1. It automatically maintains the constant purchasing power of capital
constant for an indefinite period of time (zero erosion of real value in
constant items) in all entities that at least break even in real value during low
inflation and deflation – ceteris paribus
– whether they own any revaluable fixed assets or not.
2. It was authorized in IFRS in 1989.
3. It can right now be implemented by any individual company
implementing IFRS.
4. It can be used
to eliminate the effect of inflation from the entire money supply - zero
inflation - (excluding from actual bank notes and coins which generally make up
about 7% of the money supply) only
in the case of complete coordination with all money and other monetary items
inflation-adjusted daily in terms of a Daily Consumer Price Index. Chile
currently inflation-indexes 20 to 25% of its broad M3 money supply on a daily
basis in terms of the Unidad de Fomento which is a monetized daily indexed unit
of account.
5. It would stop the unknowing, unintended and unnecessary erosion of
hundreds of billions of USD per annum
in the real value of constant items not maintained constant in the world´s
constant item economy as a result of the implementation of the stable measuring
unit assumption under HCA.
6. It would instead maintain hundreds of billions of USD per annum in the world´s
constant item economy at current levels – ceteris
paribus.
Strengths of HCA
1. It is the 3000-year-old generally accepted, globally implemented,
traditional accounting model. Everybody uses HCA during low inflation and
deflation.
2. All accounting software packages are for implementing HCA.
3. All accounting education at all levels is for teaching HCA.
Nicolaas Smith
Copyright (c) 2005-2011 Nicolaas J Smith. All rights reserved. No reproduction without permission.
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