Gresham's law
(redirected from Bad money drives good money out of circulation)Also found in: Dictionary, Thesaurus, Encyclopedia.
Gresham's Law
The theory that given two types of money with the same nominal value but different real values, the "bad" money will be spent while the "good" money will be hoarded. Strictly, the law only applies if the exchange rate between the two monies is decreed by the state, but it is sometimes invoked more broadly. While it does not always hold true, one example was the hoarding of U.S. coins in the 20th century as they gradually came to be minted with less valuable metals.