Difference between revisions of "Devaluation"

Latest revision as of 03:09, April 22, 2016

Devaluation is a government policy to dilute the value of its currency, typically by printing more of it. The reasons for this can include helping voters (like farmers) who are in debt by reducing the real value of their obligations, or helping the government itself pay back loans.

Sometimes devaluation is done to increase exports and decrease imports, thereby reducing a balance-of-payments trade deficit.

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-'''Devaluation''' is a [[government]] [[monetary policy]] to dilute the value of its [[currency]], typically by printing more of it.  The reasons for this can include helping [[voter]]s (like [[farmers]]) who are in [[debt]] by reducing the real value of their obligations, or helping the [[government]] itself pay back [[loans]] (see [[United States Treasury securities]] and the [[National debt]]). Sometimes devaluation is done to increase [[exports]] and decrease [[imports]], thereby reducing a balance-of-payments [[trade deficit]].
+'''Devaluation''' is a [[government]] policy to dilute the value of its [[currency]], typically by printing more of it.  The reasons for this can include helping voters (like farmers) who are in debt by reducing the real value of their obligations, or helping the government itself pay back loans.
-When the [[Federal Reserve]] deliberately [[prints money]] (often a cause of [[hyperinflation]]) to cover a persistent [[budget deficit]] without borrowing, this may be considered a devaluation. A steady insidious process of [[inflation]] is not considered a devaluation, although if a [[fiat currency]] has a high level of inflation, its value will naturally fall against [[gold]], [[silver]] or foreign currencies.
+Sometimes devaluation is done to increase exports and decrease imports, thereby reducing a balance-of-payments trade [[deficit]].
+==Historical examples==
 [[Category:Economics]]