When the government finances its budget deficit through the creation of new high powered money and in the process causes inflation, the purchasing power of old money balances held by the public falls.
The monetary base (or M0) is the total amount of a currency that is either in general circulation in the hands of the public or in the form of commercial bank deposits held in the central bank's reserves.
The creation of new money will increase the monetary base which in turn increase the money supply that ultimately increases inflation.