Gresham’s law states that ‘bad money drives out good‘. However, as Murray N. Rothbard pointed out in ‘A History of Money and Banking in the United States: The Colonial Era to World War II‘, the ‘triumph’ of ‘bad money’ is not a perverse feature of the free market, but a direct outcome of government intervention:

 

…when government compulsorily overvalues one money and undervalues another, the undervalued money will leave the country or disappear into hoards, while the overvalued money will flood into circulation.

 

In this article, I’ll consider the implications and manifestations of Gresham’s law for traditional commodity monies as well as present-day fiat currencies.

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An update of the daily treasury statement charts:

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