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Sir Isaac Newton (1642 – 1727) “I CAN CALCULATE THE MOTION OF HEAVENLY BODIES, BUT NOT THE MADNESS OF PEOPLE.”

Published byRandell Greene Modified over 9 years ago

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Presentation on theme: "Sir Isaac Newton (1642 – 1727) “I CAN CALCULATE THE MOTION OF HEAVENLY BODIES, BUT NOT THE MADNESS OF PEOPLE.”"— Presentation transcript:

1 Sir Isaac Newton (1642 – 1727) “I CAN CALCULATE THE MOTION OF HEAVENLY BODIES, BUT NOT THE MADNESS OF PEOPLE.”

2 DUTCH GOLDEN AGE 17 th Century – Through a merging of events, the Dutch reached a Golden Age Creation of a Middle Class Artists: Rembrandt, Vermeer

3 ECONOMICS VOC – Dutch East India Company First ever multinational company (1602) First modern stock exchange Monopoly on trade Tulip Mania

4 REASONS FOR THE GOLDEN AGE … Cheap Energy from: Invention of Windmills Use of Peat (energy) Sawmills led to: Boat building economy Ships for Trade & Navy Tolerant Society Exploration of Science Religious and Intellectual safety

5 How much would you pay for a Tulip? Goods allegedly exchanged for a single bulb of the Viceroy Two lasts of wheat448ƒ Four lasts of rye558ƒ Four fat oxen480ƒ Eight fat swine240ƒ Twelve fat sheep120ƒ Two hogsheads of wine70ƒ Four tuns of beer32ƒ Two tons of butter192ƒ 1,000 lb. of cheese120ƒ A complete bed100ƒ A suit of clothes80ƒ A silver drinking cup60ƒ Total2500ƒ

6 The Mosaic Virus Mosaic Virus caused ‘Broken Tulip coloration’ Rarity created demand Demand could not be met Rare tulips take time to grow and are fragile Valued tulips now extinct Normal Tulip vs. Tulip with Mosaic Virus

7 Definition 1 = The buying and selling of stuff Definition 2 = The study of the production, distribution and consumption of goods and services Supply & Demand WHAT IS ECONOMICS ?= Study of Commerce

8 SUPPLY & DEMAND

9 Return on investment of 25% More than 5x what a bank would give you! STOCKS/SHARES = SHARED RISK ExpeditionShare/Inv.ResultReturn Japan$100Boat sunk$0 Malacca$100Success+$225 China$100Rats+$50 India$100Success+$175 China$100Success+150 Java$100Success+150 Total:+$750

10 Allows individuals to buy shares or stock in a company “Shared ownership” Bull Market (prices go up) Bear Market (prices go down) STOCK EXCHANGE(video)(video)

11 MONOPOLY When one person or enterprise is the only source of a good or service Dutch had a monopoly on spices from Asia

12 TULIP BUBBLE aka TULIP MANIA Definition: when asset prices deviate from intrinsic value (prices are out of whack) Inflated expectations = inflated prices A trigger collapses the artificial prices (Bubble Bursts) = economic destruction

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14 What is ‘Black Friday’ ???

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