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Wednesday, 23 June 2010

Real value to be destroyed by SA accountants over the next 30 years - Part I

Link to tables

Table 2 above is a good estimate of the state of real value destruction in the SA economy at the moment: In the 12 month period ending in August, 2009, inflation actually destroyed R1 952.799 billion x 0.064 = R124.9 billion in the real value of the Rand in the SA monetary economy. At the same time SA accountants unknowingly destroyed about R200 billion in the real value of constant items never maintained which they treat as monetary items in the SA constant item economy. About R324 billion in real value was thus destroyed in the SA economy in the 12 months to August, 2009 by inflation and unknowingly by SA accountants implementing their very destructive stable measuring unit assumption.


If inflation stays at 6.4% for the next five years and SA accountants keep on unknowingly destroying the real values of constant items never maintained which they treat as monetary items with their very destructive stable measuring unit assumption then a cumulative total of R1 620 billion in real value would be destroyed in the SA economy – all else being equal. The cumulative totals of real value destruction under these circumstances for 10, 20 and 30 years would be R3 240 billion, R6 480 billion and R9 720 billion respectively. These are huge values of real value destruction in the SA economy. The part which SA accountants unknowingly, unnecessarily and unintentionally destroy can easily be eliminated completely.

Kindest regards

Nicolaas Smith
realvalueaccounting@yahoo.com

Copyright © 2010 Nicolaas J Smith