The E-Sylum:  Volume 8, Number 21, May 22, 2005, Article 8

GRESHAM'S LAW DEFINED

Another numismatic term appeared on the "A Word A Day"
Internet mailing list this week:

"Gresham's law (GRESH-ums law) noun

The theory that bad money drives good money out
of circulation.

[Coined by economist Henry Dunning Macleod in 1858
after Sir Thomas Gresham (1519-1579), financier and
founder of the Royal Exchange in London. Gresham, a
financial adviser to Queen Elizabeth I, wrote to her
"good and bad coin cannot circulate together."]

Gresham's law says that when both are required to be
accepted as legal tender, inferior money remains in
circulation while the good money tends to be hoarded
or exported.

Examples of bad money could be counterfeit notes,
coins that have their edges scraped off to siphon
precious metal, or two legal tenders where one is
intrinsically superior (e.g. a gold coin vs. a paper note
of the same face value)."

greshams_law.html

  Wayne Homren, Editor

	coinbooks.org Web

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