Gresham's law

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Gresh·am's law

 (grĕsh′əmz)
n.
The theory holding that if two kinds of money in circulation have the same denominational value but different intrinsic values, the money with higher intrinsic value will be hoarded and eventually driven out of circulation by the money with lesser intrinsic value.

[After Sir Thomas Gresham.]

Gresham's law

or

Gresham's theorem

n
(Economics) the economic hypothesis that bad money drives good money out of circulation; the superior currency will tend to be hoarded and the inferior will thus dominate the circulation
[C16: named after Sir Thomas Gresham]

Gresh′am's law′


n.
the tendency of an inferior currency to drive a superior currency out of circulation because of the hoarding of the latter.
[1855–60; after Sir T. Gresham]
ThesaurusAntonymsRelated WordsSynonymsLegend:
Noun1.Gresham's Law - (economics) the principle that when two kinds of money having the same denominational value are in circulation the intrinsically more valuable money will be hoarded and the money of lower intrinsic value will circulate more freely until the intrinsically more valuable money is driven out of circulation; bad money drives out good; credited to Sir Thomas Gresham
principle, rule - a rule or law concerning a natural phenomenon or the function of a complex system; "the principle of the conservation of mass"; "the principle of jet propulsion"; "the right-hand rule for inductive fields"
economic science, economics, political economy - the branch of social science that deals with the production and distribution and consumption of goods and services and their management
References in classic literature ?
On returning to his native land, he still continued to turn his chemical knowledge to account, by giving his services to that particular branch of our commercial industry which is commonly described as the adulteration of commodities; and from this he had gradually risen to the more refined pursuit of adulterating gold and silver--or, to use the common phrase again, making bad money.
I said it was pretty bad money, but maybe the hair-ball would take it, because maybe it wouldn't know the difference.
I had been warned by the authorities that a celebrated coiner of bad money would arrive at my inn, with several of his companions, all disguised as Guards or Musketeers.
Deposited with the justice; they said it was bad money.
If it were bad money, there might be some hopes; but unfortunately, those were all good pieces.
For an hour or more that evening I listened to his monotonous chirrup about bad money driving out good, the token value of silver, the depreciation of the rupee, and the true standards of exchange.
The neighbours, very naturally, declined to believe his story, and tried me several times with all the bad money they could collect together, but I never failed to stand the test triumphantly.
This bad money has to be parked somewhere, but we do not know the revenue stream that can gradually lessen this burden from the finance ministry's shoulders,' said the officials.
Whatever the case, there is a clear pattern throughout history: Bad states produce bad money, and bad money leads to failed states.
Subramanyan said that the Gresham's law in economics, which says that bad money drives good money out of circulation, is also applicable in the bilateral economic engagement in the sense that progress in bilateral economic relations at times get smarred by certain challenges.
Most people see this yuletide season as a season to make excess money and I refer to that money as bad money.
In the subsequent decade, gold soared from $35 to above $800 an ounce, a perfect vindication of Gresham's law - bad money drives out good.