Islamic economic system: from principles to microeconomics and macroeconomics fields (56)

Continuation

One of the interesting ideas is following.

That idea is known as the Gresham's law in the contemporary literature.

Gresham's law was discussed explicitly in the work of Taqiuddin Ahmad al-Maqrizi in the 14th century.

The law simply says that the bad money drives away the good money from the market.

People tend to use bad money for transactions and save the good money.

Thus the good money disappears from the market.

Al-Maqrizi found this happening in Egypt and analysed the phenomenon.

Ibn Taimiyyah (1263-1328 AD) also discussed the same law.

The credit for this contribution in the western literature goes to Thomas Gresham, an author of the nineteenth century.

Used from paper of Abdul Ghafar Ismail and  Noraziah Che Arshad