Daniel Altman: The Wealthy Elizabethan Merchant Who Explains CNN’s Bad Boston Coveragetags: CNN, coins, economics, Daniel Altman, Sir Thomas Gresham, Foreign Policy magazine
Daniel Altman teaches economics at New York University's Stern School of Business and is chief economist of Big Think.
Last week, during the frantic hunt for the second suspect in the Boston Marathon bombings, CNN wrongly reported that a man had been arrested. The news network soon corrected its error, but not in time to avoid a chorus of "how could this happen?" from, mostly, other media. Their explanations centered mainly on the pressures of the 24-hour news cycle. But for the real reason, you'd have to ask Sir Thomas Gresham.
Gresham was an advisor to Queen Elizabeth I and an exceptionally wealthy London merchant. Having realized that British money was losing its value because of the shoddy coinage standards of the queen's predecessors, Gresham suggested she create a new, more trustworthy money that could not be confused with the old specie. This act -- though not the first of its kind in recorded history -- gave rise to what is now known as Gresham's Law: "Bad money drives out good."
The law makes a simple but powerful point: Why would you go to the trouble of obtaining genuine legal tender when, at a lower cost, you can get something that works just as well? Joseph Schumpeter may have explained the law best in his History of Economic Analysis, pointing out that "if coins containing metal of different value enjoy equal legal-tender power, then the ‘cheapest' ones will be used for payment, the better ones will tend to disappear from circulation."...
comments powered by Disqus
- The Most Controversial Psych Study Is Repeated — Same Weird Result
- A new book explores the stunning revelation that Hemingway spied for the USSR
- A President’s Restless Corpse May Be on the Move Again in Tennessee
- How China and the U.S. might collide — or not
- Major Viking Age Archaeological Find Discovered in Denmark
- The New York Times celebrates biographer Richard Holmes
- Historians are in demand! (On cruise ships)
- Douglas Brinkley says there’s a "smell of treason in the air"
- Mary Maples Dunn, Advocate of Women’s Colleges and President of Smith, Dies at 85
- Gil Troy says Jews and Israelis are the victims of a “Hate Swarm”