Valuation Standard Based on Solution of Value,A Non-violable Law of Nature in Social Sciencehttp://infinitespreadsheet.com (free demo)

1. Infinite Spreadsheet
Valuation Standard Based on Solution of Value
A Non-violable Law of Nature in Social Science
http://infinitespreadsheet.com (free demo)
Hugh Ching
Post-Science Institute 2015
http://www.post-science.com

2. About the Author
Hugh Ching (http://hughching.com) founded post-
science with support from Ta-You Wu, T. L.
Kunii, C. V. Ramamoorthy, and Lotfi A. Zadeh.
The mission of post-science is to find, with the
solutions of touch, value, and software, the
direction of knowledge for the next 2000 years.
Hugh Ching has lower the age of the students of
his solutions of touch, value, and software to 6.
2

3. Overview
The Infinite Spreadsheet answers the
three basic questions, which all
businessmen and economists try to avoid:
(1) What is the price?
(2) How to solve the financial crisis?
(3) How to set the interest rate (or to
calculate the rate of return)?
3

4. The Goal of Post-Science
The goal of post-science is to find the solution to
(1) financial crises, (2) complexity crises, and (3)
permanent life with infinite, not finite, planning.
The solution to financial crisis is the post-science
solution of value, e. g. the Infinite Spreadsheet,
which establishes economic equilibrium among all
the factors extending to infinite time and space.
The solution of complexity crises is the post-
science solution of complete automation.
The solution of permanent life is DNA. 4

5. Knowledge for Next 2000 Years
 Age of Social Science (2000 - 2500): Non-violable
laws of nature in social science, e. g. the Infinite
Spreadsheet, will replace all man-made laws.
 Age of Life Science (2500 – 3000): The solution of
complete automation will be the foundation of life and
computer sciences.
 Age of Robotics (3000 – 3500): Self-Manufactured
General Purpose Robots with the ability of touch will
replace all human physical labors.
 Age of Self-Creation (3500 – 4000): From our own
self-creation, we will understand the meaning of life
and the purpose of existence. 5

6. Knowledge for Next Decade
The most important knowledge progress for
the next decade will be the recognition of the
existence of Non-violable Laws of Nature in
Social Science.
Solving the financial crisis will be the most
important development in next 100 years.
The solution to financial crises is the solution
of value (e. g. the Infinite Spreadsheet),
which is a non-violable law in social science.
6

7. Foundation of Social Science
Social science deals with reality, which is
infinite in time and space.
Since infinity can never be reached,
problems involving infinity can never be
empirical verification.
The acceptance of a solutions in social
science is based on mathematical verification
within a fuzzy range of tolerance.
7

8. Introduction
The Infinite Spreadsheet establishes
socioeconomic equilibrium among all the factors
affecting a value, price or decision, extending to
infinity in time and space.
Being mathematically rigorous, the Infinite
Spreadsheet is a non-violable law of nature in
social science and, therefore, should be observed
in all decision-making by all individuals and
governments within the fuzzy limit of tolerance.
 THE MARKET IS NOT FREE. 8

9. Historical Significance (1of 6)
The solution of value was conceived in 1972.
The solution helped dominate the commercial
real estate brokerage in the San Francisco
East Bay in the 1970s.
The solution was on CompuServe in the
1980s and dominated investment analysis.
The solution predicted publicly the US
Savings and Loan Crisis in 1984 by detecting
the overvaluation of the real estate market.
9

10. Historical Significance (2of 6)
The Knowledge Team led by Hugh Ching,
William N. Kinnard, Jr., Tom and Mary Dum,
James Mason, and other appraisal authorities
endorsed the Infinite Spreadsheet as the
solution to the Savings and Loan Crisis.
The Political Team led by Fed Chairman Alan
Greenspan, who is backed by Milton
Friedman, endorsed the Free Market.
10

11. Historical Significance (3of 6)
The solution to the US Savings and Loan
Crisis was the passing of the Financial
Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA).
FIRREA of 1989 endorses the market
comparison method of appraisal, which had
caused the Crisis by keeping the price rigid.
FIRREA of 1989 contributed to the 2007
Subprime Woe, an order of magnitude more
severe than the Savings and Loan Crisis. 11

12. Historical Significance (4of 6)
Hugh Ching warned Fed Chairman Ben S.
Bernanke in June of 2006 that the interest rate
should be lowered. Bernanke instead raised
the Fed rate another quarter point to 5.25%.
The Subprime Woe flared up in 2007 and
Bernanke apologized to Ching in 2008.
Out of about 100 public comments on toxic
assets, the US Treasury displayed 6, and out of
the 6, all 3 comments of Ching were displayed.
12

13. Historical Significance (5of 6)
On the intellectual side, Hugh Ching warned
the Assistant Director of the National Science
Foundation Mary Clutter the pending Savings
and Loan Crisis in 1984.
Ching communicated with Gerard Debreu and
Kenneth Arrow in the 1990s on the problem of
value in Theory of Value of Debreu.
Arrow questioned the correctness of the
discounted cash flow calculation on page 34.
The Infinite Spreadsheet is the correct solution.13

14. Historical Significance (6of 6)
The 2013 Nobel Economic Prize was given to
Eugene Fama, Lars Peter Hansen and Robert
Shiller, who contributed to the Subprime Woe
by supporting the market comparison method.
The 2014 Nobel Economic Prize was given to
Jean Tirole, who endorses the Free Market.
 The market is not free because it is regulated
by non-violable laws of nature in social
science, which will invalidate all man-made
laws not based on laws of nature. 14

