gresham's law

Thân thiện

Gresham's law explains why people hoard gold coins and spend paper money.

Definition

Noun: - An economic principle: Gresham's Law states that when two forms of money with the same face value but different intrinsic values are in circulation, the "bad" money (money with lower intrinsic value) will drive the "good" money (money with higher intrinsic value) out of circulation. People will tend to hoard the more valuable money and spend the less valuable one.

Usage

• This term is used primarily in economics and finance to describe a specific monetary phenomenon.
• It is often cited in discussions about currency debasement, bimetallism, or the circulation of counterfeit money.

Examples

Advanced Usage

• The principle is often summarized by the aphorism "Bad money drives out good."
• While historically applied to coinage, the concept can be analogously applied in broader contexts, such as when inferior products or information crowd out superior alternatives in a market (e.g., "A Gresham's Law for social media, where sensationalist content drives out thoughtful analysis").

Variants and Related Words

• Gresham's Law is a proper noun and is typically used in this fixed form. There are no direct variants, but related concepts include:
  • Currency debasement: The act of reducing the intrinsic value of money.
  • Bimetallism: A monetary system based on two metals, historically gold and silver.
  • Arbitrage: The practice of taking advantage of price differences, which is related to the behavior described by Gresham's Law.

Synonyms

• "Bad money drives out good": This is the colloquial summary and functional synonym for the principle itself.
• Monetary displacement: A more general, descriptive term.

Related Idioms/Phrases

• "Bad money drives out good": This is the core idiom encapsulating Gresham's Law. It is used both within and outside of strict economic discourse.
  • The manager lamented a kind of Gresham's Law in the team: low-effort work was becoming the norm, driving out genuine innovation.

Học thuật

Noun

1. (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

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• gresham's law