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Thursday, 18 October 2012

Daily inflation-indexing the entire money supply an inevitable future step

Daily inflation-indexing the entire money supply an inevitable future step
 
Daily inflation-indexing of the entire money supply in terms of already existing Daily CPIs is an inevitable future step in the world economy.
(i)The first known inflation–indexed bond was issued by the Massachusetts Bay Company in 1780.
(ii) The British government began issuing inflation–linked Gilts in 1981. The market for inflation–linked bonds has grown rapidly since then - with the use of Daily CPI´s.
(iii) The IASB originally authorised financial capital maintenance in units of constant purchasing power in the original Framework in 1989.
(iv) Non-monetary items were then split in variable real value non-monetary items (property, plant, equipment, inventories, etc.) and constant real value non-monetary items (issued share capital, all items in shareholders´equity, salaries, wages, rents, trade debtors, trade creditors) in 2005 making the development of an accounting model based on financial capital maintenance in units of constant purchasing power in terms of a Daily CPI or other daily index possible.
(v) The draft IFRS 'X' CAPITAL MAINTENANCE IN UNITS OF CONSTANT PURCHASING POWER in terms of a Daily CPI or other daily index was submitted to the IASB in January 2012. An IFRS based on IFRS 'X' should be authorised in 6 to 8 years´ time.
(vi) Some years´ after that countries could start inflation-indexing their entire money supplies.
 
 
 

Nicolaas Smith

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