Talk:Gresham's law

message: This article starts by defining one kind of currency, rather arbitrarily, as "good" and another as "bad", but ultimately concludes that the one labeled "bad" will be the more widely circulated of the two.  Since circulation is the whole point of a currency, it seems that we've mislabeled the both -- the better currency is the one that circulates more.  My reading of this law is just that valuable commodities make poor currencies.  Maybe "good" and "bad" are not the best terms to use here? 24.55.17.191 (talk) 22:48, 18 January 2014 (UTC)
thread_title:  "Good" and "Bad" 

message: What does mean bad money in this context? --Anonymous
:In the context of the Wikipedia itself, Gresham's law says that bad contributors (or contributions) will tend to drive out good contributors (or contributions), and we have seen it in operation in two ways:  Sometimes the actions of a bad user actually cause a good user to stop using the 'pedia at all.  Other times, the actions of a bad user cause a good user to waste time fixing the damage the bad user has done (and/or discussing the bad user's actions), thus reducing the amount of new material the good user can produce.  Either way, the bad use tends to drive out good use.  (I suggest there's a lesson here for good users in deciding how to spend their time on the 'pedia.) --isis 20:35 Nov 26, 2002 (UTC)
::And yet, there must be some sort of break or flaw in the analogy, since manifestly the bad users are not driving out the good on Wikipedia (as I from the perspective of several years later can affirm). --maru 16:09, 13 May 2005 (UTC)
replies: text: (You cannot). They are! Wlod (talk) 02:45, 10 February 2008 (UTC)
replies: text: There isn't any equivalent of legal-tender laws on Wikipedia, though -- we are not required to treat bad contributions as equal to good ones. --FOo 01:42, 30 May 2005 (UTC)
replies: text: Maru & FOo are right. Wikipedia benefits from the inverse of Gresham's Law.  Gresham's Law (paraphrased) says "if high quality and low quality are forced to be treated equally, then folks will keep good quality things to themselves and use low quality things to exchange for more good stuff."  So the inverse (or converse? Someone correct me) of Gresham's Law would be "if high quality and low quality are NOT forced to be treated equally, then folks will INSIST on the good stuff and reject or ignore the low quality stuff."  Of course, there will be some valid debate about what constitutes "high" or "low" quality contributions to Wikipedia... hence the lovely discussion pages like this one.  --Nicolas Nelson 03:08, 21 July 2007 (UTC)

text: The point made is a good one  as the article shows extreme bias that ignores the deeper issues. The deeper issue is that corruption is self funding, while honor has to beg.
example - It was noted that 8-carbon fuel (octane) worked better in cars than 7-carbon (heptane) that ran up the value, and so it became necessary to label the octane content.
When it became known that tetra-ethyl-lead could disguise the low octane levels and greater profits made the rules were passed that hid the real octane levels to octane-like levels, and since lower value fuels were cheaper they pushed actual octane totally out of the market, even as the health costs of lead became ever more obvious.  
It is only when another source of great profits shows up in the form of corn ethanol that there is funding to force out the use of lead, when the simple requirement of higher weight carbon was always available, but had no constituency of corruption. The use of corn ethanol of course drives up the price of corn making food more expensive for everyone.
There are of course thousands of other examples (manufacturing profits vs banking profits) (wage pressures,vs unions), etc. But the implication that government intervention is all bad is highly political, when government policing is the only brake to a race to the bottom of the most corrupt, brutal, and abusive, business practices.Dragonwlkr (talk) 16:16, 27 September 2012 (UTC)
thread_title:  Law applied elsewhere 

