22 sats \ 1 reply \ @denlillaapan OP 25 Oct \ parent \ on: MONEY CLASS OF THE DAY: Sir Thomas Gresham and the Economic Law He Didn't Make econ
Nono, you're missing my point -- and what I think a lot of the Rolnick/Mundell/Selgin debacles was about:
everyone will try to spend the used one, and keep the high-quality one. But the merchant is in the exact same position, with incentives reversed. He would want the brand new one, not the significantly used one.
So there's a negotiation going on, naturally leading to some kind of price discovery (pay premium/discount for pristine quality etc).
The weird think you discuss is when some entity FORCES everyone to accept the two notes at par. (insert good car/bad car analogy)
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0 sats \ 0 replies \ @jk_14 25 Oct
But the merchant is in the exact same position
No, he is not in the same position.
I see the content of my wallet only - while he doesn't. And I give him ten-dollar banknote which I prefer: so, a used one, but still in acceptable condition for anyone.
He simply doesn't know if I have another ten-dollar banknote (brand new) inside my wallet or not.
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