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Making your Intanglibles, Tangible. Part 3: Trade Secrets.
by Peter Smith
Apex Law is producing a four-part series on increasing the value of your business by making your intangibles, tangible. This post on trade secrets is the third installment of the series, and it is particularly useful for the DIY business owner because the scope and strength of trade secret protection rests on the actions that the business takes to maintain its secrets. There's no state filings or formal trade secret process. You might think you have protections to certain trade information, but failing to have even one employee, distributor or manufacturer sign a nondisclosure agreement ("NDA") could be fatal to protecting that information.
This post will discuss the means by which a company can go about protecting its trade secrets, potential remedies available if a trade secret is misappropriated, and the consideration of whether a trade secret could be better protected by registering for a patent.
What is a trade secret?
Trade secrets include a broad category of inventions, patterns, compilations, programs, devices, methods, techniques, or processes that derive independent economic value from not being generally known to, or readily ascertainable by, the general public who could obtain economic value from its disclosure[1]. A trade secret becomes a business commodity if it rises to a level of originality, novelty, or utility and a company goes to great lengths to maintain its secrecy against a wake of competitors. Unlike other categories of intellectual property (e.g. patents, copyright, trademarks), trade secrets are not registered with a state or federal agency; the scope and strength of legal protection is based on the amount of private protections the company itself puts in place.
What protections should I put in place?
Because the scope of trade secret protection depends on the actions of the businesses, if you maintain trade secrets you must take reasonable steps to safeguard them against public disclosure. It may sound obvious, but a trade secret has little value once it is in the public domain. Businesses must implement policies and procedures, communicating to employees, agents, or third parties entrusted with the information, that it is confidential and that disclosure is forbidden. Past means involved tangible techniques (i.e. lockboxes and safes), but today's digital world often requires that companies use a mix of traditional methods with new technological devices and software. Additionally, the importance of ensuring that employees are unable to disclose your trade secrets, and specifically be hired away for such knowledge by a competitor, cannot go understated. The following list includes some of the methods by which a company can keep trade secrets confidential:
First, identity what your company considers to be a trade secret (you cannot protect a high valued commodity if it goes unidentified);
Limit or restrict the number of people who have access to the information (keep it to a "need to know" basis);
Utilize password protected folders and a company-wide login system to restrict or monitor who has access to electronically stored information;
Break-up or fragment the process or formula so that no one employee knows it from beginning to end;
When negotiating a deal, seeking an investment, or otherwise working with a third party, be sure that an NDA is in place first before disclosing confidential trade secrets;
Use employment agreements that contain non-compete and confidentiality provisions;
Work to retain employees that have access to confidential information (a happy employee is a loyal employee);
Add a confidentiality policy to your company's employee handbook;
Ensure the return of all corporate documents from those employees that quit or are otherwise terminated;
Label all documents and electronic materials pertaining to trade secrets as proprietary or confidential;
Keep files physically locked-up, in a restricted access area, or use a file check-out system.
Remedies for disclosure.
So you put into effect a plan to protect your trade secrets, take all the above precations and still, there is a leak of information, what next? Remedies available for the misappropriation of a trade secret draw from Washington State's adoption of the Uniform Trade Secrets Act ("UTSA"). The UTSA provides a direct cause of action for misappropriation against anyone who unlawfully obtains and uses its trade secret to gain an unfair competitive or commercial advantage in the marketplace. Improper means of acquisition by a competitor include theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.[2] An individual or business that acquires a trade secret through improper means may be enjoined from using the information attained and will be liable to the originator for damages that result from actual loss caused by the misappropriation.
Trade secret limitations and patent protection alternatives.
Reliance on a company's diligence in maintaining a confidential system and relying upon state trade secret protection is not, however, a guarantee that the information will never enter the public domain or become public knowledge. The risk of a competitor discovering the process or mechanics involved in the creation of one's invention or commodity is a real and present risk. Ownership of a trade secret will not provide assurances of exclusive right in its use; trade secret laws do not protect against honest third party discovery or reverse engineering. A worst-case scenario in relying on trade secret protection can also materialize if a competitor independently comes up with the same invention, receives a patent registration for the invention, and then requires you to pay a licensing fee for use or production of your own idea.