message: In the described situation of gold and fake coins, why would people take the gold coins, melt them down, and sell the gold? They will only get one pound for it, because that's what the gold is worth, and one pound they had to begin with. --AxelBoldt 20:58 Nov 26, 2002 (UTC)
:They may sell the gold in another country -- when English coins were debased, they were mostly selling the gold in the Lowlands --  but the point is that selling a gold coin for a pound is better than spending a gold coin for a pound's worth of goods that you can buy for a fake gold coin worth much less than a pound.  Try to think of it as arbitrage. --isis 21:27 Nov 26, 2002 (UTC)
::Well, I realize that I'm a bit dense here, but "selling a gold coin for a pound" doesn't make any sense: either you get a true gold pound for your gold coin, which is what you had to begin with, or you get a fake pound, in which case you have made a bad deal. --AxelBoldt 03:49 Nov 27, 2002 (UTC)
:::The choice is not between selling a gold coin for a true pound coin and selling it for a fake pound coin.  The choice is between getting its true (= face) value for it and getting the value of a fake one for it.  Assume a "bad" coin is worth 50% of a "good" one, and you have five of each:  The number of bad coins in circulation has forced merchants to double their prices, so you can spend all 10 of your coins here and get only £5 of goods, or you can spend the 5 bad ones here for £2.5 of goods and spend the 5 good ones in the Netherlands for £5-worth of goods, so you get a total of £7.5 of goods for your 10 coins (which is how much your coins are actually worth in terms of their gold content).  (I'm leaving out the step where you actually sell the good ones there as bullion and spend the guilders here at their full value.)  The point of Gresham's law is that everyone with sense will spend the bad ones here and the good ones there, so having bad ones in circulation here will drive the good ones out of circulation here and into circulation there.  I'm sorry, but I don't know how to explain it any better than that. --isis 07:15 Nov 27, 2002 (UTC)
The original point of coinage was the certification of quality in weight and purity. If the coin was stamped by the king those in the market would not have to test all the possibilities in some random chunk of metal. Dragonwlkr (talk) 20:38, 27 September 2012 (UTC)
thread_title:  Arbitrage 

message: I removed this passage from the article:
:Philosophically, Gresham's law is related to the Tragedy of the commons in that both refer to a situation where the interests of individuals, collectively, tend to destroy the value of a public resource unless some regulatory power intervenes.
I think this is a misleading parallel.  The key point in Gresham's law is that some regulatory power - the government or whoever - decrees that two items of different value ('good' and 'bad' coins, diplomas, etc.) can be used interchangeably.  Gresham's law can in fact be reversed by removing the intervention of the regulator - in which case the 'good' coins would drive out the worthless 'bad' coins.
Furthermore, a gold coin is not a public resource in the economic sense - it is generally owned and enjoyed by one person only!  The tragedy of the commons is a rather different idea that applies to shared resources. --Enchanter
:You are mistaken about this -- "the government or whoever" has not decreed that good and bad ones are interchangeable.  The people who make counterfeit coins are criminals the government prosecutes, for example, and if you remove the regulator (= the mint) from the system, there will be no good coins at all, only bad ones.  And the coinage system is, indeed, a public resource.  But I have no interest in trying to persuade you that Gresham's law is true and you simply don't understand it, and I'm posting this here merely to keep other people from being misled by your confusion. --isis 23:34 Nov 26, 2002 (UTC)
::In response, I would like to make a couple of points:
::*It is important to Gresham's law that some authority declares the 'good' and 'bad' currency to be of equal value.  It is not the case that people can't tell the good coins from the bad - for Gresham's law to hold people must be able to distinguish them so that they know which ones to spend and which to hoard and melt down.  If the coins were not declared by law to be of equal value, traders could - and would - refuse to be paid with the 'bad' coins and only accept the 'good' ones, invalidating the law. It is because the law says that bad coins can be used instead of good ones, for example to settle debts, that the bad coins retain their value.
::*Gresham's law doesn't just apply to counterfeit currency; the 'bad' coins might have been issued by government (this was relevant in Gresham's day, when treasuries would issue coins with lower gold content in order to boost revenue), or a 'bimetallic' system where, for example, ten silver coins are worth the same as one gold at face value but the value of the metal is different.  The article could do with some clarification here. --Enchanter
:::A relevant example where the mint itself creates "bad" money: Pre-1982 pennies (with the exception of 1943 war pennies) were minted with 95% copper. Since these pennies retain their metallic value in face of an inflating dollar and these older pennies because their current value on the market can exceed 2 cents of a dollar.  —Preceding unsigned comment added by VTNC (talk • contribs) 14:41, 19 January 2009 (UTC)
thread_title:  Bad comparison? 

