Contrary to the claims of Arthur Rolnick and Warren Weber, Gresham's Law is not a 'fallacy.' Nor does it rest on the unrealistic assumption of an operational fixed (disequilibrium) exchange rate between two economically distinct monies. Here I interpret Gresham's Law as a result of coercive...

Economists have long believed that, absent any public withdrawals of high-powered money, an unregulated, closed banking system can expand its assets and liabilities without encountering any shortage of reserves so long as its members act in concert. Notwithstanding its popularity, this...