Don't get bitten by Bitcoins

Don't get bitten by Bitcoins

Gold, Long a Secure Investment, Loses Its Luster

Gold, Long a Secure Investment, Loses Its Luster

Understanding IAS 29 per PricewaterhouseCoopers: Correction 12 and 13: PricewaterhouseCoopers clueless about Capital Maintenance in Units of Constant Purchasing Power

Understanding IAS 29 per PricewaterhouseCoopers: Correction 12 and 13: PricewaterhouseCoopers clueless about Capital Maintenance in Units of Constant Purchasing Power

‘Benefits of purchasing power adjusted financial statements.’

PricewaterhouseCoopers Understanding IAS 29 2006 p4

Correction

What PricewaterhouseCoopers should have stated:

Benefits of Capital Maintenance in Units of Constant Purchasing Power during hyperinflation.

Correction 13

‘Financial statements that are expressed under IAS 29 in a measuring unit that is current at the balance sheet date provide several benefits:’

PricewaterhouseCoopers Understanding IAS 29 2006 p4

PricewaterhouseCoopers and the IASB do not understand that IAS 29 is a failed attempt at implementing Capital Maintenance in Units of Constant Purchasing Power during hyperinflation because

(1)   they do not understand the concept of financial capital maintenance in units of constant purchasing power

(proof: they do not understand

(a) that (and why) a daily index instead of a monthly published index needs to be used and

(b) they do not understand that the IFRS-authorized statement in the Conceptual Framework (2010), Par. 4.59 (a) that ‘Financial capital maintenance can be measured in units of constant purchasing power’ means that non-monetary items are split in two: variable real value non-monetary items and constant real value non-monetary items)

(2) they mistakenly believe that by simply “restating” HC or CC financial statements in a measuring unit that is current at the balance sheet date will stop making these financial statements misleading since that is what they believe is the objective of IAS 29.  They are duped by their blind believe in the meaningless “restatement” dogma. They are clueless about Capital Maintenance in Units of Constant Purchasing Power authorized in IFRS in 1989.

Nicolaas Smith

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

North Korean economy is a Dollarized economy?

CNN

The DPRK's official currency is the North Korean won, but Jang said everything in North Korea was pegged on the U.S. dollar, including the black market economy. The won was effectively "like toilet paper" he said and because all business was done using dollars the currency was used by people to barter even at the lowest levels of North Korean society.

Pyongyang had tried to revalue the currency but because everyone used U.S. dollars to trade, the dollar consistently went up and the won continued to fall in value, he said.

Hoare said euros were increasingly being used in some areas because North Koreans were worried the U.S. would somehow cut off dollars. Foreign currency flowed into North Korea in a number of ways including cross border trade with China and visiting foreigners, he said. All embassies also had to operate in foreign currency.

"We were not supposed to handle North Korean money. So it's pretty widespread. If you go into a hotel or restaurant prices are in foreign currency rather than Korean won,"

Understanding IAS 29 per PricewaterhouseCoopers: Correction 11: Monetary amounts per se (meaning all values in the economy) are not expressed in terms of a relatively stable foreign currency.

Understanding IAS 29 per PricewaterhouseCoopers: Correction 11: Monetary amounts per se (meaning all values in the economy) are not expressed in terms of a relatively stable foreign currency.

‘Monetary amounts are expressed in terms of a relatively stable foreign currency.’

PricewaterhouseCoopers Understanding IAS 29 2006 p3

Correction

 All monetary amounts per se (meaning all values in the economy) are not expressed in terms of a relatively stable foreign currency.

All local currency monetary items (local currency bank values, bank statements, cheques, local currency loans, etc.) are not expressed in terms of a relatively stable foreign currency. They are expressed in local currency values.

Most variable real value non-monetary items are expressed in terms of a relatively stable foreign currency.

Nicolaas Smith

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

Understanding IAS 29 per PricewaterhouseCoopers: Correction 10: People do not accumulate wealth in a stable foreign currency during hyperinflation

Understanding IAS 29 per PricewaterhouseCoopers: Correction 10: People do not accumulate wealth in a stable foreign currency during hyperinflation

‘Characteristics of hyperinflation

There is no absolute definition of hyperinflation. The characteristics identified in IAS 29 are as follows:

• People accumulate wealth in non-monetary assets or in a stable foreign currency;’

PricewaterhouseCoopers Understanding IAS 29 2006 p3

Correction

Generally people do not accumulate wealth in a stable foreign currency. It is often forbidden and a crime to accumulate wealth in a stable foreign currency in a country with hyperinflation.