For many businesses, the decision is whether to maintain their new commodity as a trade secret or to go ahead and file a patent application. "Patents require the inventor to provide a detailed and enabling disclosure about the invention in exchange for the right to exclude others from practicing the invention for a limited period of time."[3] In other words, the "secret" will become known to the public in exchange for the patent holder's exclusive right to use the invention.
As will be discussed in the fourth installment of this series, some inventions or manufacturing processes will simply not meet the patentability criteria[4] and can only be protected as trade secrets, but many items crossover into both categories. If an invention can be reversed engineered, independently developed, or if the cost to maintain confidentiality is exceedingly high, then there is a strong incentive to protect the idea by filing for a patent. Overall, the decision entails balancing factors related to both commercial costs and business strategy.
In making such a decision, the trade secret owner must be methodical, but also timely. Time is often of the essence, and an inventor developing under the guise of trade secret protection will lose the opportunity to patent an idea if he or she fails to file an application within one year of when the invention is first put into public use or offered for sale. A common practice in today's market is to seek and obtain a patent on that part of technology that is likely to be easily re-created, while maintaining related information or processes in confidence. Of course, making the decision between a patent filing and using trade secret protections is complicated, so hiring a professional is a highly recommended.
Whether using patent law or trade secret protections, the point of this post should be clear. You can greatly increase the value of your business by making sure that your secret sauces stay secret and stay protected. It's one thing to simply tell an investor or potential buyer that you've kept a process secret for your business's advantage, and it's quite another to show them the processes in place to maintain secrecy.
The article provided above is for general information purposes only and should not be relied on as specific legal advice. This article does not form an attorney-client relationship. If you have any questions about this article, please feel free to contact Peter J. Smith at peter@apexlg.com
This article was authored by guest blogger McKenzie Holden, a 2L at Seattle University School of Law and legal intern at the Apex Law Group.
[1] Uniform Trade Secret Act, See RCW 19.108
[2] RCW 19.108.010(1)
[3] http://www.uspto.gov/ip/global/patents/ir_pat_tradesecret.jsp
[4] Machines, processes/methods, and compositions of matter that are new, useful, and non-obvious meet the threshold for patentability.


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Theories of Demand of Money: Tobin's Portfolio and Baumol's Inventory Approaches
Theories of Demand of Money: Tobin's Portfolio and Baumol's Inventory Approaches!
By introducing speculative demand for money, Keynes made a significant departure from the classical theory of money demand which emphasized only the transactions demand for money. However, as seen above, Keynes' theory of speculative demand for money has been challenged.
The main drawback of Keynes' speculative demand for money is that it visualises that people hold their assets in either all money or all bonds. This seems quite unrealistic as individuals hold their financial wealth in some combination of both money and bonds.
This gave rise to portfolio approach to demand for money put forward by Tobin, Baumol and Freidman. The portfolio of wealth consists of money, interest-bearing bonds, shares, physical assets etc. Further, while according to Keynes' theory, demand for money for transaction purposes is insensitive to interest rate, the modem theories of money demand put forward by Baumol and Tobin show that money held for transaction purposes is interest elastic.
We discuss below the Post-Keynesian theories of demand for money put forward by Tobin, Baumol and Friedman.
1. Tobin's Portfolio Approach to Demand for Money:
An American economist James Tobin, in his important contribution explained that rational behaviour on the part of the individuals is that they should keep a portfolio of assets which consists of both bonds and money. In his analysis he makes a valid assumption that people prefer more wealth to less.
According to him, an investor is faced with a problem of what proportion of his portfolio of financial assets he should keep in the form of money (which earns no interest) and interest-bearing bonds. The portfolio of individuals may also consist of more risky assets such as shares.
According to Tobin, faced with various safe and risky assets, individuals diversify their portfolio by holding a balanced combination of safe and risky assets.
