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Gresham's Law
(820 words)

In monetary theory, Gresham’s law states that under certain conditions, circulating coins of inferior quality (i.e. with a lower precious metal content) with the same face value will drive coins of superior quality out of circulation. A central assumption is that the coins are equally regarded as legal tender (see Value, monetary; Currency).

The formula “bad money drives out good” came into common use in the 16th century, but the principle was familiar earlier: Nicholas Oresme was probably one of the first students of monetary theory who dea…

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Hesse, Jan-Otmar, “Gresham's Law”, in: Encyclopedia of Early Modern History Online, Editors of the English edition: Graeme Dunphy, Andrew Gow. Original German Edition: Enzyklopädie der Neuzeit. Im Auftrag des Kulturwissenschaftlichen Instituts (Essen) und in Verbindung mit den Fachherausgebern herausgegeben von Friedrich Jaeger. Copyright © J.B. Metzlersche Verlagsbuchhandlung und Carl Ernst Poeschel Verlag GmbH 2005–2012. Consulted online on 05 March 2024 <http://dx.doi.org/10.1163/2352-0272_emho_SIM_020439>
First published online: 2015
First print edition: 20180915

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