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Thursday, 12 August 2010

Salaries and wages would never be decreased in line with monthly deflation.

Salaries and wages would never be decreased in line with monthly deflation.
Effects of rejecting the current 3000-year-old Historical Cost paradigm and changing over to a Constant Item Purchasing Power paradigm:

All non-monetary receivables and payables would be updated monthly with the change in the CPI. E.g. trade debtors, trade creditors, taxes payable, taxes receivable, etc would be updated monthly.

Salaries and wages would be updated monthly.

Result: a law would be rushed through parliament in the first month of monthly deflation (as already happened in one American state very recently) to prevent salaries from being decreased in line with monthly deflation (as they should be in order to maintain economic stability).

This would result in an increase in the real value of salaries and wages when they are kept the same during a month of monthly deflation.

Kindest regards

Nicolaas Smith
realvalueaccounting@yahoo.com

Copyright © 2010 Nicolaas J Smith