The source of the law that bad money drives out good money is the purity of gold coins, that is, when someone puts 100% pure gold coins on the market, they will be mixed with some impurities, making them 70% gold coins. On the surface, gold coins still have purchasing power, but in essence, the original seven gold coins can be turned into ten gold coins. There are no 100% pure gold coins in the market. At this time, bad money drives out good money.

In a narrow sense, bad money drives out good money, which means that when the evaluator (the party lacking information) has a certain valuation, the supplier (the party with sufficient information) will choose to provide goods with lower real value (bad money), resulting in fewer and fewer goods with higher real value (good money). Broadly speaking, bad money drives out good money, which can also refer to the general phenomenon of reverse elimination (that is, bad money wins good money).

Tips: The above information is for reference only.

Reply time: 2021-12-16. Please refer to the latest business changes announced by Ping An Bank in official website.