If that were the case (central banks debasing money), you'd see high interest rates. You'd also see inflation in goods, not just high prices in financial assets.
When people talk about central banks "debasing" currency because of QE, they miss one thing: Something in the neighborhood of one trillion dollars evaporated in 2008. That's the kind of thing that can lead to a significant deflationary mess. The central banks actually did a pretty good job of maintaining the value of their currencies, in light of the magnitude of the event.
Why is deflation so bad? Well, dollars are rarer, and therefore worth more. But I still owe the same number of dollars on my house, my car, and my student loans. If my income drops due to the deflation, my debts go from "manageable" to "crushing". So many peoples' spendable income drops, so they buy less. In that circumstance, a bunch of people sell their houses for whatever they can get, and a bunch more walk away. So house prices drop. And so it goes, with economic activity declining, prices falling, money becoming scarcer, and those who are in debt getting destroyed.
> you don't see high interest rates because the banks are undermining the currency by buying their own debt (lowering their interest rates).
True - or at least, it was true. Currently the Fed is not buying additional debt. The amount that they hold might distort the market, but at least they aren't adding any additional distortion to it.
> not sure what the rest of your post is addressing. i'm familiar with deflation.
It's addressing the term "debase". If a trillion dollars evaporated, creating a new trillion dollars isn't debasing the currency, it's restoring the status quo ante.
When people talk about central banks "debasing" currency because of QE, they miss one thing: Something in the neighborhood of one trillion dollars evaporated in 2008. That's the kind of thing that can lead to a significant deflationary mess. The central banks actually did a pretty good job of maintaining the value of their currencies, in light of the magnitude of the event.
Why is deflation so bad? Well, dollars are rarer, and therefore worth more. But I still owe the same number of dollars on my house, my car, and my student loans. If my income drops due to the deflation, my debts go from "manageable" to "crushing". So many peoples' spendable income drops, so they buy less. In that circumstance, a bunch of people sell their houses for whatever they can get, and a bunch more walk away. So house prices drop. And so it goes, with economic activity declining, prices falling, money becoming scarcer, and those who are in debt getting destroyed.