News are that Avatar has beaten Titanic to become the highest grossing movie ever. In absolute numbers that may be true, but the price of a movie ticket now isn't exactly what it used to be in the past. I paid $10 to see Avatar 3D; I've seen price tickets as high as $20 (converted from Euros) in some European cinemas. I still remember paying $7 for an adult ticket twelve years ago, and farther in the past the tickets were even cheaper. Yes, I'm referring to inflation.
It turns out that according to Box Office Mojo, Avatar ranks "only" 26th in inflation-adjusted box office in the US. The highest grossing movie is still Gone With the Wind; Cameron's previous movie Titanic is sixth. However, Avatar has the lowest share (29.9%) of revenues from the US, from the top 50 movies ranked by inflation-adjusted earnings. Obviously, calculating the inflation-adjusted earnings on other countries for all the movies would be difficult and slow, so I took a shortcut and assumed a similar rate of inflation worldwide.
Based on this assumption and the share of earnings of top 50 movies in the US, I was able to determine that if inflation is taken into account, Avatar is the fifth-highest grossing movie ever, with nearly $1.9 billion. It is mere $20 million away from surpassing E. T. for the number four spot, but its chances to catch up with the first three movies (Gone with the Wind, Titanic and Star Wars) are slim. Here are the rankings of the current top five movies, adjusted for inflation and world-wide sales:
1. Gone with the Wind - $2.99 billion
2. Titanic - $2.89 billion
3. Star Wars - $2.2 billion
4. E. T. - $1.9 billion
5. Avatar - $1.88 billion
A word about my big assumption: Inflation rates vary from country to country, but are usually tied with changes in currency exchange rates(interest rate parity). As a result, calculating all earnings in US dollars could take care of most fluctuations in inflation between countries.
Wednesday, January 27, 2010
Monday, September 15, 2008
In defense of price gouging
As expected, the gasoline prices in Atlanta spiked the evening before hurricane Ike hit the Texas coast. And equally expected was the hysterical reaction of our elected officials and unelected bureaucrats who kept accusing gas station owners of price gouging. Whether they were right or not is beyond the point; I'm simply in favor of price spikes in times of panic.
Gas station owners are in a very precarious pricing situation. They are in an extremely competitive industry, with pricing pressures changing within hours. However, it is in their best interest to keep their prices slightly above demand, in order to always have gas available. According to various sources, gas station stores record much higher profit margins than gas itself, and thus attracting people with available, yet cheap gas, is essential. Striking this balance can be difficult during regular times; during a panic it's hit and miss.
This was also the case in Atlanta during the last panic. The local Quicktrip had regular gas for $3.66 in the morning, $3.93 in the afternoon and was sold out in the evening. A nearby Chevron station had gas available, for $4.26. Thus the fair price for the local market was somewhere between $3.93 and $4.26, with the first creating excess demand and the latter surplus. Those who favor price controls during panics should now pay close attention: as a driver, I couldn't care less about the price of gasoline when my tank is empty, only about its availability. Even those who view gas stations as more than just as business, as providers of essential infrastructure goods, should realize that because of the higher price, the Chevron station has provided an important public service: it kept gas available for people who really needed it. Quicktrip failed in this function: its manager did not estimate the level of demand properly, causing the station to run out of gas and stop servicing its constituency for nearly four days.
Gas station owners are in a very precarious pricing situation. They are in an extremely competitive industry, with pricing pressures changing within hours. However, it is in their best interest to keep their prices slightly above demand, in order to always have gas available. According to various sources, gas station stores record much higher profit margins than gas itself, and thus attracting people with available, yet cheap gas, is essential. Striking this balance can be difficult during regular times; during a panic it's hit and miss.
