Difference between monetary values and monetary items

All economic/accounting/financial values expressed in terms of the monetary unit of account - whether they refer to non-monetary or monetary items - are stated as monetary values: the unit of account is a monetary unit of account.

Definition: Monetary items constitute the money supply. 

When an item is part of a country´s money supply, then it is a monetary item. It is expressed as a monetary value since it is expressed in terms of the monetary unit of account.

All non-monetary items - variable and constant real value non-monetary items - expressed in terms of the monetary unit of account are stated as monetary values, but they are not monetary items.

All monetary items are monetary values but not all monetary values are monetary items.

Nicolaas Smith Copyright (c) 2005-2014 Nicolaas J Smith. All rights reserved. No reproduction without permission.

Daily CPI formula used by France

The formula for calculating the French and Eurozone Daily CPIs is available HERE.

The following Daily CPI´s have been added to the Daily CPI / Monetized Daily Indexed Unit of Account list on the right hand side of this blog: 

Eurozone Daily CPI

French Daily CPI 

Mexican Monetized Daily Indexed Unit of Account

Nicolaas Smith Copyright (c) 2005-2014 Nicolaas J Smith. All rights reserved. No reproduction without permission.

Argentinian and Uruguayan Daily CPIs

The Argentinian Daily CPI and the Uruguayan Daily CPI are new additions to the Daily CPI / Daily Monetized Unit of Account links on the right hand side of this blog.

The Daily CPI links now include:

1. Chile

2. Colombia

3. Iceland

4. Serbia

5. Turkey

6. UK

7. Uruguay

8. US

9. US unofficial Daily CPI

10. Other unofficial Daily CPIs

The above official Daily CPIs and all others not yet linked on this blog are used in these countries to value/price their specific government inflation-indexed bonds on a DAILY basis in the global USD 3 trillion (2014) market for these sovereign bonds.

Countries that calculate their Daily CPIs in the form of a Daily Monetized Unit of Account and express them in terms of either 1 or 100 units of local currency at the base date, use these DMUAs also to value/price other items besides their government inflation-indexed bonds in their economies. This is of great advantage in these specific DMUA economies. 

Chile inflation-index a number of monetary items and non-monetary items in their economy on a DAILY basis besides their sovereign inflation-indexed bonds. So much so that they inflation-adjust more than 25% of their money supply on a DAILY basis. There is thus NO EFFECT of inflation in 25% of Chile´s money supply. If they were to increase that to 100% of their money supply they would have NO EFFECT of inflation in 100% if their money supply at whatever rate of low, high or hyperinflation and deflation.

Colombia use their Real Value Unit DMUA to inflation-index all mortgage bonds in the country on a DAILY basis. 

Uruguay use their Unidad Indexada to inflation-adjust some monetary items besides their sovereign inflation-indexed bonds on a DAILY basis.

Nicolaas Smith 

Copyright (c) 2005-2014 Nicolaas J Smith. All rights reserved. No reproduction without permission.

Daily indexing will stop your tears forever, Argentina

The Argentinian Accounting Federation sent a proposal to the IASB in 2010 regarding financial reporting in high inflationary economies (available in IFRS 'X'). I amended their proposal in 2012 with IFRS 'X' CAPITAL MAINTENANCE IN UNITS OF CONSTANT PURCHASING POWER. I suggested capital maintenance in units of constant purchasing power in terms of a DAILY INDEX similar to what stabilized the Brazilian economy during high and hyperinflation from 1964 to 1994. Brazilian accountants called it ´correcção monetária`.

My amendment was ignored by both the Argentinian Accounting Federation and the IASB. The IASB at one stage even wanted to throw my amendments in the rubbish bin. Maybe that is where IFRS ´X´is now at the IASB - despite Hans Hoogervorst´s assurances to the contrary.

When I first read, a year or two ago, that the Argentinian government was faking inflation, I knew that they would land up in an economic disaster. 

Now we have this: 

Soaring Prices Fuel Frustrations Among Weary Argentines

IFRS 'X' is still valid today. It will always be valid while there is inflation and deflation. DAILY INDEXING would give Argentina economic stability over a very short period of time. The IASB could REQUIRE it in IAS 29. The Board could encourage it immediately while correcting IAS 29 in a very short time.

Unfortunately the IASB is still in love with historical cost accounting even during high inflation. "The cheque amount is what represents cost" is currently still very forcefully stated by a top IASB member in public when discussing accounting during high inflation which could reach up to 25% per annum. What a joke. 

Watch Argentina and Venezuela to see historical cost accountants destroying two big economies - aided and abetted by the IASB.


Nicolaas Smith 

Copyright (c) 2005-2014 Nicolaas J Smith. All rights reserved. No reproduction without permission.