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Tuesday, 8 September 2009

PricewaterhouseCoopers clueless about monetary and constant item real value

Dr Roelof Botha, an economic adviser to PricewaterhouseCoopers, does not agree with these levels of increase. "In the private sector increases exceeding consumer price inflation (CPI) may be justified if the company's productivity increases.

If institutions like the Reserve Bank and the South African Revenue Service (Sars) - which have no effect on the country's productivity and add no value to the economy - award salary increases higher than the CPI, they violate their own principles.
Fin24

Dr Roelof Botha from PricewaterhouseCoopers was commenting on the salary increases above the inflation rate at the SARB.

It is unbelievable that an economic adviser to PricewaterhouseCoopers would state that the SARB has no effect on the country´s productivity and add no value to the economy.

A 1% drop in the inflation rate maintains instead of destroy R20 billion per annum in the SA monetary economy. Tito Mboweni and his team at the SARB have succeeded in maintaining average annual inflation at 6% per annum for the last 10 years compared to 12% average annual inflation during the last 12 years of apartheid rule. They have thus maintained instead of destroyed R120 billion per annum in the SA monetary economy during the last 10 years.

Basically the SARB has added R120 billion PER ANNUM to the economy during the last 10 years. This will carry on in the future as long as inflation can be maintained at or below 6%.

PWC´s Dr Botha regards R120 billion per annum as "no value".

The 50% reduction in average annual inflation also reduced by 50% the amount of real value SA accountants at PricewaterhouseCoopers´ clients and all other SA companies unknowingly destroy in constant items never updated in the SA real economy. PWC signed most of their clients´ accounts off as "fairly presenting their businesses."

PricewaterhouseCoopers is not even remotely aware of the unknowing and unintentional destruction in the real value of constant items never updated by all the accountants at all their clients. PWC is blisfully lost in Historical Cost accounting - blindfolded by their complete support of the implementation of the very destructive stable measuring unit assumption in the SA economy.

PricewaterhouseCoopers´ Dr Botha will obviously state that Gideon Gono, the governor of the Reserve Bank of Zimbabwe had not the slightes effect on the Zimbabwean economy when he single handedly wiped out 100% of the real value of the Zimbabwe Dollar in the Zim monetary economy with hyperinflation at billions of percent and eliminated the ZimDollar completely from the Zim economy in that fashion.

The blatant lack of basic understanding of measurement of monetary as well as constant item real value in the SA economy by PricewaterhouseCoopers is shocking.

Kindest regards,

Nicolaas Smith