Any method involving the notion of entropy, the very existence of which depends on the second law of thermodynamics, will doubtless seem to many far-fetched, and may repel beginners as obscure and difficult of comprehension.
Fiat or paper money is debased when volume of money printed is greater than demand. This reduces the value of paper money and causes monetary-based inflation. In contrast to commodity money in which each coin is changed, fiat currency only requires electronic or physical printing to decrease its value.
One reason a government will debase its currency is financial gain for the sovereign at the expense of citizens. By reducing the silver or gold content of a coin, a government can make more coins out of a given amount of specie. Inflation follows, allowing the sovereign to pay off or repudiate government bonds. However, the purchasing power of the citizens’ currency has been reduced.
Hyperinflation results from a rapid and continuing increase in the supply of money, which occurs when a government prints money or creates credits in bank accounts, instead of collecting taxes to fund government activities. The price increases that result from increased government spending create a vicious circle, requiring ever increasing amounts of money creation to fund government activities. Hence both monetary inflation and price inflation rapidly accelerate. Such rapidly increasing prices cause widespread unwillingness of the local population to hold the local currency as it rapidly loses its real value. Instead they quickly spend any money they receive, which rapidly increases the velocity of money flow which causes further acceleration in prices. Hyperinflation is often associated with wars or their aftermath, political or social upheavals, or other crises that make it difficult for the government to tax the population.