According to Tobin, individual's behaviour shows risk aversion. That is, they prefer less risk to more risk at a given rate of return. In the Keynes' analysis an individual holds his wealth in either all money or all bonds depending upon his estimate of the future rate of interest.
But, according to Tobin, individuals are uncertain about future rate of interest. If a wealth holder chooses to hold a greater proportion of risky assets such as bonds in his portfolio, he will be earning a high average return but will bear a higher degree of risk. Tobin argues that a risk averter will not opt for such a portfolio with all risky bonds or a greater proportion of them.
On the other hand, a person who, in his portfolio of wealth, holds only safe and riskless assets such as money (in the form of currency and demand deposits in banks) he will be taking almost zero risk but will also be having no return and as a result there will be no growth of his wealth. Therefore, people generally prefer a mixed diversified portfolio of money, bonds and shares, with each person opting for a little different balance between riskiness and return.
It is important to note that a person will be unwilling to hold all risky assets such as bonds unless he obtains a higher average return on them. In view of the desire of individuals to have both safety and reasonable return, they strike a balance between them and hold a mixed and balanced portfolio consisting of money (which is a safe and riskless asset) and risky assets such as bonds and shares though this balance or mix varies between various individuals depending on their attitude towards risk and hence their trade-off between risk and return.
Tobin's Liquidity Preference Function:
Tobin derived his liquidity preference function depicting relationship between rate of interest and demand for money (that is, preference for holding wealth in money form which is a safe and "riskless" asset. He argues that with the increase in the rate of interest (i.e. rate of return on bonds), wealth holders will be generally attracted to hold a greater fraction of their wealth in bonds and thus reduce their holding of money.
That is, at a higher rate of interest, their demand for holding money (i.e., liquidity) will be less and therefore they will hold more bonds in their portfolio. On the other hand, at a lower rate of interest they will hold more money and less bonds in their portfolio.
This means, like the Keynes's speculative demand for money, in Tobin's portfolio approach demand function for money as an asset (i.e. his liquidity preference function curve) slopes downwards as is shown in Fig. 19.1, where on the horizontal axis asset demand for money is shown. This downward-sloping liquidity preference function curve shows that the asset demand for money in the portfolio increases as the rate of interest on bonds falls.
In this way Tobin derives the aggregate liquidity preference curve by determining the effects of changes in interest rate on the asset demand for money in the portfolio of individuals. Tobin's liquidity preference theory has been found to be true by the empirical studies conducted to measure interest elasticity of the demand for money.
As shown by Tobin through his portfolio approach, these empirical studies reveal that aggregate liquidity preference curve is negatively sloped. This means that most of the people in the economy have liquidity preference function similar to the one shown by curve Md in Fig. 19.1. Evaluation:
Tobin's approach has done away with the limitation of Keynes' theory of liquidity preference for speculative motive, namely, individuals hold their wealth in either all money or all bonds. Thus, Tobin's approach, according to which individuals simultaneously hold both money and bonds but in different proportion at different rates of interest yields a continuous liquidity preference curve.
Further, Tobin's analysis of simultaneous holding of money and bonds is not based on the erroneous Keynes's assumption that interest rate will move only in one direction but on a simple fact that individuals do not know with certainty which way the interest rate will change.
It is worth mentioning that Tobin's portfolio approach, according to which liquidity preference (i.e. demand for money) is determined by the individual's attitude towards risk, can be extended to the problem of asset choice when there are several alternative assets, not just two, of money and bonds.
2. Baumol's Inventory Approach to Transactions Demand for Money:
Instead of Keynes's speculative demand for money, Baumol concentrated on transactions demand for money and put forward a new approach to explain it. Baumol explains the transaction demand for money from the viewpoint of the inventory control or inventory management similar to the inventory management of goods and materials by business firms.
As businessmen keep inventories of goods and materials to facilitate transactions or exchange in the context of changes in demand for them, Baumol asserts that individuals also hold inventory of money because this facilitates transactions (i.e. purchases) of goods and services.
