The hammer is used up in production as are all tools, equipment, and so on. Entrepreneurs depreciate the market value of their plant and equipment to reflect this fact. They do not depreciate the monetary value of their cash holdings.
Perhaps Mises’s discussion of these matters in his book, Theory of Money and Credit, will help clarify things,
http://library.mises.org/books/Ludwig%20von%20Mises/The%20Theory%20of%20Money%20and%20Credit.pdf
