Disinflation (inflation at a slower rate) continues in the SA monetary economy.

Disinflation (inflation at a slower rate) continues in the SA monetary economy.

The general increase in consumer prices in SA over the 12 months to the end of July, 2009 only led to the destruction on average of 6.7% of the real value of the Rand and all other monetary items in the SA monetary economy compared to 6.9% in the 12 month period to the end of June, 2009.

SA accountants unknowingly also only destroyed 6.7% of the real value of all Retained Profits in SA companies and SA banks over the 12 months to July, 2009 compared to the 6.9% in real value they were unknowingly destroying in all constant items never updated in the SA real economy in the 12 months to June, 2009.

The time it takes to destroy 50% of the real value of current Retained Profits stays at 11 years.

This unknowing destruction by SA accountants amounts to about R200 billion PER ANNUM.

This was because of their implementation of their very destructive stable measuring unit assumption and their refusal to change over to measuring financial capital maintenance in units of constant purchasing power as they were authorized to do 20 years ago by the IASB in the Framework, Par. 104 (a) which states:

“Financial capital maintenance can be measured in either nominal monetary units or in units of constant purchasing power.”

Two of the “hidden forces of economic law on the side of destruction” as described by John Maynard Keynes thus had a slightly lesser destructive effect on the SA economy in the year to end July, 2009.

Cumulative inflation since April 1994 came to 166.5% in July, 2009.

62.5% of all the real value of Retained Profits in SA companies and banks in April, 1994 whichremained in Retained Profits till July, 2009 have thus been unknowingly and unintentionally been destroyed by SA accountants implementing their stable measuring unit assumption by which they assume cumulative inflation over that period was zero percent.

So too the real value of issued share capital of all SA companies with no fixed assets over that period.

Cumulative inflation since Jan 1981 came to 1382.2% in July, 2009.

93.3% of all the real value of Retained Profits in SA companies and banks in Jan, 1981 which remained in Retained Profits till July, 2009 have thus been unknowingly and unintentionally been destroyed by SA accountants implementing their stable measuring unit assumption by which they assume cumulative inflation over that period was zero percent.

So too the real value of issued share capital of all SA companies with no fixed assets over that period.

We all know that our accountants can freely stop their silly and very destructive stable measuring unit assumption any time they want.

© 2005-2010 by Nicolaas J Smith. All rights reserved

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