In view of the cost incurred on holding inventories of goods there is need for keeping optimal inventory of goods to reduce cost. Similarly, individuals have to keep optimum inventory of money for transaction purposes. Individuals also incur cost when they hold inventories of money for transactions purposes.
They incur cost on these inventories as they have to forgone interest which they could have earned if they had kept their wealth in saving deposits or fixed deposits or invested in bonds. This interest income forgone is the cost of holding money for transactions purposes. In this way Baumol and Tobin emphasised that transaction demand for money is not independent of the rate of interest.
It may be noted that by money we mean currency and demand deposits which are quite safe and riskless but carry no interest. On the other hand, bonds yield interest or return but are risky and may involve capital loss if wealth holders invest in them.
However, saving deposits in banks, according to Baumol, are quite free from risk and also yield some interest. Therefore, Baumol asks the question why an individual holds money (i.e. currency and demand deposits) instead of keeping his wealth in saving deposits which are quite safe and earn some interest as well.
According to him, it is for convenience and capability of it being easily used for transactions of goods that people hold money with them in preference to the saving deposits. Unlike Keynes both Baumol and Tobin argue that transactions demand for money depends on the rate of interest.
People hold money for transaction purposes "to bridge the gap between the receipt of income and its spending." As interest rate on saving deposits goes up people will tend to shift a part of their money holdings to the interest-bearing saving deposits.
Individuals compare the costs and benefits of funds in the form of money with the interest- bearing saving deposits. According to Baumol, the cost which people incur when they hold funds in money is the opportunity cost of these funds, that is, interest income forgone by not putting them in saving deposits.
Baumol's Analysis of Transactions Demand:
A Baumol analysis the transactions demand for money of an individual who receives income at a specified interval, say every month, and spends it gradually at a steady rate. This is illustrated in Fig. 19.2. It is assumed that individual is paid Rs. 12000 salary cheque on the first day of each month.
Suppose he gets it cashed (i.e. converted into money) on the very first day and gradually spends it daily throughout the month. (Rs. 400 per day) so that at the end of the month he is left with no money. It can be easily seen that his average money holding in the month will be Rs. = 12000/2 = Rs. 6,000 (before 15th of a month he will be having more than Rs. 6,000 and after 15th day he will have less than Rs. 6,000). Average holding of money equal to Rs. 6,000 has been shown by the dotted line. Now, the question arises whether it is the optimal strategy of managing money or what is called optimal cash management. The simple answer is no. This is because the individual is losing interest which he could have earned if he had deposited some funds in interest-bearing saving deposits instead of withdrawing all his salary in cash on the first day.
He can manage his money balances so as to earn some interest income as well. Suppose, instead of withdrawing his entire salary on the first day of a month, he withdraws only half of it i.e. (Rs. 6,000 in cash and deposits the remaining amount of Rs. 6,000 in saving account which gives him interest of 5 per cent, his expenditure per day remaining constant at Rs. 400.
This is illustrated in Fig. 19.3. It will be seen that his money holdings of Rs. 6,000 will be reduced to zero at the end of the 15th day of each month. Now, he can withdraw Rs. 6,000 on the morning of 16th of each month and then spends it gradually, at a steady rate of 400 per day for the next 15 days of a month. This is a better method of managing funds as he will be earning interest on Rs. 6,000 for 15 days in each month. Average money holdings in this money management scheme is Rs. 6000/2 = 3000 Likewise, the individual may decide to withdraw Rs. 4,000 (i.e., 1/3rd of his salary) on the first day of each month and deposits Rs. 8,000 in the saving deposits. His Rs. 4,000 will be reduced to zero, as he spends his money on transactions, (that is, buying of goods and services) at the end of the 10th day and on the morning of 11th of each month he again withdraws Rs. 4,000 to spend on goods and services till the end of the 20th day and on 21st day of the month he again withdraws Rs. 4,000 to spend steadily till the end of the month. In this scheme on an average he will be holding Rs. 4000/2 = 2000 and will be investing remaining funds in saving deposits and earn interest on them. Thus, in this scheme he will be earning more interest income.
