The definition of ‘humiliation’
Humiliation refers to a decrease in the value of currencies, particularly on the basis of precious metals by adding metal of low value.
Breaking down the ‘humiliation’
Humiliation was common throughout history. In ancient times, governments debase their currency by adding a smaller value of the metal in the gold or silver content of coins. By mixing precious metals with lower quality metal, they were able to create additional coins of the same denomination, substantially expanding the money supply.
Roman Emperor Nero began to debase the Roman currency around 60 ad by reducing its silver content from 100% to 90%. Over the next 150 years, the silver content was reduced to 50%. In 265 ad, the silver content dropped to 5%. When the Currency devalued, sooner or later citizens catches on and starts demanding higher prices for the goods they sell or more wages for their work, leading to inflation. In the case of the Roman Empire, humiliation, produced annual inflation of around 1000%.
Today, most currencies are currencies and are not based on the precious metal. So, the humiliation only requires that the government to print more money or as much money exists only in digital accounts, create more electronic. In Germany in the early 1920’s, the government reduced the value of the sign of eight per U.S. dollar to 184 of the dollar by printing money to meet their financial obligations. By 1922, the mark depreciated up to 7,350 per U.S. dollar. He eventually collapsed, reaching 4.2 trillion marks per U.S. dollar before Germany returned to the gold standard.
By debasing their currencies, governments believe that they can easily meet their financial obligations or have more money to spend on infrastructure and other projects. Humiliation has a negative impact on society, however, is in the form of inflation. Is an additional advantage of the government public debt easier to pay off.