Gresham's law

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Gresham's law is commonly written: "Bad money drives out good."

This is about a situation where a government overvalues one type of money and undervalues another.

If people desire one thing ("good" money) more than the other ("bad" money), they will always offer the bad money in trade before the good money. Over time, the good money will be kept in pocket, and only the bad money will be found in the market. The law is named after Sir Thomas Gresham (1519-1579). Gresham founded the Royal Exchange in 1565.