This was also the case in Atlanta during the last panic. The local Quicktrip had regular gas for $3.66 in the morning, $3.93 in the afternoon and was sold out in the evening. A nearby Chevron station had gas available, for $4.26. Thus the fair price for the local market was somewhere between $3.93 and $4.26, with the first creating excess demand and the latter surplus. Those who favor price controls during panics should now pay close attention: as a driver, I couldn't care less about the price of gasoline when my tank is empty, only about its availability. Even those who view gas stations as more than just as business, as providers of essential infrastructure goods, should realize that because of the higher price, the Chevron station has provided an important public service: it kept gas available for people who really needed it. Quicktrip failed in this function: its manager did not estimate the level of demand properly, causing the station to run out of gas and stop servicing its constituency for nearly four days.
Friday, March 21, 2008
What's a reasonable price for a gambling ban?
The most interesting thing about the on-line gambling ban imposed on US residents is the settlement the US reached with other countries. Most notably, the part that says that the settlement is a matter of national security, and thus the exact amount cannot be disclosed. We only now that a separate settlement, with Antigua, will cost the taxpayers $21 million annually. The estimates for the larger settlement with the EU and other countries range in tens of billions of dollars, presumably as a lump sum.
Making a wild and completely unjustified assumption, let's say that American lawmakers have enough common sense to make this settlement economically viable. For that, they should estimate the amount of economic damage to US gambling providers. Further, let's make a stupid assumption that without the ban US gambling operation would not launch their own on-line presence, and focus only on the current off-line revenues as a basis on the damage calculations.
The federal and state governments derive most of their gambling revenues from two sources: lotteries and casinos. Lotteries are justly called taxes for the stupid. In fact, as early as the Revolutionary War, lotteries were used to finance the American side. Last year, lottery spending has reached nearly 1% of all household spending in the US, with rates varying from 0% (six states have banned lotteries) to nearly 5% (with the exception of Rhode Island, where spending was at 7.47%, but most of it came from out of state purchases). The total lottery revenues reached $56.7 billion.
It is important to realize that lotteries offer much lower chances of winning than casino games. Usually, about fifty cents on each dollar is being paid off in winnings; the rest is officially used to pay for lottery expenses and special projects, such as school funding. (In truth, that money more often than not replaces budgetary spending, and thus can be considered budget income in the first place.) Lotteries also feature very steep double taxation. In addition to the 50% tax one pays by purchasing a lottery ticket, the winners have to pay income taxes, and the large winnings put them automatically into the 35% tax bracket. At the end of the day, on aggregate lottery players receive only 32 dollars and 50 cents for each 100 dollars spent. Subtracting lottery costs, the states and federal government end up with 52.5% of all lottery revenues.
So we have our first number - government's income from lotteries was around $29.8 billion last year. But how about casinos? Their revenue varies wildly, depending on who you ask. Some place their revenue at $637 billion for last year, but that's the total amount of wagers placed in the casinos. The casinos themselves report a total revenue of $54 billion, which is the amount they won from the players, but before their operating costs (by the way, that's only about 8.5 cents for each dollar wagered). Casinos have reported income taxes of $5.2 billion for commercial venues and $1.44 billion for racetrack operations, for a total of $6.64 billion.
So the total number of gambling income was $36.44 billion last year. To estimate how much would on-line gambling damage this income is impossible. Anyone who gives you a number just pulls it out of thin air. Last year, worldwide wagers in on-line gambling reached $18 billion. Assuming the absolutely worst-case scenario, that this amount would displace revenues for lottery games, this would cost various US governments about $9.5 billion in spending. Most likely, assuming the current distribution of wagers in the US, 92% at casinos and 8% for lotteries, the damage to government budgets would go down to $0.95 billion. All this, of course, assuming that the 100% of on-line gambling revenues came from the US, total displacement of revenues at other gambling sources (as opposed to increased gambling spending), and no on-line gambling operation based in the US and thus paying income taxes.
