the metal became more about its symbol than the metal itself. In practical terms, it was a way to pay bills without fully admitting the cost. The long-run risk wasn't just hyperinflation; it was that once people stopped trusting the coin, everything else in the economy became harder to coordinate."
"The car is now towing a $38 trillion trailer. The weight is so heavy that if the Fed hits the brakes too hard, the brake pads will explode from the pressure (the government's interest payments will become too expensive, causing a default). So, to prevent the car from crashing, the Fed is forced to let off the brake, even if the car is speeding toward the cliff of over-spending."
A historical analogy compares Roman coin debasement to modern risks from soaring public debt. Debasement reduced metal value and eroded trust, undermining economic coordination. With U.S. debt at roughly 120% of GDP, fiscal dominance could emerge when financing needs constrain the central bank's ability to fight inflation. Instead of adjustment through taxes or spending cuts, the burden falls on the purchasing power of money. A towing-trailer analogy illustrates how excessive debt can prevent the Fed from tightening without causing fiscal stress, potentially leading to runaway inflation if monetary policy is subordinated to financing pressures.
Read at fortune.com
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