Now, which scheme will he decide to adopt? It may be noted that investing in saving deposits and then withdrawing cash from it to meet the transactions demand involves cost also. Cost on brokerage fee is incurred when one invests in interest-bearing bonds and sells them.
Even in case of saving deposits, the asset which we are taking for illustration, one has to spend on transportation costs for making extra trips to the bank for withdrawing money from the Savings Account. Besides, one has to spend time in the waiting line in the bank to withdraw cash each time from the saving deposits.
Thus, the greater the number of times an individual makes trips to the bank for withdrawing money, the greater the broker's fee he will incur. If he withdraws more cash, he will be avoiding some costs on account of brokerage fee.
Thus, individual faces a trade-off problem-, the greater the amount of pay cheque he withdraws in cash, less the cost on account of broker's fee but the greater the opportunity cost of forgoing interest income. The problem is therefore to determine an optimum amount of money to hold. Baumol has shown that optimal amount of money holding is determined by minimising the cost of interest income forgone and broker's fee. Let us elaborate it further.
Let the size of the pay cheque (i.e. salary) be denoted by Y, the average amount of the cash he withdraws each time the individual goes to the bank by C, the number of times he goes to the bank to withdraw cash by T, broker's fee which he has to bear each time he makes a trip to the bank by b. In the first scheme of money management when he gets his whole pay-cheque cashed on the first day of every month he incurs broker's fee only once since he makes only a single trip to the bank.
Thus T in our first case is equal to one T = Y/C = 12000/12000 = 1 because in this case C = Y. In the second, case, T = 12000/6000 =2 and in the third case T = 12000/4000 =3.
Interest income lost by holding money is the average amount of money holding multiplied by the interest rate. As seen above, average money held is one half of cash withdrawn each time (i.e., C/2).
Thus, interest income lost in the first case is rC/2 = 5/100 x 1200/2 = Rs. 300, in the second case interest lost =r.C/2 = 5/100 x 6000/2 = 150 and m the third case it is 5/100 x 4000/2 = 100.
Thus the total cost incurred on broker's fee and interest income forgone is given by
Total Cost =bT + r.C/2
Where b stands for broker's fee
As seen above, T = Y/C
Therefore, Total Cost = Y/Cb + r.C/2
Baumol has shown that average amount of cash withdrawal which minimises cost is given by
C = √2bY/r
This means that average amount of cash withdrawal which minimise cost is the square root of the two times broker's fee multiplied by the size of individual's income (Y) and divided by the interest rate. This is generally referred to as Square Root Rule.
For this rule, it follows that a higher broker's fee will raise the money holdings as it will discourage the individuals to make more trips to the bank. On the other hand, a higher interest rate will induce them to reduce their money holdings for transaction purposes as they will be induced to keep more funds in saving deposits to earn higher interest income. That is, at a higher rate of interest transactions demand for money holdings will decline.
Keynes thought that transactions demand for money was independent of rate of interest. According to him, transactions demand for money depends on the level of income. However, Baumol and Tobin have shown that transactions demand for money is sensitive to rate of interest.
As explained above, interest represents the opportunity cost of holding money instead of bonds, saving and fixed deposits. The higher the rate of interest, the greater the opportunity cost of holding money (i.e. the greater the interest income forgone for holding money for transactions).
Therefore, at a higher rate of interest people will try to economise the use of money and will demand less money for transactions. At a lower interest rate on bonds, saving and fixed deposits, the opportunity cost of holding money will be less which will prompt people to hold more money for transactions.
Therefore, according to Baumol and Tobin, transactions demand curve for money slopes downward as shown in Fig. 19.4. At higher interest rates, bonds, savings and fixed deposits are more attractive relative to money holding for transactions.