There you have it: the highly unrealistic, worst-case scenario would cost American federal and state governments between $0.95 and $9.5 billion last year. At the same time, the government refuses to release the settlement amount, despite the very public estimates that it reached tens of billions of dollars. This leads me to believe that the final amount may have been higher. Again, let's make some wild assumptions: let's say the settlement was between $20 billion (the lowest possible amount for "tens of billions"), and $100 billion (just a convenient number), and a 4% interest rate (within the range of this year's federal funds rate). It would take the US gambling industry 3 to 120 years to repay that settlement. (Note: I made one assumption against the government, by not suggesting any revenue growth for the on-line gambling industry, and while in a short to medium range this should not have a significant effect, at the high end of the range the number is probably way out of whack.)
From how I see it, the settlement caused by the on-line gambling ban was not paid for economic reasons, as the repayment period may be longer than any of our lifetimes, and definitely longer than the lifetime of the Internet in the form we know now. Let me rephrase that: the settlement was not paid for the "greater good" economic reasons; as some lawmakers already so eloquently showed us, gambling bans may have significant personal economic benefits. Even those would be just a fraction of the cost of the settlement. I just can't shake the feeling that I'm paying at least a hundred dollars for the privilege of not having the choice to spend my money in a different way. Kind of like the prisoners paying for the privilege to be kept in jail. Actually, with the insane already running the asylum, that may not be a bad analogy...
Making a wild and completely unjustified assumption, let's say that American lawmakers have enough common sense to make this settlement economically viable. For that, they should estimate the amount of economic damage to US gambling providers. Further, let's make a stupid assumption that without the ban US gambling operation would not launch their own on-line presence, and focus only on the current off-line revenues as a basis on the damage calculations.
The federal and state governments derive most of their gambling revenues from two sources: lotteries and casinos. Lotteries are justly called taxes for the stupid. In fact, as early as the Revolutionary War, lotteries were used to finance the American side. Last year, lottery spending has reached nearly 1% of all household spending in the US, with rates varying from 0% (six states have banned lotteries) to nearly 5% (with the exception of Rhode Island, where spending was at 7.47%, but most of it came from out of state purchases). The total lottery revenues reached $56.7 billion.
It is important to realize that lotteries offer much lower chances of winning than casino games. Usually, about fifty cents on each dollar is being paid off in winnings; the rest is officially used to pay for lottery expenses and special projects, such as school funding. (In truth, that money more often than not replaces budgetary spending, and thus can be considered budget income in the first place.) Lotteries also feature very steep double taxation. In addition to the 50% tax one pays by purchasing a lottery ticket, the winners have to pay income taxes, and the large winnings put them automatically into the 35% tax bracket. At the end of the day, on aggregate lottery players receive only 32 dollars and 50 cents for each 100 dollars spent. Subtracting lottery costs, the states and federal government end up with 52.5% of all lottery revenues.
So we have our first number - government's income from lotteries was around $29.8 billion last year. But how about casinos? Their revenue varies wildly, depending on who you ask. Some place their revenue at $637 billion for last year, but that's the total amount of wagers placed in the casinos. The casinos themselves report a total revenue of $54 billion, which is the amount they won from the players, but before their operating costs (by the way, that's only about 8.5 cents for each dollar wagered). Casinos have reported income taxes of $5.2 billion for commercial venues and $1.44 billion for racetrack operations, for a total of $6.64 billion.
So the total number of gambling income was $36.44 billion last year. To estimate how much would on-line gambling damage this income is impossible. Anyone who gives you a number just pulls it out of thin air. Last year, worldwide wagers in on-line gambling reached $18 billion. Assuming the absolutely worst-case scenario, that this amount would displace revenues for lottery games, this would cost various US governments about $9.5 billion in spending. Most likely, assuming the current distribution of wagers in the US, 92% at casinos and 8% for lotteries, the damage to government budgets would go down to $0.95 billion. All this, of course, assuming that the 100% of on-line gambling revenues came from the US, total displacement of revenues at other gambling sources (as opposed to increased gambling spending), and no on-line gambling operation based in the US and thus paying income taxes.