message: This page was turning into a tirade against legal tender laws, and its logic was becoming badly distorted.  I have removed the POV tone and moved material around to make the logic flow better.  I have also completely taken out the following passage, which had been added as a comment on Gresham's Law in reverse.  It completely misses the point that was being made, and makes no sense in that context, or anywhere else in the article.
:However, the US Dollar was clearly considered to be a more stable currency, and despite being illegal in some cases, still more desirable than that of the collapsed Soviet Union or South American countries suffering from severe inflation or economic downturns. Here the issue of context is raised again, since there is considerable difficulty comparing the two currencies while one is in the process of collapsing.  It shows, however, that Gresham's law does not apply when people must make a choice between breaking legal tender law or feeding themselves. It seems that legal tender law does not trump survival.
Finally, someone needs to look up apostrophe - "it's" means "it is" not "of it".  And, Enchanter, could you date your comments, please?  It happens automatically if you just put ~~~~ at the end of your text.  Thanks.  --seglea 19:14, 6 Sep 2004 (UTC)
thread_title:  Historical example 

message: When the US half-dollar was reduced in silver content, the quarter and the dime were both similarly reduced at the same time.  The difference?  Nobody uses half-dollars of any kind in this country anymore.  A better example would be to say that the old pre-1965 quarters and dimes are no longer seen much in circulation, because half-dollars of any age are not usually seen anyhow unless you're a collector. --Lurlock 14:23, 29 June 2006 (UTC)
thread_title:  Why US Half-Dollar Example? 

message: I would also like to bring up that Americans have a tendency to shy away from dollar coins and 2 dollar bills. I believe this to based on the reduced usefulness of the currency do to the fact that it can't be used in vending machines and other places, putting it in the category of bad money.
-Mike
: Good point, Mike.  Also, 2-dollar bills are rare enough that there may be a fear of counterfeiting when someone tries to pass one.  One thing to consider: it is usually the BUYER who shies away from accepting the dollar coin or the 2-dollar bill (as change in the transaction). If a buyer wanted to use them to buy something, the seller would have to accept them, so Gresham's law ought to apply.  It does not seem to, perhaps because 
:1. there simply aren't many dollar coins or 2-dollar bills in circulation 
:2. those which are circulated tend to be kept as curiosities because they are rare
:3. because of their lower utility, sellers who receive these as payment probably remove them from immediate circulation, either by tucking it away as a rarity or by depositing it in the bank.  -- Nicolas Nelson 03:27, 21 July 2007 (UTC)
thread_title:  2 dollar bills and dollar coins

message: I removed the uncited statement that This law was first formulated by Nicolaus Copernicus.  
The History section of the article refutes that Copernicus was first.  Copernicus did precede Gresham, but NC was not first.  As for the citation requested (in the general sense)?  There are  two citations already quoted  in the article which indicate that Gresham was not the first to discuss the concept, even though the idea is now eponymously named for him.  One that I am familiar with is Spiegel.  The other, claimed within the text of the article by another WP editor, with extensive quotations, is Selgin.  Enjoy.  N2e 23:06, 10 October 2006 (UTC)
thread_title: First-formulated-by Claims

message: The phrasing of one of the sections says the rising price of zinc and copper has led to banning on melting of one and five cent pieces respectively.  This implies pennies are made of zinc and five cent pieces of copper.  I do not live in America, but I am pretty sure that this is not the case.  24.65.87.238 (talk) 21:33, 15 January 2008 (UTC)
thread_title: Zinc Pennies?

