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Bernard M -- Taipei English Tutor

Bernard M - English Conversation / TOEFL / IELTS 一對一英文會話

Tuesday, April 22, 2008

A t-shirt message

I don't think most Taiwanese really care what the English writing on their shirts really mean. In any case, I was quite surprised to see someone wearing a t-shirt with the words "Bad money drives out good" written on the back. This is known as Gresham's Law.

The explanation below is from Economy Professor.
Usually attributed to English businessman Sir Thomas Gresham (1519-1579), Gresham's Law is often summarized as 'Bad money drives out good.' Gresham's observation concerned the likelihood that coins with bullion content equal or higher than their face value would be removed from circulation and melted down, leaving in circulation only coins with a metal value lower than their face value.
A further clarification by Mises, FROM Mises on Money by Gary North:
Mises clarified Gresham's law in Human Action. "It would be more correct to say that the money which the government's decree has undervalued disappears from the market and the money which the decree has overvalued remains" (p. 450). Consumers hoard the undervalued coins, or use them in illegal black market exchanges at ratios that deviate from the law's fixed ratios, or send them abroad, where the coins purchase goods of equal market value. People then spend the overvalued coins in public.

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