It's time... Jamaica!: GRESHAM'S LAW | How money can lose value?

Gresham's Law. This is the monetary principle stating that "bad money drives out good". Similarly, "cheap drives out dear". This can be explained as follows: Coins composed of the cheaper metal will be used for payment first, and so, the inferior (bad or cheap) coins will be put into circulation first while those made of more expensive metal or rare coinage will be hoarded.

Likewise, a coin collector will likely keep his rarest and prized coins and sell his poor valued coins into circulation.

Sir Thomas Gresham, the financial agent of Queen Elizabeth I, was not the first to recognize this monetary principle. Aristophanes (450-385 BC), wrote: "the full-bodied coins that are the pride of Athens are never used while the mean brass coins pass hand to hand." Aristophanes described how the gold coins of Athens were kept, while the lesser minted brass coins were circulated hand to hand.

As Athens (the home of democracy) became powerful, armies were used to extend this power to neighboring states. Leaders had to pay vast sums of money to maintain armies and great works such as the Parthenon were built to showcase this power and splendor. To pay the huge debt of maintaining big armies and monuments, coins were debased and made of brass, in the place of the valued gold coins.

We should take full notice!

People will hold onto things they deem valuable.
As countries debase their currency, by switching to cheaper metals they inflate the new debased currency in relation to the former.
Bad drives out good, cheap drives out dear; similarly, Poor Quality drives away Quality if you are not keen on this.

Act accordingly,
~ @ a 21st Century Vision.

Revised: 11/20/2015.

Advance>>>