Friday, 27 September 2013

Street vendors compared to the IASB

Street vendors are ahead of the curve in a hyperinflationary economy. They are one of the first groups to adopt daily indexing of prices in terms of the US Dollar parallel rate. They always know the current daily parallel rate.

Street vendors instinctively understand daily indexing or daily monetary correction which is financial capital maintenance in units of constant purchasing power in terms of  a daily index as authorised in US GAAP in 1985 and in IFRS since 1989 at all levels of inflation and deflation.

Street vendors instinctively know that prices (all prices) always have to be updated to the current level of the general price level - something the International Accounting Standards Board finds very difficult to understand and may take decades or even tens of decades to eventually understand.

The IASB needs "flexibility" according to its chairman, Mr. Hans Hoogervorst. That is "flexibility" to carry on being a cozy, semi-retired old boys club in a cramped boardroom living in the Historical Cost past with statements like "Financial reporting has no effect on the economy" in London on 8th January, 2013. 

"We ignore that" is another favourite statement by the IASB.

Nicolaas Smith Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.

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