Near St. Paul’s in the City of London, literally, a one minute walk is Gresham Street
[http://www.streetmap.co.uk/newmap.srf?x=532454&y=181322&z=1&sv=gresham+street&st=6&tl=Gresham+Street,+London,+EC2v&searchp=newsearch.srf&mapp=newmap.srf]

It is named after Thomas Gresham was a financial agent and representative of the English Crown during the 16th Century. King Henry VIII had replaced 40% of the silver content in the English shilling with lower value base metals, effectively devaluing the shilling by 40%. Thus what happened was that business folk and merchants were hoarding the old shillings and using the new devalued shillings for trade. “Bad money crowds out good money.” The old shilling had far more value than the new shilling and the masses began to hoard the old ones.

Gresham’s law is an economic principle that states, “when a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation.” It is commonly stated as: “Bad money drives out good” – Gresham’s Law.

Modern examples are seen in the post financial crisis.

1. In Zimbabwe, shop keepers would sells items in shops, accept South African Rand or US dollers during the days of hyperinflation, and give change back to the customers in Zimbabwe Dollars.

2. In Iceland, shop keepers would sells items in shops, accept Euros during the Icelandic bankruptcy, and give change back to the customers in Icelandic Krona.

What you see in both cases, is the effective hoarding of what is perceived the more valuable asset, the South African Rand or the Euro.

With the levels of Quantative Easing, one has to think about whether governments are effectively trying to de-base the currency.