Gresham's Law

I am Sir Thomas Gresham reincarnated. Just as in my previous life, I spend my time pursuing the subjects of money, credit, exchange & speculation – here I write about markets & political economy. In honour of my law about the unintended consequences of central planning in money, we have chosen the ‘URL’; greshams-law.com.

We intend to provide a kooky and insightful view that you’re unlikely to find elsewhere (after all, who else has financial experience dating back to the 16th Century?). Consequently, we refrain from commenting on the daily flow of news, and — instead — focus upon market philosophy, monetary trends, contrarian market indicators, the structure of fiat currencies, the history of money & much more.

Philosophy & Focus

Integrating Assorted Intellectual Convictions:

Although we have a bias towards the Austrian School of Economics, we try not to be overly ‘loyal’ to it (or to any other school of thought for that matter). Our understanding of markets leads us to be wary of dogmatism, so we try to integrate the great insights of various thinkers.

Focusing on Money:

It is often difficult to articulate the importance of money in the usual archaic or jargonistic terms. So, it may help to think analogously: Imagine you’re a fisherman, and one morning you set off in your boat for your usual duties. Upon arriving at the place where you fish, you find that all the fish in the sea are dead. Do you seek an explanation by inspecting each and every fish? Or do you seek an explanation by examining the water in the sea? Of course, you look at the sea, right? In the same way, it pays to look at money when it comes to financial speculation.

This topic is grossly misunderstood. Evidence for this can be found in the fact that people genuinely believe that central planning is bad (or indulgent) – except in the monetary sphere. You can’t make this stuff up. This scenario is golden for the true contrarian; for, occasionally, it is possible to highlight trends that are opposite to widely held beliefs discussed in news stories and declared in public pronouncements.

Seeking Asymmetric Opportunities via Contrarian Strategies

The business of speculation is vast, old and attractive to some of the brightest minds in the world. So, if one wishes to be rewarded greatly for having risked little, one must think in an entirely different fashion to the herd. One must be able to reconcile that which the herd cannot (yet) reconcile. That is, one must pursue paradoxical & ironic knowledge, rather than consensual mechanisms. In short, one has to be contrary.

Here at greshams-law.com, this is precisely what we try to do. Thankfully, consensual modes of thought bore us – just as they did several centuries ago. We only comment on contrarian (and therefore asymmetric) opportunities.

Our Services

Greshams-law.com provides regular free articles on the main page. These tend to focus on long-term monetary & market trends.

We also provide a monthly newsletter that includes more actionable investment ideas. If you seek our usual style & philosophy with specific ideas, this is for you. You may notice that the main site scarcely mentions specific stocks, ticker symbols, currencies or commodities – the newsletter does.

What is Gresham’s law?

Gresham’s law is the (formerly popular) catchphrase that says: ‘Bad money drives out good’. This insight was noted by me, Sir Thomas Gresham, as well as several people before me. During my previous life (1519 -1579), the favorite tool of the central planner was to debase coins but nevertheless impose their use at specific exchange ratios. Resultantly, the ‘decreed exchange ratios’ diverged from those demanded by market participants. Consequently, certain coins (usually debased or worn coins) would become overvalued with respect to other coins (typically full-bodied coins). These skewed valuations gave rise to a profit-motive to use the overvalued money in exchange and hoard (or export) the undervalued money. In other words, the ‘bad money drove out [the] good [money]‘.

This site has been named after Gresham’s law to honor its central insight; that central planning in the monetary sphere can have unforeseen and unintended consequences for all.