Therefore, at higher interest rates people tend to hold less money for transaction purposes. On the other hand, when the rates of interest are low, opportunity cost of holding money will be less and, as a consequence, people will hold more money for transactions. Therefore, the curve of transaction demand for money slopes downward. It will be observed from the square root rule given above that transactions demand for money varies directly with the income (Y) of the individuals. Therefore, the higher the level of income, the greater the transactions demand for money at a given rate of interest.
In Fig. 19.4. the three transactions demand curves for money Md, Md' and Md", for three different income levels, Y1, Y2, Y3 are shown. It will be known from the square root rule that optimum money holding for transactions will increase less than proportionately to the increase in income. Thus, transactions demand for money, according to Baumol and Tobin, is function of both rate of interest and the level of income.
Mtd = f(r, Y)
Where Mtd stands for transactions demand for money, r for rate of interest and Y for the level of income.
3. Friedman's Theory of Demand for Money:
A noted monetarist economist Friedman put forward demand for money function which plays an important role in his restatement of the quantity theory of money and prices.
Friedman believes that money demand function is most important stable function of macroeconomics. He treats money as one type of asset in which wealth holders can keep a part of their wealth. Business firms view money as a capital good or a factor of production which they combine with the services of other productive assets or labour to produce goods and services.
Thus, according to Friedman, individuals hold money for the services it provides to them. It may be noted that the service rendered by money is that it serves as a general purchasing power so that it can be conveniently used for buying goods and services.
His approach to demand for money does not consider any motives for holding money, nor does it distinguishes between speculative and transactions demand for money. Friedman considers the demand for money merely as an application of a general theory of demand for capital assets.
Like other capital assets, money also yields return and provides services. He analyses the various factors that determine the demand for money and from this analysis derives demand for money function. Note that the value of goods and services which money can buy represents the real yield on money. Obviously, this real yield of money in terms of goods and services which it can purchase will depend on the price level of goods and services.
Besides money, bonds are another type of asset in which people can hold their wealth. Bonds are securities which yield a stream of interest income, fixed in nominal terms. Yield on bond is the coupon rate of interest and also anticipated capital gain or loss due to expected changes in the market rate of interest.
Equities or Shares are another form of asset in which wealth can be held. The yield from equity is determined by the dividend rate, expected capital gain or loss and expected changes in the price level. The fourth form in which people can hold their wealth is the stock of producer and durable consumer commodities.
These commodities also yield a stream of income but in kind rather than in money. Thus, the basic yield from commodities is implicit one. However, Friedman also considers an explicit yield from commodities in the form of expected rate of change in their price per unit of time.
Friedman's nominal demand function (Md) for money can be written as
Md=f (W, h, rm, rb, re, P, ∆P/P, U)
As demand for real money balances is nominal demand for money divided by the price level, demand for real money balances can be written as
Md/P = f(W, h, rm, rb, re, P, ∆P/P, U)
Where Md stands for nominal demand for money and Md/P for demand for real money balances, W stands for wealth of the individuals, h for the proportion of human wealth to the total wealth held by the individuals, rm for rate of return or interest on money, rb for rate of interest on bonds, re for rate of return on equities, P for the price level, ∆P/P for the change in price level {i.e. rate of inflation), and U for the institutional factors.
1. Wealth (W):
The major factor determining the demand for money is the wealth of the individual (W) In wealth Friedman includes not only non-human wealth such as bonds, shares, money which yield various rates of return but also human wealth or human capital. By human wealth Friedman means the value of an individual's present and future earnings.
Whereas non-human wealth can be easily converted into money, that is, can be made liquid. Such substitution of human wealth is not easily possible. Thus human wealth represents illiquid component of wealth and, therefore, the proportion of human wealth to the non-human wealth has been included in the demand for money function as an independent variable.
Individual's demand for money directly depends on his total wealth. Indeed, the total wealth of an individual represents an upper limit of holding money by an individual and is similar to the budget constraint of the consumer in the theory of demand.
The greater the wealth of an individual, the more money he will demand for transactions and other purposes. As a country, becomes richer, its demand for money for transaction and other purposes will increase.