There you have it: the highly unrealistic, worst-case scenario would cost American federal and state governments between $0.95 and $9.5 billion last year. At the same time, the government refuses to release the settlement amount, despite the very public estimates that it reached tens of billions of dollars. This leads me to believe that the final amount may have been higher. Again, let's make some wild assumptions: let's say the settlement was between $20 billion (the lowest possible amount for "tens of billions"), and $100 billion (just a convenient number), and a 4% interest rate (within the range of this year's federal funds rate). It would take the US gambling industry 3 to 120 years to repay that settlement. (Note: I made one assumption against the government, by not suggesting any revenue growth for the on-line gambling industry, and while in a short to medium range this should not have a significant effect, at the high end of the range the number is probably way out of whack.)
From how I see it, the settlement caused by the on-line gambling ban was not paid for economic reasons, as the repayment period may be longer than any of our lifetimes, and definitely longer than the lifetime of the Internet in the form we know now. Let me rephrase that: the settlement was not paid for the "greater good" economic reasons; as some lawmakers already so eloquently showed us, gambling bans may have significant personal economic benefits. Even those would be just a fraction of the cost of the settlement. I just can't shake the feeling that I'm paying at least a hundred dollars for the privilege of not having the choice to spend my money in a different way. Kind of like the prisoners paying for the privilege to be kept in jail. Actually, with the insane already running the asylum, that may not be a bad analogy...
Tuesday, March 18, 2008
A quick note on inflation
The dollar keeps falling against the Euro. Oil and gold have hit new highs. Bernanke has printed a few billions of extra bills to bail out a bank. The sky is falling! I've put together a quick and dirty chart on the change in prices of oil, gold and Euro. It doesn't look all that bad for the dollar...
What we see here is a flight to commodities, but not a serious inflation of the dollar. The scale is from 100% on January 1 2007 to yesterday, and as we can see, during that time the price of Brent crude (spot) appreciated by slightly over 80%. That's a huge jump, but look at what was happening to the oil price in Euros and in grams of gold: until late August 2007 all three prices changed nearly identically. This indicates that oil prices have moved independently of the dollar until then, influenced only by supply and demand (and the perception of those). After that, two things happened: the dollar started growing weaker against the Euro, and the gold has taken off. Oil prices in grams of gold (Aug) has plateaued out.
The vast majority of the exchange rate swing took place between September and December; for the rest of the time the rate moved only very slightly. This is attributable to a number of factors, but a 15% exchange rate swing for two currencies that are not tied (in fact, they appear to be in global competition, not only for the distinction of reserve currency, but also as the price factor for two major import blocs) is not all that large. Gold, on the other hand, has grown in price primarily after the exchange rate between the dollar and Euro stabilized, and in fact, it's grown faster than the price of oil. This indicates a flight to safety, not excess inflation. Given inflation of around 3% in the Eurozone and 4% in the US, the growth in the price of gold was abnormally high, indicating a possible bubble. Moreover, considering that the commodity prices changed largely when there was little or no change in the US$/EUR exchange rate, we can safely assume that commodities have moved independently of the price of the two currencies, and not as a result of excess inflation.
What we see here is a flight to commodities, but not a serious inflation of the dollar. The scale is from 100% on January 1 2007 to yesterday, and as we can see, during that time the price of Brent crude (spot) appreciated by slightly over 80%. That's a huge jump, but look at what was happening to the oil price in Euros and in grams of gold: until late August 2007 all three prices changed nearly identically. This indicates that oil prices have moved independently of the dollar until then, influenced only by supply and demand (and the perception of those). After that, two things happened: the dollar started growing weaker against the Euro, and the gold has taken off. Oil prices in grams of gold (Aug) has plateaued out.
