The iTulip’s Great Insights Thread

[Sapiens]

Re: The iTulip’s Great Insights Thread

http://www.itulip.com/forums/showpos...7&postcount=19

Remember there are four factors that produce either inflation or deflation:

Supply of goods
Demand for goods
Supply of money
Demand for money

For any particular good, and for the particular channel of money available to purchase that good (e.g. mortgage loans for houses), prices over time are determined by the simplified formula below.

Oil Supply/Oil Demand
--------------------------------- = Goods Price
Money Demand/Money Supply

Assume from a starting point:

Supply of oil = 10
Demand for oil = 10
Supply of money = 10
Demand for money = 10

10/10
------ = 1
10/10

Decrease oil demand 50% relative to supply, hold money demand and supply steady: price falls by 50%.

10/5
------ = .5 (deflation)
10/10

Increase oil demand 50% relative to supply, hold money demand and supply steady: 100% inflation.

10/20
------ = 2 (inflation)
10/10

Hold oil demand and supply steady, decrease the supply of money 50% relative to demand: 50% deflation.

10/10
------ = .5 (deflation)
20/10

Hold oil demand and supply steady, increase the supply of money 100% relative to demand: 100% inflation.

10/10
------ = 2
10/20

Decrease oil demand 50% relative to supply (deflationary), increase the supply of money 200% relative to demand (inflationary): 100% inflation.

10/5
------ = 2
10/40

In the last case, demand falls 50%, yet prices double. Why? Because the purchasing power of each unit of money used to purchase oil fell more than the value of a unit of demand.

Keynes noted that as fast as demand can fall, the value of money can always be made to fall even faster.

Ah, you have almost cracked the Rockefeller Algorithm, you are in the right path. A clue, a BTU in its separate substrates defined in the unit of input, another, per capita demand and consumption of the above.

[Sapiens]

Re: The iTulip’s Great Insights Thread

http://www.itulip.com/forums/showthread.php?t=13002

...

Effect of the Law Merchant on Common & Statute Law

Many of the rules of the Law Merchant were directed to evade inconvenient rules of the common law. For example, one of the first rules of the common law is that a man cannot give what he himself has not. Hence, a man who has no title to goods cannot give title. Consequently, when you buy a thing, if you are to be sure that you have title to it, you must inquire into the title of that thing back to its remote possessors, to make sure that no one in the chain of title stole it or obtained it by fraud. Whereas, the merchant said that commercial business "cannot be carried on if we have to inquire into the title of everybody who comes to us with documents of title."

Lord Justice Bowen in Sanders v. McKlean, 11 Q.B.D. page 343 said, "The practice of merchants is not based on the supposition of possible fraud. The object of mercantile usage is to prevent the risk of insolvency, not of fraud; and anyone who attempts to follow and understand the Law Merchant will soon find himself lost, if he begins by assuming that merchants conduct their business on the basis of attempting to insure themselves against fraudulent dealing. The contra is the case. Credit, not distrust, is the basis of commercial dealings. Mercantile genius consists principally in knowing whom to trust and with whom to deal . . ."

The Law Merchant dealt with many choses in action, and it would have been very inconvenient, for example, when a man took a bill of exchange, if he were not able to sue on it in his own name or would have to inquire into the title of all previous endorsers.

[It is a uniform practice of banks, when processing checks, to stamp their endorsement on the back with the note "P.E.G.", which stands for "Prior Endorsement Guaranteed."]

Hence, the Law Merchant established certain documents or choses in action which were transferable by delivery and endorsement, or by delivery, so that the holder could sue in his own name and which passed good title to the transferee who took them in good faith, notwithstanding the transferor had no title. They could be sued on by the holder in his own name and were not affected by previous lack of title. This instrument was the original negotiable instrument. Hence, the law of negotiable instruments, with a few exceptions, is founded entirely upon the customs of merchants.

[The law of negotiable instruments is known today as the Uniform Commercial Code and is a part of every State's law by adoption.]

...

Second Instrument to be made Negotiable

The Promissory Note was the next document which obtained the feature of negotiability. The first case in which a promissory note was recognized by the courts of England as negotiable instruments was that of Sheldon v. Hently, 2 Showers 160, decided in 1680, in which case the court held a promissory note to be a negotiable instrument expressly stating ". . it was the custom of merchants that made them good."

Bank Notes become Negotiable

The next instruments to become negotiable were the promissory notes payable on demand issued by bankers, that is, bank notes. To this again, the custom of merchants very speedily gave negotiability, and in the leading case of Miller v. Race, Lord Mansfield decided that bank notes also were negotiable instruments, holding that it was necessary for the purposes of commerce that their currency be established and secured. Next, the banks besides issuing their promissory notes payable on demand, accepted and honored bills of exchange drawn on them by their customers payable on demand, that is, the check came into existence, and the practice of merchants made it negotiable.

[Jay]

Re: The iTulip’s Great Insights Thread

Thanks Sharky, that is what I suspected and fits in with my above post. Sorry, if this is simple to all of you, but I have zero education in these areas. I appreciate all of the comments and input.

The Creature from Jekyll Island has taught me a bunch. Bailout appears to be the endgame, every time. Bummer. Off to start my own bank... ;)

[Sapiens]

Re: The iTulip’s Great Insights Thread

[Diarmuid]

Re: The iTulip’s Great Insights Thread