Since as compared to non- human wealth, human wealth is much less liquid, Friedman has argued that as the proportion of human wealth in the total wealth increases, there will be a greater demand for money to make up for the illiquidity of human wealth.
2. Rates of Interest or Return (rm, rb, re):
Friedman considers three rates of interest, namely, rb, re and which determine the demand for money, rm is the own rate of interest on money. Note that money kept in the form of currency and demand deposits does not earn any interest.
But money held as saving deposits and fixed deposits earns certain rates of interest and it is this rate of interest which is designated by rm in the money demand function. Given the other rates of interest or return, the higher the own rate of interest, the greater the demand for money.
In deciding how large a part of his wealth to hold in the form of money the individual will compare the rate of interest on money with rates of interest (or return) on bonds and other assets. As mentioned earlier, the opportunity cost of holding money is the interest or return given up by not holding these other forms of assets.
As rates of return on bond (rb) and equities (re) rise, the opportunity cost of holding money will increase which will reduce the demand for money holdings. Thus, the demand for money is negatively related to the rate of interest (or return) on bonds, equities and other such non-money assets.
3. Price Level (P):
Price level also determines the demand for money balances. A higher price level means people will require a larger nominal money balances in order to do the same amount of transactions, that is, to purchase the same amount of goods and services.
If income (Y) is used as proxy for wealth (W) which, as stated above, is the most important determinant of demand for money, then nominal income is given by Y.P which becomes a crucial determinant of demand for money.
Here Y stands for real income (i.e. in terms of goods and services) and P for price level. As the price level goes up, the demand for money will rise and, on the other hand, if price level falls, the demand for money will decline. As a matter of fact, people adjust the nominal money balances (M) to achieve their desired level of real money balances (M/P).
4. The Expected Rate of Inflation (∆P/P):
If people expect a higher rate of inflation, they will reduce their demand for money holdings. This is because inflation reduces the value of their money balances in terms of its power to purchase goods and services.
If the rate of inflation exceeds the nominal rate of interest, there will be negative rate of return on money. Therefore, when people expect a higher rate of inflation they will tend to convert their money holdings into goods or other assets which are not affected by inflation.
On the other hand, if people expect a fall in the price level, their demand for money holdings will increase.
5. Institutional Factors (U):
Institutional factors such as mode of wage payments and bill payments also affect the demand for money. Several other factors which influence the overall economic environment affect the demand for money. For example, if recession or war is anticipated, the demand for money balances will increase.
Besides, instability in capital markets, which erodes the confidence of the people in making profits from investment in bonds and equity shares will also raise the demand for money. Even political instability in the country influences the demand for money. To account for these institutional factors Friedman includes the variable U in his demand for money function.
Simplifying Friedman's Demand for Money Function:
A major problem faced in using Friedman's demand for money function has been that due to the non-existence of reliable data about the value of wealth (W), it is difficult to estimate the demand for money. To overcome this difficulty Friedman suggested that since the present value of wealth or W = YP/r (where Yp is the permanent income and r is the rate of interest on money.), permanent income Yp can be used as a proxy variable for wealth.
Incorporating this in Friedman's demand for money function we have:
Md = (Yp,h,rm,rb,re ∆P/P,U)
If, we assume that no price change is anticipated and institutional factors such as h and U remain fixed in the short run and also all the three rates of interest return are clubbed into one, Friedman's demand for money function is simplified to
Md = f(Ypr)
Main Motives for which Money is Wanted by the People
4 Key Determinants of Demand for Money
Quantity Theory of Money: Fisher's Transactions and Cambridge Cash Balance Approach
Demand for Money and Keynes' Liquidity Preference Theory of Interest

redpajama_set_name: RedPajamaCommonCrawl


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Sōsuke Uno (宇野宗佑 Uno Sōsuke, 27 d'agost de 1922-19 de maig de 1998) fou un polític japonès i 47é Primer Ministre del Japó des del 3 de juny de 1989 fins al 10 d'agost de 1989.