The vast majority of the exchange rate swing took place between September and December; for the rest of the time the rate moved only very slightly. This is attributable to a number of factors, but a 15% exchange rate swing for two currencies that are not tied (in fact, they appear to be in global competition, not only for the distinction of reserve currency, but also as the price factor for two major import blocs) is not all that large. Gold, on the other hand, has grown in price primarily after the exchange rate between the dollar and Euro stabilized, and in fact, it's grown faster than the price of oil. This indicates a flight to safety, not excess inflation. Given inflation of around 3% in the Eurozone and 4% in the US, the growth in the price of gold was abnormally high, indicating a possible bubble. Moreover, considering that the commodity prices changed largely when there was little or no change in the US$/EUR exchange rate, we can safely assume that commodities have moved independently of the price of the two currencies, and not as a result of excess inflation.
Sunday, December 2, 2007
On the value of US coins
Some say that money is only worth the paper it's printed on. It's not my place to agree or disagree with that, but given that the paper is not worth all that much, I was wondering how much US coins are worth. For my analysis, I looked only on coins from one cent to a quarter, ignoring the discontinued half dollar and the new dollar coins, as they rarely if ever find their way into my pocket. For value, I referenced the metal spot prices (in dollars) at the London Metal Exchange.
A few words about the materials the coins are produced from. Until 1981 (and partially 1982), 1 cent coins were produced from copper. Since then, they were switched to zinc, whose value is negligible in our calculation. Dimes and quarters were made of silver and heavier than today until 1964. Since then they consist of copper core and copper/zinc plating. If you were prepared to break the law and saw a quarter in half, you'd see that its inside color is very much like the one of a new cent. Five cent coins have always been manufactured from a copper/zinc alloy.
Using the unscientific method of counting the coins in my pocket (actually, in my coin jar with well over 1000 coins and thus with sample results having a relatively low margin of error), I found that for each $100 worth of coins you'd have 1080 coins. 441 of them will be one cent coins, 139 five cents, 241 dimes and 258 quarters. That, assuming, that you're like me and don't spend any of your coins in wending machines or laundromats. On their face value, they may be worth $100, but their real (metal) value is only about $17.40. The follwing chart shows this distribution.
You may notice that copper cents are suddenly woth more than before, but the value of other coins took a dive. Based on my count, about one in ten one cent coins you'd get is still copper, and currently the value of copper is about 2.16 cents, more than double the coins face value. In other coins, the copper content amount for less, compared to face value. The following table shows the relative value of the coins.
So what to conclude from this? Not much. Currently, we have laws against defacing currency, which will prevent you from melting the one cent coins and making some money. Not only it would be illegal, but also would require enormous amount of coins to make it worthwhile. Still, if the price of the US dollar keeps falling, one day the coins may be worth much more. Until then, though, I'll keep looking for the silver dimes and quarters that occassionally happen - they are worth roughly ten times their face value right now.
A few words about the materials the coins are produced from. Until 1981 (and partially 1982), 1 cent coins were produced from copper. Since then, they were switched to zinc, whose value is negligible in our calculation. Dimes and quarters were made of silver and heavier than today until 1964. Since then they consist of copper core and copper/zinc plating. If you were prepared to break the law and saw a quarter in half, you'd see that its inside color is very much like the one of a new cent. Five cent coins have always been manufactured from a copper/zinc alloy.
Using the unscientific method of counting the coins in my pocket (actually, in my coin jar with well over 1000 coins and thus with sample results having a relatively low margin of error), I found that for each $100 worth of coins you'd have 1080 coins. 441 of them will be one cent coins, 139 five cents, 241 dimes and 258 quarters. That, assuming, that you're like me and don't spend any of your coins in wending machines or laundromats. On their face value, they may be worth $100, but their real (metal) value is only about $17.40. The follwing chart shows this distribution.
You may notice that copper cents are suddenly woth more than before, but the value of other coins took a dive. Based on my count, about one in ten one cent coins you'd get is still copper, and currently the value of copper is about 2.16 cents, more than double the coins face value. In other coins, the copper content amount for less, compared to face value. The following table shows the relative value of the coins.
So what to conclude from this? Not much. Currently, we have laws against defacing currency, which will prevent you from melting the one cent coins and making some money. Not only it would be illegal, but also would require enormous amount of coins to make it worthwhile. Still, if the price of the US dollar keeps falling, one day the coins may be worth much more. Until then, though, I'll keep looking for the silver dimes and quarters that occassionally happen - they are worth roughly ten times their face value right now.
