gresham's law is an economic principle that states: "when a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."rothbard, murray, commodity money in colonial america, lewrockwell.com it is commonly stated as: "bad money drives out good". this law applies specifically when there are two forms of commodity money in circulation which are required by legal-tender laws to be accepted as having similar face values for economic transactions. the artificially overvalued money tends to drive an artificially undervalued money out of circulationhttp://mises.org/money/3s5.asp and is a consequence of price control. the law was named in 1858 by henry dunning macleod, after sir thomas gresham (1519â1579), who was an english financier during the tudor dynasty. however, there are numerous predecessors. the law had been stated earlier by nicolaus copernicus; for this reason, it is occasionally known as the copernicus law. it was also stated in the 14th&nbsp;century, by nicole oresme,how the catholic church built western civilization, woods, thomas e. and by jurist and historian al-maqrizi (1364â1442) in the mamluk empire; and noted by aristophanes in his play the frogs, which dates from around the end of the 5th&nbsp;century bc. =='good' money and 'bad' money== "good" money is money that shows little difference between its nominal value (the face value of the coin) and its commodity value (the value of the metal of which it is made, often precious metals, nickel, or copper). in the absence of legal-tender laws, metal coin money will freely exchange at somewhat above bullion market value. this may be observed in bullion coins such as the canadian gold maple leaf, the south african krugerrand, the american gold eagle, or even the silver maria theresa thaler (austria). coins of this type are of a known purity and are in a convenient form to handle. people prefer trading in coins rather than in anonymous
Adages Economics_laws International_economics International_trade Metallism Monetary_policy Nicolaus_Copernicus