Biografia
Naixqué a Moriyama, a la Prefectura de Shiga i estudià a la Universitat de Kobe. Després de servir a l'Exèrcit Imperial Japonès durant la Segona Guerra Mundial, va entrar en el món de la política guanyant un escó a la Dieta del Japó l'any 1960.

La política principal d'Uno com a Primer Ministre va ser crear i instituir el primer impost al consum del Japó, el qual va causar immediatament una gran insatisfacció entre la ciutadania i una important fuita de vots que va fer guanyar al Partit Socialista del Japó les eleccions prefecturals de Tòquio d'aquell mateix any. El seu govern també estigué afectat pels efectes de l'Escàndol Recruit.

Uno va haver de resignar al seu càrrec menys de tres mesos després d'arribar després que isquera a la llum que havia mantingut relacions extramaritals amb una Geisha.

Després de la seua renúncia, molts diputats del PLD rebutjaren aliar-se amb ell i prompte va perdre el control de la seua facció al partit. Va morir l'any 1998 en la seua localitat natal, Moriyama.

Referències

Primers ministres del Japó
Polítics japonesos
Persones de la Prefectura de Shiga
Morts de càncer al Japó

redpajama_set_name: RedPajamaWikipedia


Royal Dano was an American actor.
Royal Dano was born on November 16th, in New York, New York, United States. His zodiac sign was Scorpio.
He died on Sunday, May 15th, 1994 at the age of seventy-one (71) in Los Angeles, California, United States.
As an actor, Royal Dano acted in movies such as Ghoulies II, released in 1987 (character: Uncle Ned), Spaced Invaders (1990) (Wrenchmuller), Cocaine Wars (1985) in which he portrays Bailey, House II: The Second Story (1987) playing Gramps, Something Wicked This Way Comes (1983) in which he plays Tom Fury, and The Red Badge of Courage (1951) portraying The Tattered Man.
No message has yet been posted about Royal Dano.
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text:
The Sun (Sydney, NSW : 1910 - 1954)
Sun 19 Feb 1922
TRAIN JUMPS TRACK
A railway accident occurred to-day at Watchem, an enginedriver being injured. The track was torn up for some distance, and many rails were broken.
Sun 19 Feb 1922 - The Sun (Sydney, NSW : 1910 - 1954)
Page 5 - TRAIN JUMPS TRACK
MELBOURNE, Saturday.
A railway accident occurred to-day',
at Watchem, an englnedriver being in
jured. The track was torn up for some
distance, and many rails were broken.
A goods train which left Burchlp this
liiviiiuib bwu,b ii u-twiutii wmttuM
jumped the points Tho engine and
tender were thrown over, and a truck
which was flung against the tender was
smashed intwo. The driver and fireman
jumped clear. The main line was com
pletely blocked, and the Mlldura ex,-
pre -s was delayed.
TRAIN JUMPS TRACK (1922, February 19). The Sun (Sydney, NSW : 1910 - 1954), p. 5. Retrieved January 16, 2021, from http://nla.gov.au/nla.news-article225213787
"TRAIN JUMPS TRACK" The Sun (Sydney, NSW : 1910 - 1954) 19 February 1922: 5. Web. 16 Jan 2021 <http://nla.gov.au/nla.news-article225213787>.
1922 'TRAIN JUMPS TRACK', The Sun (Sydney, NSW : 1910 - 1954), 19 February, p. 5. , viewed 16 Jan 2021, http://nla.gov.au/nla.news-article225213787
{{cite news |url=http://nla.gov.au/nla.news-article225213787 |title=TRAIN JUMPS TRACK |newspaper=[[The Sun]] |issue=986 |location=New South Wales, Australia |date=19 February 1922 |accessdate=16 January 2021 |page=5 |via=National Library of Australia}}
State Library of NSW Digital Excellence Program
The Sun (Sydney, NSW : 1910 - 1954), Sun 19 Feb 1922, Page 5 - TRAIN JUMPS TRACK