Gresham’s law

Gresham’s law is an economic principle that states that “bad money drives out good.” The law is named after Sir Thomas Gresham, a 16th-century English financier, who observed that when a government issues new coinage of lower value than the existing coinage, the new coinage will be used for transactions, while the existing, higher-value coinage will be hoarded or exported.

The law states that when two forms of money have the same legal value but different intrinsic values, the money with the lower intrinsic value will be used in transactions, while the money with the higher intrinsic value will be saved or used for other purposes.

The law can also be applied to other forms of money, such as fiat currency or digital currency. It can also be applied to other goods or services, such as when there is a surplus of goods or services, the price of those goods or services will decrease, and the less desirable goods or services will be more widely used.

It’s important to note that Gresham’s Law is a general principle, and does not always apply in every case, depending on the circumstances of the economy and the specific goods or services.