Gresham's Law
Gresham’s law is that bad money drives out good when both are legal tender at a fixed rate: the overvalued coin circulates, the undervalued one is hoarded or exported.
Definition
Gresham's Law refers to gresham’s law is that bad money drives out good when both are legal tender at a fixed rate: the overvalued coin circulates, the undervalued one is hoarded or exported. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
It is a named object desks use to frame risk, positioning, or process. When gresham’s law is that bad money drives out good when both are legal tender at a fixed rate: the overvalued coin circulates, the undervalued one is hoarded or exported shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what gresham's law is saying. If gresham’s law is that bad money drives out good when both are legal tender at a fixed rate: the overvalued coin circulates, the undervalued one is hoarded or exported moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Keep the definition fixed, then challenge it with cross-checks before sizing. Prefer a short written null hypothesis for Gresham's Law: what would falsify the current reading in the next window?