IFRS and US GAAP authorised CMUCPP automatically maintains the constant purchasing power of constant real value non-monetary items (e.g. capital, all items in shareholders´ equity, provisions, salaries, wages, pensions, taxes, trade debtors/creditors, etc) only when updated in terms of the Daily CPI during low and high inflation, hyperinflation and deflation - ceteris paribus. European Accounting Association: "Capital maintenance is a competing objective of financial reporting."
Quantitative easing is thecreationofnewmoney by the central bank in the formofloanstocommercialbanksthatdoesnotresultinanincreaseininflation. A central bank increases commercial banks´reserveswith the centralbankbymeans of validloansthathave to bepaidbackby the commercial banks. The commercialbanks, havingmorereserves with the central bank,thenincreaseloanstobusinessesandconsumerswhichboosteconomicactivityinanon-inflationaryway. Nicolaas Smith Copyright (c) 2005-2014 Nicolaas J Smith. All rights reserved. No reproduction without permission.