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It presents two explanations: government intervention fixing exchange rates, and information asymmetries between trading parties, concluding with relevance for contemporary monetary disorder.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & Report",3,{"item":32,"name":10,"@type":21,"position":33},"https://docshare.wps.com/document/the-tale-of-greshams-law-economic-commentary/324828/",4,{"url":32,"name":10,"@type":35,"image":36,"author":41,"headline":10,"publisher":44,"fileFormat":47,"inLanguage":8,"description":12,"dateModified":48,"datePublished":49,"encodingFormat":47,"isAccessibleForFree":50,"interactionStatistic":51},"DigitalDocument",{"url":37,"@type":38,"width":39,"height":40},"https://docshare.wps.com/thumbnails/the-tale-of-greshams-law-economic-commentary/324828.png","ImageObject",300,407,{"name":42,"@type":43},"Quinn","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-10-30","2026-09-21",true,{"@type":52,"interactionType":53,"userInteractionCount":55},"InteractionCounter",{"@type":54},"ViewAction",10,{"@type":57,"mainEntity":58},"FAQPage",[59,65,69],{"name":60,"@type":61,"acceptedAnswer":62},"What does Gresham’s law claim about the circulation of currencies?","Question",{"text":63,"@type":64},"Gresham’s law states that bad money tends to drive good money out of circulation. It predicts that coins with inferior intrinsic value are more likely to remain while better coins are hoarded or removed.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"Who is credited with originating the expression and the law?",{"text":68,"@type":64},"Henry D. Macleod used the phrase and attributed the underlying “great and fundamental law” to the phenomenon. The text also discusses Thomas Gresham’s correspondence and notes that an English economist, Stanley Jevons, originated the modern wording in 1875.",{"name":70,"@type":61,"acceptedAnswer":71},"What two explanations does the Economic Commentary give for why the law holds?",{"text":72,"@type":64},"The first explanation relies on government intervention that fixes currency exchange rates. The second relies on information asymmetries, where two trade parties rarely share the same information.","https://schema.org",{"og:url":32,"og:type":75,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":77,"canonical":32},"index,follow",{"doc_id":79,"site_id":7},324828,1790144632,{"code":4,"msg":82,"data":83},"success",[84,88,92,96,101,106,111,115,120,123,126],{"id":22,"doc_module":4,"doc_module_name":25,"category_name":85,"show_sort_weight":86,"slug":87},"Story & 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toeplain why aparticular commodity or currencybecomes a medium ofexchange.Thecommon wisdom is that currencies withgood properties—high intrinsic value,low storage cost,or low inflation—aremore likely to circulate than those withbad properties.This is illustrated by thephenomenon of dollarization,in whichthe currencies of high-inflation countriestend to be partially abandoned in favor ofsounder currencies like the U.S.dollar.  \nBut good currencies have not alwaysbeen preferred to bad ones.Monetaryhistoryincludes plenty of incidents inwhich monies with good intrinsic prop-erties are displaced by monies withinferior properties.For example,Aristo-phanes'(450-385 B.C.E.)play,TheFrogs,refers to an episode in which thegovenment of Athens,facing a shortageof silver,decided to supplement its silvercoins with copper.As a result,silvercoins ceased to circulate and werereplaced by copper ones.The MiddleAges also furnishes many examples.In1295,Philip the Fair,king of France,decided to mint new silver pennies thatcontained less metal than similar coinsthat were circulating in two adjacentterritories,Burgundy and Flanders.Bothterritories soon substituted the lightcoins minted in France for their heavierdomestic ones.More recently,the U.S.Coinage Act of 1965 replaced the oldsilver quarters with\"sandwich\"coinsmade of a silver-nickel alloy.The pre-1965 silver coins were quickly with-drawn from circulation,leaving only theinferior new quarters.  \nThe observation that bad money drivesout good money,usually called Gre-sham's law,has become one of the morefamous maxims in economics and has  \nbeen used to account for manyepisodesof monetary disorder.This EconomicCommentary examines the history andthe economic foundations of Gresham'slaw and identifies two explanations forthe law.The first relies on governmentintervention in currency exchange rates.The second relies on the presence ofasymmetries of information—the factthat two parties in a trade rarely sharethe same information.The Commentaryconcludes by discussing the relevance ofGresham's law for understanding today'smultiple-currency economies.  \n## ■ The Origin of Gresham's\n\nThe phrase “Gresham's law”appeared inHenry D.Macleod's 1858 book,Elementsof Political Economy.Macleod(1821-1902)unveiled “a great and fundamentallaw of the currency\"by which“a bad anddebased currency [that is,a currency witha lower intrinsic value]is the cause ofthedisappearance of the good money.\"Henamed it Gresham's law after reading aletter to Qucen Elizabeth from ThomasGresham(1519-79),an English merchantworking as the Crown's financial repre-sentative in Antwerp.Gresham attributedthe disappearanceof gold from the king-dom to the debasement initiated by HenryVII,which reduced the metallic contentof coins \"from six ounces fine to threeounces fine [of gold][….]which was theoccasion that all your fine gold went outofyour realm.\"As noted by Fetter(1932),“it requires considerable ingenuity todraw from Gresham's modest statement[...]a universal law that bad money drivesout good money.\"  \nAs a matter of fact,Thomas Greshamdid not invent the law bearing his name.Statements related to the phenomenonthat “bad money drives out good money”  \nOctober 1,2005  \nGresham's law,which says that badmoney tends to drive good money outof circulation,may account for manynations'episodes of money troubles,as far back as ancient Athens.ThisCommentary discusses the two mainexplanations for Gresham's law andsuggests some circumstances in whichthe law does not apply.  \noccur in several Medieval and Renais-sance writings,from scholars likeHostiensis(ca.1200-71),Oresme(1320-82)and Copenicus(1473-1543)、and from mint officials like HenriPoullain(1612).As we have just seen,Aristophanes,in the 5th century B.CE,had already anticipated the mechanism.And it was the British economist,Stan-ley Jevons,who originated the expres-sion \"bad money drives out goodmoney\"in ","cbCaiiDnNWRdcmct","https://ap.wps.com/l/cbCaiiDnNWRdcmct","pdf",1127742,"English","# The Origin of Gresham's\n## ■ Legal Restrictions and Gresham's Law","[{\"question\":\"What does Gresham’s law claim about the circulation of currencies?\",\"answer\":\"Gresham’s law states that bad money tends to drive good money out of circulation. It predicts that coins with inferior intrinsic value are more likely to remain while better coins are hoarded or removed.\"},{\"question\":\"Who is credited with originating the expression and the law?\",\"answer\":\"Henry D. Macleod used the phrase and attributed the underlying “great and fundamental law” to the phenomenon. The text also discusses Thomas Gresham’s correspondence and notes that an English economist, Stanley Jevons, originated the modern wording in 1875.\"},{\"question\":\"What two explanations does the Economic Commentary give for why the law holds?\",\"answer\":\"The first explanation relies on government intervention that fixes currency exchange rates. The second relies on information asymmetries, where two trade parties rarely share the same information.\"}]","The Tale of Gresham's Law - Economic Commentary | PDF",1789968974,13]