message: Anyone else find the AA section kinda... creepy? As if theists are good money, and everyone else is a rotten stain on hope? Should this article really be going that direction? --Thomas B♘talk 09:20, 12 August 2008 (UTC)
replies: text: I agree.  Yes, it has a reference, but...  meh.  It's not clear that this one guy's thoughts on the topic are notable or really on-point, though I suppose I see the analogy.  I've removed that section. SnowFire (talk) 17:55, 5 March 2009 (UTC)
thread_title:  Alcoholics Anonymous 

message: Shouldn't there be mentioned in the History section, that in fact, Copernicus formulated simillar theory about 70 years before Gresham?? it is, actually mentioned in the Copernicus article
83.31.83.43 (talk) 19:59, 14 October 2008 (UTC)
replies: text: Relegating the real creator, Copernicus, to foot notes and similar impoverishes the readers, and once again diminishes the value of wikipedia. As a minimum, the title of the article should read: Copernicus-Gresham law (as it is done in some publications). -- Wlod (talk)  —Preceding undated comment was added at 18:38, 14 November 2008 (UTC)
thread_title:  History/Copernicus 

message: Currently, the second sentence of the introduction is:
Gresham's law applies specifically when there are two forms of commodity money in circulation which are forced, by the application of legal-tender laws, to be respected as having face values in a fixed-ratio for marketplace transactions.
The more typical demonstration of Gresham's law is the case of monies containing different quantities of the same commodity, not of monies containing different commodities.  This application should be placed less prominently, and probably reworded. - Crosbiesmith (talk) 17:51, 30 November 2008 (UTC)
thread_title: Two forms of commodity

message: I'm removing the market for lemons shinenigans since it affirms that it isn't possible to tell bad cars from good ones.  —Preceding unsigned comment added by VTNC (talk • contribs) 14:44, 19 January 2009 (UTC)
replies: text: I don't see what's so hard about this.  If good cars and bad cars are practically indistinguishable at first glance, and the only way for the buyer to tell the difference is to wait a year or two after driving the car, and furthermore have problems be entirely on a probability basis with lots of intervening other events to make it difficult to pin down a cause...  of course there's an incentive to pass off every car as a good car.  Which is exactly the problem Gresham's law describes - if it's impossible for buyers to tell the difference between bad and good used cars, the market for good cars is adversely affected. SnowFire (talk) 17:55, 5 March 2009 (UTC)
thread_title:  LEMONS!? 

message: I've removed a statement from the article claiming that "[s]ince that quantity of fiat currency is constantly increased through the fractional reserve banking system, modern money tends to constantly diminish in value."  Unfortunately, the fractional reserve banking system doesn't "constantly increase" the quantity of currency over time.  (According to the fractional reserve article, it simply increases the maximum amount of money in circulation by a constant factor.)  --John Reed Riley (talk) 11:54, 2 March 2009 (UTC)
thread_title:  Discussion of Fractional Reserve in the Bad Money section 

message: Mikołaj Kopernik (Nicolaus Copernicus) was carrying out the Polish monetary reform in the Polish Sejm (parliament) in 1526. It was him who personally invented the name for the new Polish currency - "złoty" ("złoty" is a Polish word and means "golden" in English). Kopernik also invented the economical law "Fałszywy Pieniądz Wypiera Prawdziwy z Obiegu" ("The Counterfeit Money is Driving Out the Authentic Money from the Circulation") and he personally presented it in the Polish Sejm in 1526.
He also published his work (written in Latin), titled "Monetae cudende ratio" - and his monetary law ("The Counterfeit Money is Driving Out the Authentic Money from the Circulation"), written in Latin, can be easilly found in this work by any interested historian.
Kopernik's work was published in 1526 (and he started working on it yet in 1519), in the same year he presented it in his speech in the Polish Sejm, as part of the Polish monetary reform (which was carried out in order to prevent the Polish currency and economy from German and Jewish counterfeit money).
Thomas Gresham was borned in 1519 - in 1526 he was still a child. Conclusion - this Law is not Gresham's invention - Copernicus was first!
I wonder why these facts are not included in this article yet? It seems that some "Western people" (and especially Anglo-Americans) are still so conceited if it comes to the history of other than their own parts of the world as according to common (common in the whole world except the Anglo-Amercian part of it) stereotypes.
But everyone can check on his own - just read the "Monetae cudende ratio". De facto the "Gresham's Law" was not invented by Gresham for the first time.
Best regards!,
Peter558 (talk) 22:27, 4 July 2009 (UTC)
thread_title:  Gresham's Law?! - NO, not really Gresham's !!! 