Friday, November 16, 2007
Liberty Dollar and the inflation-proof currency
On November 15, the FBI has raided the offices of Liberty Dollar and seized all its assets. Up to that point, the Liberty Dollar was the best known alternative currency in the US, a currency that cold be used by those who didn't want to pay or receive payments in US dollars. The main reason for not using US dollars was stated as the fact that US dollars are not inflation-proof. Liberty Dollar has solved this issue by linking its currency with precious metals. Its coins contain an amount of precious metals, mainly silver and gold, valued at the coins' face value. Its notes (deposit certificated) were fully backed by precious metals, including two tons of gold, which were seized in the raid.
It is not my goal to explore the legalities of using Liberty Dollars or government theft; other blogs have covered it already. I was more interested in the claim that Liberty Dollars or other precious metals-backed currencies were inflation proof. The currency's Web site is prominently featuring a well-known chart showing the decline in the value of US dollar. I recreated the chart using government inflation data:
What the chart does not address, though, is the growth in prices and wages. Inflation causes harm primarily if the growth in personal income is lower than the rate of inflation. The following chart shows the level of disposable (after-tax) personal income. Note that to normalize this number and account for differences in industry-specific wages and number of household members, I averaged the total personal income by the number of people in the US. This chart shows income in current dollars, not adjusted for inflation.
The graph seems to grow faster than the decline in dollar value. This is not an illusion - translated into 1914 dollars, the average disposable personal income grew from $400 to $1600, a four-fold increase. This despite the fact that the average tax burden grew from 2% to 12%, a six-fold increase. In other words, if the US dollar didn't change its value, we'd earn four times as much today as nearly 90 years ago.
In fact, it seems that wages have almost always outpaced inflation in the US. The following chart shows the inflation-adjusted change in wages, as well as the price in two staples that haven't changed much for the past century: a gallin of milk and housing costs. As can be see, we not only earned more in real wages, but we spent less on housing and food. The reason we don't feel much richer is that we find new things to spend our money on.
In fact, we are not saving much at all. Gone are the Jimmy Carter days of nearly 10% saving rates; for the past two years we saved less than 1% of our disposable income. Given that all my savings (with the exception of a small sum in the bank I need for liquidity) go into gold, I was wondering how well gold would hold up against the dollar. The following chart shows two things: the number of gold the average American could purchase with his savings every year, and the total profit or loss generated by holding onto the gold, given the gold spot prices.
As can be seen, if a person started purchasing gold since the abandonment of the Breton Woods System (given that that's when the price of dollar began floating against gold), by 2001, 30 years later, that person would lose money. That despite the fact that at that time the person would accumulate over 25 pounds of gold. Only thanks to the most recent fall in the price of dollar the value of gold holdings would yield a profit. Thanks to this, the current return on investment averages 7.74% annually for the past 36 years. That is still less than putting all savings into a Dow Jones index fund, which would at this point yield around 8.67% annually and increase the total gain in savings from $140,400 for investing in gold to $177,300.
I believe that historical inflation data doesn't support the claims than precious metals based currency was safer than US dollars. That doesn't mean it will be true for the future, though. As the past few years show, the US dollar may be on the verge in a long-term slide, and with no clearly dominating currency in the next few decades, gold may be the safest investment. I'm betting on it.
It is not my goal to explore the legalities of using Liberty Dollars or government theft; other blogs have covered it already. I was more interested in the claim that Liberty Dollars or other precious metals-backed currencies were inflation proof. The currency's Web site is prominently featuring a well-known chart showing the decline in the value of US dollar. I recreated the chart using government inflation data:
What the chart does not address, though, is the growth in prices and wages. Inflation causes harm primarily if the growth in personal income is lower than the rate of inflation. The following chart shows the level of disposable (after-tax) personal income. Note that to normalize this number and account for differences in industry-specific wages and number of household members, I averaged the total personal income by the number of people in the US. This chart shows income in current dollars, not adjusted for inflation.
