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Sir Isaac Newton (1642 – 1727)

Sir Isaac Newton (1642 – 1727). “I CAN CALCULATE THE MOTION OF HEAVENLY BODIES, BUT NOT THE MADNESS OF PEOPLE.”. How much would you pay for a Tulip?. Goods allegedly exchanged for a single bulb of the Viceroy Two lasts of wheat 448ƒ Four lasts of rye 558ƒ Four fat oxen 480ƒ

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Sir Isaac Newton (1642 – 1727)

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

  2. How much would you pay for a Tulip? Goods allegedly exchanged for a single bulb of the Viceroy Two lasts of wheat 448ƒ Four lasts of rye 558ƒ Four fat oxen 480ƒ Eight fat swine 240ƒ Twelve fat sheep 120ƒ Two hogsheads of wine 70ƒ Four tuns of beer 32ƒ Two tons of butter 192ƒ 1,000 lb. of cheese 120ƒ A complete bed 100ƒ A suit of clothes 80ƒ A silver drinking cup 60ƒ Total 2500ƒ

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

  4. MAIN REASONS • Cheap Energy from: • Invention of Windmills • Use of Peat • Sawmills led to: • Boat building economy • Ships for Trade & Navy • Tolerant Society • Exploration of Science • Religious and Intellectual safety

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

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

  7. SUPPLY & DEMAND

  8. STOCKS/SHARES = SHARED RISK

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

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

  11. 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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