However, wouldn’t it be just as easy to change your mind with the physical backing: “Now you pay two dollars to get an ounce of gold, whereas in the past you paid one dollar per ounce of gold.”?
Governments can indeed do this—the usual term is “devaluing.” But a devaluation is a blatant obvious politically costly thing, in a way that letting inflation gradually creep up from 2% to 4% to 8% isn’t. So it’s not “just as easy.”
Governments can indeed do this—the usual term is “devaluing.” But a devaluation is a blatant obvious politically costly thing, in a way that letting inflation gradually creep up from 2% to 4% to 8% isn’t. So it’s not “just as easy.”
Actually, the usual term is debasement of currency :-) Devaluing refers to changing the foreign exchange rate.