The graph seems to grow faster than the decline in dollar value. This is not an illusion - translated into 1914 dollars, the average disposable personal income grew from $400 to $1600, a four-fold increase. This despite the fact that the average tax burden grew from 2% to 12%, a six-fold increase. In other words, if the US dollar didn't change its value, we'd earn four times as much today as nearly 90 years ago.
In fact, it seems that wages have almost always outpaced inflation in the US. The following chart shows the inflation-adjusted change in wages, as well as the price in two staples that haven't changed much for the past century: a gallin of milk and housing costs. As can be see, we not only earned more in real wages, but we spent less on housing and food. The reason we don't feel much richer is that we find new things to spend our money on.
In fact, we are not saving much at all. Gone are the Jimmy Carter days of nearly 10% saving rates; for the past two years we saved less than 1% of our disposable income. Given that all my savings (with the exception of a small sum in the bank I need for liquidity) go into gold, I was wondering how well gold would hold up against the dollar. The following chart shows two things: the number of gold the average American could purchase with his savings every year, and the total profit or loss generated by holding onto the gold, given the gold spot prices.
As can be seen, if a person started purchasing gold since the abandonment of the Breton Woods System (given that that's when the price of dollar began floating against gold), by 2001, 30 years later, that person would lose money. That despite the fact that at that time the person would accumulate over 25 pounds of gold. Only thanks to the most recent fall in the price of dollar the value of gold holdings would yield a profit. Thanks to this, the current return on investment averages 7.74% annually for the past 36 years. That is still less than putting all savings into a Dow Jones index fund, which would at this point yield around 8.67% annually and increase the total gain in savings from $140,400 for investing in gold to $177,300.
I believe that historical inflation data doesn't support the claims than precious metals based currency was safer than US dollars. That doesn't mean it will be true for the future, though. As the past few years show, the US dollar may be on the verge in a long-term slide, and with no clearly dominating currency in the next few decades, gold may be the safest investment. I'm betting on it.
Sunday, November 11, 2007
Terry Goodkind's Grace
I'm in the process of reading Terry Goodkind's Sword of Truth series of fantasy books. Towards the beginning of the fourth book, Goodkind described a magical symbol he called The Grace. From what I could learn on-line, The Grace plays a certain role in the books, but I was more intrigued by Goodkind's description of the symbol. In his Appendix of Terms, Goodkind describes the symbol as follows:
In the book he also mentions that the Grace is a symbol that's drawn by hand, on any medium. The first grace the main characters encounter is drawn in dirt; later it is explained that wizards often drew it almost subconsciously.
To my knowledge, however, a Grace has not been published by the author of the books, and so only guesses of how the symbol looks currently exist. Wikipedia has one such symbol, which shows the most literal interpretation of the Grace. However, when I tried to visualize the Grace, I was a little more liberal in putting words into drawings. First, I abandoned the idea of radiating lines escaping the outer circle. While this could be permissible in drawings, it could become very awkward in other symbols, which require some kind of framing, and the outer circle does offer such a frame. Windows, for example, could be designed into a self-containing Grace. In fact, Goodkind seems to have been inspired by cathedral windows, such as the Rose Window of the Cathedral of St. John the Divine in New York City, which contains elements of an eight-pointed star in two concentric circles. This window, like many other similar windows, also has lines radiating from the center, where Jesus (an equivalent to Goodkind's Creator) is placed.
After a little experimentation, I came up with a design that abandoned another element of the definition, the radiating lines crossing the corners of the square. I find this design to be very fascinating, and currently I'm working on a stained glass version.
