Comments on: Of Money, Bad and Good: Gresham’s Law is Wrong

By: no third solution » Blog Archive » Say’s Law of Markets: The Case for Doing “Nothing”

Sat, 17 Jan 2009 22:01:23 +0000

[...] abundance of goods and services, rather than an abundance of money, which signifies prosperty (cf. here here.), it is of paramount importance to recognize that such an abundance of goods and services can [...]

By: no third solution » Blog Archive » Comments on Comments #25

no third solution » Blog Archive » Comments on Comments #25 — Tue, 14 Oct 2008 13:48:06 +0000

[...] Wang left a comment on Gresham’s Law is Wrong. In addition, it also works in the presence of Bimetalism fixed exchange rate or face values (also [...]

By: Shaoyu Wang

Shaoyu Wang — Mon, 29 Sep 2008 13:34:13 +0000

Robert,
In addition, it also works in the presence of Bimetalism fixed exchange rate or face values (also enforced by governments).

By: Francois Tremblay

Francois Tremblay — Sun, 27 Jul 2008 17:35:50 +0000

“the government need not debase the currency.”

Are you serious?

By: Robert Evans

Robert Evans — Sun, 27 Jul 2008 14:56:58 +0000

In short, Gresham’s Law is only correct in the presence of legal tender laws.

By: KipEsquire

KipEsquire — Sun, 27 Jul 2008 01:37:20 +0000

“Turning simple cloth into greenbacks does not and cannot create wealth. This argument cannot be made about gold, since so long as people continue to desire it (for whatever purposes), the production of gold does constitute the production of real wealth[.]“

This is a totally circular argument: Fiat currency has no “real” worth, because people MIGHT stop valuing it, but gold has “real” worth, because people MIGHT keep valuing it?

Stated differently: The entire global economy should be linked exclusively to the demand for jewelry?

(Incidentally, going back to Gresham’s Law: Seen many gold wedding bands — as opposed to platinum — on young newlywed men recently? Why not adopt a platinum standard instead?)

The gold standard’s only claim to validity is that of dilution: the government can debase the currency. But the anti-gold argument is still valid: the government need not debase the currency. And as long as it doesn’t, then the gold standard is a canard.

So, as always, the debate is only one of politics, not of economic theory per se.