Thursday, 26 January 2012

Two totally different processes of real value erosion in an economy during inflation

There are two totally different processes of real value erosion involved in an economy during inflation: 

(1) One eroding the real value of only monetary items not inflation-adjusted daily in terms of a Daily CPI, namely, the economic process of inflation and

(2) A totally different one eroding only the real value of constant real value non-monetary items not maintained constant daily, namely, the implementation of the Generally Accepted Accounting Practice of applying the stable measuring unit assumption during inflation under HCA as authorized in IFRS in 1989.

Nicolaas Smith

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