15. Future Significance (1 of 3)
The chronicle financial crises have demonstrated
the disequilibria in the Free Market.
The solution of value has demonstrated that it can
predict and prevent financial crises by keeping the
economy in equilibrium.
The question facing the society in the future is:
To Plan or Not to Plan?
The solution should be Infinite Planning by all the
private and public market participants.
15

16. Future Significance (2of 3)
All data outside of science are fuzzy.
The Fuzzy Exact Solution should replaces the
Exact Solution as the ultimate solution in
mathematics.
The Infinite Spreadsheet can be expanded into
the Fuzzy Infinite Spreadsheet, where single
value in each cell is replaced by a range of
value, reflecting the range of tolerance.
The range of tolerance can only be determined
with the availability of the Infinite Spreadsheet.16

17. Future Significance (3of 3)
The range of tolerance of a product or a
creation is the basis of freedom or free will.
A fuzzy human has freedom, and an exact
robot has no freedom.
In order to extend the range of tolerance of
a living thing, multi-cellular design
provides the ultimate fault tolerance.
The multi-cellular design causes the human,
thus, social and life sciences to be fuzzy.
17

18. Bubble Equation
Bubble = Market Value – Intrinsic Value
Market Value is obtained from the market
price.
Intrinsic Value is calculated based on
expected future cash flows: $Cash Return =
Sum of Cash Flows + Cash From Resale 18

19. Interest Rule
Rate of Return > Interest Rate > Inflation
Rate of Return is calculated based on the sale price
using the Infinite Spreadsheet, a deterministic
valuation system based on the solution of value.
 http://www.infinitespreadsheet.com/verify.htm
19

20. Application of Interest Rule
Application of the Interest Rule to the
Subprime Woe:
The Cause of the Subprime Woe:
Interest Rate > Rate of Return
The Solution to the Subprime Woe:
Lower the Interest Rate
The above Solution was recommended to
the Federal Reserve Board and applied with
success.
20

21. Cause and Cure of Financial Crisis
CAUSE: Rapid Rise of Fed Funds Rate
Causing a Real Estate Bubble.
CURE: Correct Calculation of Intrinsic Value
to Detect Bubble.
Graph: Market Price vs. Intrinsic Price:
21

22. Complete Valuation Package
Best Practice of Real Estate Appraisal
1. Use Google Spreadsheet to collect all
the inputs,
2. Use the Infinite Spreadsheet to
calculate the price, and
3. Use Google Spreadsheet to display the
outputs.
22

23. Strategy
World-Wide Valuation Standard
 1. Debate of Free Market versus Infinite Planning.
 2. Demonstrate to governments the non-violable law.
 3. Develop completely automated Valuation Package.
 4. Valuate and auto-recalculate all real estates on earth.
 5. Expand to stock http://123iss.com and others.
23

24. Implementation
Demonstration on the Internet:
http://infinitespreadsheet.com (Full System)
http://123is.com (For Real Estate Valuation)
http://123iss.com (For Stock Rate of Return)
Foxconn Cloud Information Provider
Textbook Business published at Tsing Hua U.
Press
Decision Center using the IS Desktop System
24

25. Infinite Spreadsheet Valuation
Income or fee (non-exclusive – exclusive) $20,000-
200,000; 40, 000-400,000; 80,000-800,000;
160,000-1,600,000; 320,000-3,200,000; 180%;
160%; 140%; 120%; 110% to infinity (100%, 100%,
100%, 100%, 80%, 60%, 40%, 20%, 10% to
infinity) Fuzzy Infinite Spreadsheet
40% rate of return 4 yrs. for current and resale
Price 2014 for Cloud Computing: $1,000,000non-
exclusive-$10,000,000exclusive
25

26. Growth Plan
$500,000 investment for 5% of the company
in 2015-2016 based on $10,000,000 valuation.
The first round should push up valuation to
$100,000,000.
$5,000,000 investment for 5% of the company
in 2017-2018.
The second round should allow the Infinite
Spreadsheet to capture international valuation
standard and push valuation to $Billions.
The ultimate goal is $Trillion market cap. 26

27. Conclusion (1 of 5)
The Age of Science was initiated with the
realization of the existence of non-violable
laws of nature in science.
The Age of Social Science will start with
the realization of the existence of non-
violable laws of nature in social science.
27

28. Conclusion (2 of 5)
Non-violable laws of nature in social
science is empirically verified by the
chronicle financial crises and the theoretical
predictions of the Savings and Loan Crisis
and the Subprime Woe with the Infinite
Spreadsheet (http://123is.com), which is
mathematically rigorous and, therefore,
non-violable.
28

29. Conclusion (3 of 5)
Financial crises will continue to occur without
the price being stabilized by the Infinite
Spreadsheet. The price would be unstable
when analyzed by a finite spreadsheet. The
equation of Cash Return can be written as
Cash Return = Sum of Cash Flows + Cash
from Resale
In a finite spreadsheet, the price can be
arbitrarily justified by the Cash from Resale.
29

30. Conclusion (4 of 5)
The Price, overvaluation, and undervaluation
are driven by the Finite Spreadsheet Instability.
Financial crises will always occur if not checked
by the Infinite Spreadsheet.
The spatial dependence based on the supply and
demand model is stable.
A graph depicting the Price vs. the Quantity and
a third axis of the price calculated by the Infinite
Spreadsheet is a three dimensional saddle.
30

31. Conclusion (5 of 5)
The coming Age of Social Science will be
brought about mainly by three thinkers,
Gerard Debreu, whose introduces formally
the infinite nature of reality, Hugh Ching,
who introduces the concept of Non-violable
Laws of Nature in Social Science as an
extension of the Non-violable Laws in
Science, and Lotfi Zadeh, who introduces
the fuzzy nature of reality and points out
that the Laws in social science are fuzzy. 31