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 periodicals archive ?
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.
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.
The phrase "bad money drives out good," known as Gresham's law, served as one of the fundamental principles of economy for some time.
What we need now is a primer on the major misconceptions in the hope that, unlike Gresham's Law, which says that bad money drives out good money, good economics will drive out bad economics.
As is always the case with a legally fixed bimetallic monetary standard, the operation of Gresham's Law (5) ensured that, as soon as the current market price ratio of silver to gold deviated significantly from the legally fixed mint ratio, one metal would "chase" the other out of circulation.
Gresham's law states that when an exchange rate is compulsory, bad (overvalued) money replaces good (undervalued) money, a phenomenon that early modern economists like Oresme and Mariana perceived in the tendency of precious metals to get hoarded away or else exported out of a country in which their market value was repressed by laws artificially sustaining a debased currency.
I have mused also whether a Gresham's Law operates in culture, viz.
The gold standard is not the best foundation for the challenge because it was the result of bimetallism and Gresham's Law.
GRESHAM'S Law, thankfully, doesn't work in the universe of eating out.
He seems also to have imagined that a general indiscriminate literacy would be compatible with keeping up something like the proportion that he saw existing between good literature and bad; and here the great and good old man ran hard aground on Gresham's law.
While the multiple exchanges from buyer to seller would certainly have reduced the value of a traded cigarette as a smoke, Gresham's Law insured that only the cigarettes that were least desirable as a smoke were used as a medium of exchange.
The reason for that is a favorite of economics professors: Gresham's Law.