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Gresham's law

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Gresham's law: see under Gresham, Sir Thomas Gresham's law, the economic principle that in the circulation of money "bad money drives out good," i.e., when depreciated, mutilated, or debased coinage (or currency) is in concurrent circulation with money of high value in terms of precious metals, the good money is withdrawn
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Gresham's law

Observation that “bad money drives out good.” It is named for Sir Thomas Gresham (1519–1579), financial agent of Queen Elizabeth I, who was one of the first to elucidate it (he had been preceded by Copernicus). The meaning expressed is that, if two coins have the same face value but are made from metals of unequal value, the cheaper will tend to drive the other out of circulation; the more valuable coin will be hoarded or used for foreign exchange instead of for domestic transactions.



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It was thought competition between the two currencies could lead to Gresham's Law that bad money drives out good, as in the sterling-dollar experience, and greater exchange-rate volatility.
Intriguingly, she argues that melodrama (which in a kind of Gresham's law of drama was driving tragedy and classic comedy from American stages) gained persuasiveness through its exemplification of performance, an attribute critical to Victorian middle-class society.
Indeed there may be a kind of Gresham's Law that bad loans to huge government projects drive out good private loans to the productive private sector.
 
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