Pages

Friday, 19 October 2012

Fourth advantage of daily inflation-indexing the entire money supply

Another (the fourth) very important benefit of daily inflation-indexing the entire money supply at all levels of inflation and deflation under complete co-ordination (which is the rejection of the stable measuring unit assumption in the monetary economy) would be that it would logically compliment the rejection of the stable measuring unit assumption in the constant item economy (the non-monetary or real economy being made up of the constant and variable item economies) under financial capital maintenance in units of constant purchasing power in terms of a Daily CPI or other daily index as already authorised in IFRS.
Financial capital maintenance in units of constant purchasing power as authorised in IFRS would automatically maintain the constant purchasing power of equity (capital) constant for an indefinite period of time in all entities that at least break even in real value - all else being equal - at all levels of inflation and deflation.
This means the constant real value of the entire capital investment base in an economy would automatically be maintained constant for an indefinite period of time as qualified above, i.e., in all entities that at least break even in real value, all else being equal under financial capital maintenance in units of constant purchasing power.

Nicolaas Smith

Buy the Kindle ebook at Amazon.com for $2.99 or £1.53 or €2.68




Copyright (c) 2005-2012 Nicolaas J Smith. All rights reserved. No reproduction without permission.