message: Randy Cohen writes a blog at NYT, as well as sometimes columns. In this blog post, he talks about when anonymity should be disallowed in online forums, and has one line, "It is the conversational version of Gresham’s law: bad discourse drives out good."
It's nearly a throw-away line in a blog post. I can sympathize with the idea (although I actually think it's a misapplication of Gresham's law if Gresham's law is treated seriously rather than just as a slogan), but it's not notable, even if it is obvious. CRETOG8(t/c) 06:01, 30 August 2009 (UTC)
replies: text: Randy Cohen is nnt the first to propose this. If you google "Conversational Gresham's Law," or "Gresham's Law of conversation," you'll see that it has been written about by many others as well.  It also makes intuitive sense.  Since there is a section of the article on "applications" of Gresham's Law, conversational applications deserve mention. SONORAMA (talk) 12:53, 30 August 2009 (UTC)

text: The thing to do then is to find a good source. The obviousness doesn't matter, it's whether it can be sourced. The blog isn't adequate. Look over WP:RS, find something which satisfies it, and then it'll be OK by me. Until then, I'm going to remove it, but it'll be waiting in the history for you to recover it. CRETOG8(t/c) 15:22, 30 August 2009 (UTC)

text: Ooops, I see you have added another source. I'll check that one out also before removing the text (Cohen's blog still isn't adequate). CRETOG8(t/c) 15:23, 30 August 2009 (UTC)

text: OK, checked it--a random powerpoint presentation also isn't a reliable source. CRETOG8(t/c) 15:25, 30 August 2009 (UTC)
replies: text: Alright, how about a respected MIT PhD economist as a source?  View it here:  Remember the article's section is about applications of Gresham's  law.  Clearly it is being applied in conversations and internet discourse.  By the way - I agree with and will let stand your redaction of the part about real estate - was not clear.  But just as clearly, I am not the only one who sees Gresham's Law being applied in conversations and internet discourse.  This will stay in the article. SONORAMA (talk) 16:23, 30 August 2009 (UTC)
replies: text: I think what you're describing is a real thing--people are referring to "Gresham's Law" in talking about communication. I can't tell how serious they're being or if "Gresham's Law" is being used as a bit of clever hyperbole. To include it here, it needs something more--someone writing about it seriously in an appropriate source (book, academic article, whatever). An alternative would be more "meta", someone describing how lots of people refer to Gresham's Law in this context. Kling could be a good source, but not the way he uses it in that link. CRETOG8(t/c) 16:38, 30 August 2009 (UTC)
thread_title:  Ethicist 

message: There's a bit on "real estate and other investments" in the applications section which isn't referenced, so I'm going to pull it out. CRETOG8(t/c) 15:28, 30 August 2009 (UTC)
thread_title:  real estate 

message: The Copernicus published in Latin his book on monetary reform early in 1526 under title: “Monetae Cudende Ratio” in which, for the first time in history, he stated the law of currency that “bad money derives the good money out of circulation.” At that time Thomas Gresham (1519-1579) was seven years old.
Sources: http://www.pogonowski.com/?p=1099  —Preceding unsigned comment added by Mitchozog (talk • contribs) 14:05, 9 March 2010 (UTC)
thread_title:  Monetae Cudende Ratio 

