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"Coin clipping and the debasement of money
The infamous debasement only began shortly after the Republic became Empire, and control of money passed from the Senate to the Emperor. It lasted several hundred years.
By the first century AD, taxation and tribute only covered around 80% of the imperial budget. The shortfall was met by mining and the loot of newly conquered nations. But the empire was no longer expanding at the same rate, so this was becoming an increasingly risky strategy. Shortfalls, especially under extravagant emperors, became increasingly common. The solution to excess spending, as today, was not to rein it in, but to debase the currency. In AD64 Nero reduced both the amount of silver in a denarius (to 3.5grams) as well as the purity of the metal itself (to 93.5%).
A few decades later, under Trajan, the Roman Empire reached its greatest extent. From then on, it receded. That meant the supply of loot from newly conquered territories also receded.
By lowering the amount of silver in its coins, Rome could produce more coins and "stretch" its budget. Successive emperors followed Nero’s strategy. As with boiling frogs and the debasement of currency today, the process was gradual. 100 years after Nero, around 150AD, the purity of silver had been reduced to 83%. By 250AD the silver purity was 50%.
But then the debasement accelerated. By 275AD it was just 5%. As time progressed, the sleight of hand was exposed. By the time of Diocletian, who was emperor from 284 to 305AD, there was so little precious metal in the money, the emperor had to resort to price controls. It was under Diocletian that the last denarii were minted.
The most important gold coin of Ancient Rome was the aureus, similar in size to the denarius, but containing roughly twice the weight of precious metal (gold is denser than silver). It would be a bit heavier than a 2p today. An aureus was 25 denarii, so the gold-silver ratio would have been about 1:12, the historical norm.
Nero reduced the gold content to 7.3g (coincidentally perhaps the same weight as the sovereign of the British Empire). By 210AD the gold content had fallen to 6.3g. However, unlike the silver denarius, the aureus kept its near-100%, 24-karat purity.
By the fourth century, the idea of obtaining an aureus for 25 denarii was long gone. In 301, one gold aureus was worth 833 denarii; barely a decade later, the same aureus was worth 4,350 denarii.
In 337, Constantine, who had re-located the heart of the Empire to Constantinople, replaced the aureus with the solidus - about 4.5 grams of 24 karat gold. Initially, one solidus was worth 275,000 denarii, but by 356, one solidus was worth 4,600,000 denarii. Talk about inflation.
(That last stat is from Wikipedia and it sounds dubious).
However, in a breathtaking show of hypocrisy that even leaders today would struggle to pull off, the Roman authorities, despite the declining quality of the metal content of their denarius, refused to accept anything other than gold and silver in payment of taxes. Take in the good money, send out the bad.
Of course, one key reason for the relentless debasement was a bloated Roman state that was incapable of living within its means. But another reason must be lack of raw material. As central Italy had little supply, the metal had to be obtained elsewhere and most of it came in the form of war booty and the subsequent tributes and taxes levied. No wonder Rome was constantly at war. That was its business model. But the expense of continual wars, without the corresponding payback of loot from the newly conquered, made the model unsustainable. The expansion ceased, but the spending didn’t."
