| Long ago there was a treasure-hunting magazine | | | | rather than the dollar losing its value. Inflation is |
| with an article about a house that was being | | | | really the wrong word for this effect. Therefore, |
| remodeled. It was an old house built at the turn of | | | | this writer will coin, or electronically create as the |
| the century. Construction workers had removed | | | | case may be, a new term for this phenomenon, |
| all of the old appliances and then began ripping out | | | | called decay - as in radioactive half-life. By the |
| the old plaster and lathe. As one wall was being | | | | way, the term "rust" was also considered, and |
| ripped out, small bundles, wrapped in aged white | | | | was the runner-up in this naming contest. |
| linen cloth came tumbling out. Workers opened | | | | So, as money decays, more of them are needed |
| the bundles and were stunned at what they | | | | in order to pay for a gallon of gas, or gallon of |
| found. Inside the bundles was $20,000 in cash and | | | | milk, or a trip to the doctor, or to pay for books |
| 1000 ounces of gold. The owner apparently | | | | and tuition. Some indicators used to measure this |
| stashed the bundles in there and then died, not | | | | decay strategically exclude energy, food, and |
| telling anyone where he had stashed his nest egg | | | | education, but include tin, molybdenum, and |
| - a huge nest egg for the 1920's. At that time, | | | | hundreds of other lesser-used commodities in |
| gold was worth about $20 per ounce, or $20,000, | | | | order to give a stable appearance. If we revisit |
| just like the dollar bills, so the nest egg in the | | | | the home remodel incident above, we could also |
| 1920's was worth $40,000. The amazing thing | | | | say that the gold did not decay, and is still 1000 |
| about the find was that the paper dollars were still | | | | ounces, no change. The dollars, however, had |
| worth $20,000, but the gold was now worth | | | | decayed from $630,000 to $20,000. They |
| $630,000! The total find that day would be valued | | | | decayed 97%. Therefore, the guy who stashed |
| at $650,000! This means that the deceased | | | | his money in the walls of that old house did not |
| owners' nest egg had grown tremendously in | | | | posthumously grow his nest egg, as previously |
| value, right? Actually, the growth of the nest egg | | | | thought. But, rather, his $40,000 investment could |
| was only an illusion, and the magic trick will be | | | | have been worth $1.26 million in today's dollars. |
| discussed below. | | | | Therefore it actually decayed from $1.26 million |
| Over time the amount of money in circulation | | | | down to $650,000, for a loss of $610,000, or |
| increases, and it usually increases faster than the | | | | 48%. |
| population growth rate so over time there is | | | | Some beneficial conclusions can be drawn from |
| more money around for people to use. Time is | | | | this incident. Aside from the benefits of ripping out |
| not to blame, but it simply reveals how things | | | | old walls and telling someone you love about your |
| work, namely that the dollar loses it's value over | | | | hoard before you die, the point to be made here |
| time. How fast it devalues is continuously | | | | is that money decays. Money rusts. So, look |
| changing, but the trend is down. Everyone knows | | | | elsewhere for the long-term investment or store |
| this. Usually we think in terms of prices rising, | | | | of value. |