message: I think the right quotation from Aristophanes' The Frogs is:
This  city, it often seems to me
         treats our best and worthiest citizens
         the way it does our old silver coins,
         our new gold ones, as well.* This money
         was never counterfeit—no, these coins
         appeared to be the finest coins of all,
         the only ones which bore the proper stamp.         
         Everywhere among barbarians and Greeks
         they stood the test. But these we do not use.
         Instead we have our debased coins of bronze,                 810
         poorly struck some days ago or yesterday.  —Preceding unsigned comment added by 190.138.174.252 (talk) 20:02, 8 January 2011 (UTC)
replies: text: That's already in the history section. CRETOG8(t/c) 15:45, 9 March 2010 (UTC)
thread_title:  Origin of the name 

message: Currently, this article begins with Rothbard's definition of Gresham's Law, which focuses entirely on government compulsion.  This seems overly narrow, and borderline POV.  Gresham's law has historically been applied to a wide range of contexts that have nothing to do with state price-fixing: clipping, counterfeiting, physically inferior monies, etc.  State intervention is a common theme in discussions of Gresham's Law, but the lede shouldn't be positioning it as the only possible situation. Ethan Mitchell (talk) 17:12, 16 January 2012 (UTC)
thread_title:  State and non-state induced Gresham situations 

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thread_title:  External links modified 

message: I came across a nice precursor of Greshem's law in a quote from the Pali Canon in comparison to the Dhamma: 
Just as, Kassapa, gold does not disappear so long as counterfeit gold has not arisen in the world, but when counterfeit gold arises then true gold disappears, so the true Dhamma does not disappear so long as a counterfeit of the true Dhamma has not arisen in the world, but when a counterfeit of the true Dhamma arises in the world, then the true Dhamma disappears.
From “The Connected Discourses of the Buddha: A New Translation of the Samyutta Nikaya,” page 681 by way of Fake Buddha Quotes
I think this is a noteworthy ancient formulation of the law and would be of quite a bit of interest to people looking for information on this subject. 2601:681:4D04:5CD0:52E5:49FF:FEC0:9662 (talk) 03:09, 9 April 2017 (UTC)
thread_title:  Precursors 

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thread_title:  External links modified (January 2018) 

message: Re this edit, I don't see a contradiction here. The article doesn't say that Adam F did something in 1923; that would indeed be tricky for someone born in 1932. The text only says that he pointed out some fact about 1923. Presumably he did this in his 1975 book, though I don't have a copy and the article text here doesn't say. -- John of Reading (talk) 12:27, 16 April 2018 (UTC)
replies: text: Hmmm.  Thanks, John of Reading.  Don't really know what I was thinking with that edit; it was four months ago.  Your logic is correct.  Cheers.  N2e (talk) 21:51, 16 April 2018 (UTC)
thread_title:  Contraction-inline 

message: This article really needs a once-over by someone good at excising extra info and links. We don't need:
* three different date usage formats in the second paragraph, complete with format-breaking links
* a list of five different bullion coins.
* "Examples" section does not describe any examples of Gresham's Law, or if it does they're written badly.
* "price spread" is mentioned only once, in support of collecting coins for some reason
* Explaining good and bad money only in technical terms, "seignorage" and "debasement"
* "Theory" section reads like someone's book report
And this is just the first 1/3. I realize I could do this myself, but I don't know the subject enough (which is why I came to the page).
Manys (talk) 00:23, 27 March 2019 (UTC)
thread_title:  Readability 

message: This was all discussed in the 18th and early 19th c debate in the UK over paper money, eg, Thornton, Horner, et al. Secondly, legal tender laws do not necessarily require the acceptance of denominated money.  — Preceding unsigned comment added by 108.28.145.174 (talk) 18:45, 21 February 2020 (UTC)
thread_title:  Paper money debates 

message: money 197.215.27.177 (talk) 17:43, 28 May 2022 (UTC)
thread_title:  Gresham law 

message: In standard English, the proper noun Thiers is written as Thiers's if it is in the possessive case. This article writes it as Thiers' but I do not have access to the Berholz work in which the phrase was coined. Since I cannot check Berholz's construction, I am loath to change the spelling in this context. An editor who has access to the Berholz should check its text for the original spelling. —catsmoke talk 10:13, 26 May 2024 (UTC)
thread_title:  Possessive of Thiers is Thiers's