The law states that any circulating currency consisting of both "good" and "bad" money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the "bad" money. This is because people spending money will hand over the "bad" coins rather than the "good" ones, keeping the "good" ones for themselves. Legal tender laws act as a form of price control. In such a case, the intrinsically less valuable money is preferred in exchange, because people prefer to save the intrinsically more valuable money. People hold onto valuable goods for themselves, so less valuable goods get passed around.
en.wikipedia.org | Gresham's law - Wikipedia
Filed under:
Related Notes
- If all the burghers of Small Town USA get together and say “we want...from Matt Levine
- The only good advice I have here is to re-evaluate your metrics oft...from ferd.ca
- This, from last week, is [one of the best stories you’ll ever read]...from Matt Levine
- But to tear down a factory or to revolt against a government or to ...from Robert M. Pirsig
- Every so often the US government thinks about defaulting on its deb...from Matt Levine
- Often, in making edits to a work: The ego comes in, saying: I wante...from Rick Rubin
- Infrastructure undergirds society; failures of it are a per se emer...from Bits about Money
- Thompson’s argument in that post is that Silicon Valley used to be ...from Matt Levine