Then, however, I decided to take a step back and redesign the Grace to allow for the easiest free-hand drawing. After all, people were drawing it subconsciously, and I wanted to come up with something that's easier to create, especially with the added constraint that the drawing begins on the outside. The second design is thus a step back, placing the radiating lines as they should be. Eight pointed star is not as easy to draw as a five- or six-pointed star, but techniques for each of the latter can be used. I often draw an eight pointed star when I'm doodling, using the same technique as in a five-pointed star: an uninterrupted line. Instead of skipping over one point, however, I skip over two. The other method, which mimics the six-pointed star technique, is even simpler, just instead of two opposing triangles two squares are drawn. This is the technique I used for the second drawing. Given that one square must be aligned with the larger square, I found this method to be the most simple and precise for drawing a grace.
As can be seen, though, I still took certain liberties. First, in both images I had the radiating lines cross inside the star, which makes them look more like a grid than rays. Second, in both cases I filled the inner circle with the star. This element is not addressed in the definition, but I fould the inner circle to be the perfect guide to draw a precise star.
Neither design explains one big question I have, however. Goodkind describes characters as tracing some of the radiating lines and identifying them as lines they represent, such as the line of magic. Given that the Grace has no identifying marks for top or bottom, though, I don't understand how any of the radiating lines can be identified.
A grace is a magic symbol representing all of existence. A grace consists of a small circle, inside a square, with one apex of the circle touching the middle of one side of the square. Each of the square's four points touch a point on the larger circle, which the square is inside. Inside the smaller circle is an eight pointed star. Lines radiating from the star's points pierce all the way through both circles, and the square, with each line bisecting a corner of the square. A grace is always drawn starting with the outer circle
In the book he also mentions that the Grace is a symbol that's drawn by hand, on any medium. The first grace the main characters encounter is drawn in dirt; later it is explained that wizards often drew it almost subconsciously.
To my knowledge, however, a Grace has not been published by the author of the books, and so only guesses of how the symbol looks currently exist. Wikipedia has one such symbol, which shows the most literal interpretation of the Grace. However, when I tried to visualize the Grace, I was a little more liberal in putting words into drawings. First, I abandoned the idea of radiating lines escaping the outer circle. While this could be permissible in drawings, it could become very awkward in other symbols, which require some kind of framing, and the outer circle does offer such a frame. Windows, for example, could be designed into a self-containing Grace. In fact, Goodkind seems to have been inspired by cathedral windows, such as the Rose Window of the Cathedral of St. John the Divine in New York City, which contains elements of an eight-pointed star in two concentric circles. This window, like many other similar windows, also has lines radiating from the center, where Jesus (an equivalent to Goodkind's Creator) is placed.
After a little experimentation, I came up with a design that abandoned another element of the definition, the radiating lines crossing the corners of the square. I find this design to be very fascinating, and currently I'm working on a stained glass version.
Then, however, I decided to take a step back and redesign the Grace to allow for the easiest free-hand drawing. After all, people were drawing it subconsciously, and I wanted to come up with something that's easier to create, especially with the added constraint that the drawing begins on the outside. The second design is thus a step back, placing the radiating lines as they should be. Eight pointed star is not as easy to draw as a five- or six-pointed star, but techniques for each of the latter can be used. I often draw an eight pointed star when I'm doodling, using the same technique as in a five-pointed star: an uninterrupted line. Instead of skipping over one point, however, I skip over two. The other method, which mimics the six-pointed star technique, is even simpler, just instead of two opposing triangles two squares are drawn. This is the technique I used for the second drawing. Given that one square must be aligned with the larger square, I found this method to be the most simple and precise for drawing a grace.
As can be seen, though, I still took certain liberties. First, in both images I had the radiating lines cross inside the star, which makes them look more like a grid than rays. Second, in both cases I filled the inner circle with the star. This element is not addressed in the definition, but I fould the inner circle to be the perfect guide to draw a precise star.
Neither design explains one big question I have, however. Goodkind describes characters as tracing some of the radiating lines and identifying them as lines they represent, such as the line of magic. Given that the Grace has no identifying marks for top or bottom, though, I don't understand how any of the radiating lines can be identified.
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