does inflation impact seigniorage 
in general moderate levels of inflation can increase seigniorage revenue for governments but this relationship becomes more complicated at higher inflation rates in a low to moderate inflation environment rising prices increase the nominal demand for money this increased demand for money allows the government to issue more currency thereby generating more seigniorage revenue additionally inflation erodes the real value of government debt which can be seen as an indirect form of seigniorage as it reduces the government s real debt burden however as inflation rates increase beyond moderate levels the relationship becomes more nuanced high inflation rates can lead to currency substitution where people begin to use foreign currencies or other stores of value instead of the domestic currency this behavior reduces the demand for the domestic currency meaning the government issues less currency which decreases seigniorage revenue 