LIGHTNING RELEASES 06/24/14 — Emeritus engineering professor R. L. Handy of Iowa State University attributes the ear-ringing serenades of cicadas to “fat bugs with an attitude—as who wouldn’t, when they wake up after 17 years and pay $4 for a cup of coffee?”
Prof. Handy points out that inflation creates a half-life for the dollar. “The average inflation rate of 3 percent gives the dollar a half-life of only 23.5 years: Put a dollar bill in a sock drawer for 23.5 years and when you pull it out it will be worth 50 cents. After 47 years it will be worth 25 cents. After 70 years, 12.5 cents. People have trouble with that. It’s a slippery slope. Makes it hard to stand up, let alone get anywhere, especially in their bare feet.”
According to Prof. Handy, the 1914 price of a new Chevrolet automobile was $750. Based on a dollar half-life of 23.5 years, in 2014, which is 100 years and a little over four half-lives later, the equivalent cost should be $13,900. That is about the price of a new Chevrolet Spark automobile, fully equipped and ready for the recall.
He points out that paying off today’s national debt with tomorrow’s dollars works the system if interest rates are low enough. “The debt limit and minimum wage arguably could be adjusted for inflation but Congress will never go along with it, because that would put an end to the arguing.”
Prof. Handy also points out that since an investment has to pay at least 3 percent in order to keep up with inflation, which lets some of the hot air out of mutual funds. “Inflation plus management fees are like a sales tax, except that they don’t stop taxing.”
The declining value of a dollar follows a simple mathematical formula he calls “FORE,” which stands for “first-order rate equation.” The equation is used in many scientific studies, and he modified it to apply to topics like life expectancy, population growth, home run hitting, and record times in the 100 meter dash.
“FORE shows how a nerdy new technology can even trump athleticism. Record heights in the pole vault jumped 25 percent after introduction of the fiberglass pole. FORE translates old records into modern equivalents.”
Handy also points out that FORE is analytical. There is only one basic equation. “A lot of research is empirical so every set of data gives a different equation. That is why conclusions can change with the evening news, especially when they deal with health issues.”
Prof. Handy’s book, “FORE and the Future of Practically Everything, is available for a ridiculously low price online or can be ordered through booksellers. He does not like the word futurist. “FORE projects past records into the future so it is not futurist, it is projectionist.”
Handy’s book uses a humorous approach in order to keep the logarithms humming. The book answers questions like, “Will men ever live as long as women, and if so, how long is it going to take? Would Jesse Owens still hold a world record if he had run on paved instead of cinder tracks? Are Flo-Jo’s phenomenal world records in track really real? Which home run hitters blew their cover by taking things too far?” He says to read the book to find out.
The basic assumption for FORE is that a rate of change depends on how far a process has to go. That is good news is that means that the decline of the dollar will gradually slow down and eventually stop. The bad news is that it will stop at zero. Prof. Handy makes no other claims or apologies—He only says, “It figures.”