If what PricewaterhouseCoopers state above was true, then it would be no problem dealing with hyperinflation in a hyperinflationary country. Often the single biggest problem in a hyperinflationary country is that it is a crime to trade in and to hold especially the US Dollar.

It would be relatively easy to solve the monetary problem of hyperinflation if it were always legal to hold and freely trade in especially the US Dollar in hyperinflationary countries. All people would have to do would be to buy US Dollars every end of the day with excess local currency.

Nicolaas Smith

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

Understanding IAS 29 per PricewaterhouseCoopers: Correction 9: IAS 29 aims to implement Capital Maintenance in Units of Constant Purchasing Power

Understanding IAS 29 per PricewaterhouseCoopers: Correction 9: IAS 29 aims to implement Capital Maintenance in Units of Constant Purchasing Power

‘IAS 29 aims to overcome the limitations of historical cost financial reporting in hyperinflationary environments.’

PricewaterhouseCoopers Understanding IAS 29 2006 p3

Correction

IAS 29 does not aim to overcome the limitations of historical cost financial reporting in hyperinflationary environments. IAS 29 aims to replace financial capital maintenance in nominal monetary units (HCA) during hyperinflation with capital maintenance in units of constant purchasing power during hyperinflation.

IAS 29 unfortunately does not succeed in this aim because it is generally implemented in terms of the monthly published CPI. The price level changes at least from 28 to 31 times per month (or even more often, generally above 3000 per cent inflation per annum). However, IAS 29 is currently being implemented using one single price level change: the month end CPI.

This means that a part of the real value of current year profits and a part of the real value of non-monetary receivables treated as monetary items are eroded (destroyed) in this fashion under IAS 29.

IAS 29 can also have absolutely no positive effect in an economy during hyperinflation. IAS 29 had absolutely no positive effect during the last eight years in Zimbabwe´s hyperinflation. Zimbabwe´s economy imploded on 20 November 2008 with the full implementation of IAS 29.

It is quite easy to stop this from happening: simply copy what Brazil did during 30 years from 1964 to 1994. Brazil updated some monetary items and all non-monetary items daily in terms of a government supplied daily index during those 30 years of very high and hyperinflation.

Nicolaas Smith

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

Understanding IAS 29 per PricewaterhouseCoopers: Correction 8: Companies implementing IAS 29 have departed from Historical Cost Accounting

Understanding IAS 29 per PricewaterhouseCoopers: Correction 8: Companies implementing IAS 29 have departed from Historical Cost Accounting

‘Inflation-adjusted financial statements are an extension to, not a departure from, historical cost accounting.’

PricewaterhouseCoopers Understanding IAS 29 2006 p3

Correction

Reporting period financial statements are never inflation-adjusted. Only monetary items can be inflation-adjusted. Monetary items are never inflation-adjusted in reporting period financial statements. What happens under IAS 29 is that the net monetary loss or gain is recorded and non-monetary items are measured in units of constant purchasing power in terms of the monthly CPI. Reporting period financial statements are never inflation-adjusted under IAS 29 – no matter what PricewaterhouseCoopers states.

What PricewaterhouseCoopers wanted to state is the following:

Financial statements ‘restated’ in terms of IAS 29 are an extension to, not a departure from, historical cost accounting.

PricewaterhouseCoopers is correct - when the firm´s statement above is corrected – as far as the way in which IAS 29 is being implemented under the guidance of Big Four audit firms. Companies implementing IAS 29 – under their guidance – carry on implementing the Historical Cost Accounting model during hyperinflation as required by IAS 29: IAS 29 states that either Historical Cost or Current Cost financial statements have to be ‘restated’ in terms of the guidelines in IAS 29.

This is what is supposed to happen under IAS 29 when it is implemented correctly (no-one is doing it this way - at the moment).

The first year that IAS 29 is being implemented, a company is obviously implementing HCA or CCA. IAS 29 requires the company to implement the measures guide-lined in the Standard as from the start of the year in which it detects hyperinflation in the economy. The company departs from HCA when it starts implementing IAS 29: it changes its capital maintenance concept from financial capital maintenance in nominal monetary units (HCA) to financial capital maintenance in units of constant purchasing power. It stops doing HCA. It stops implementing the stable measuring unit assumption.

However, it has a problem: IAS 29 and all IFRS are seen by the IASB, Big Four audit firms, national accounting standard and other accounting authorities and most Historical Cost accountants as the Ten Commandments of Accounting: The letter of IAS 29 has to be followed. So, IAS 29 requires Historical Cost or Current Cost financial statements to be ‘restated’ in terms of the measuring unit current at the end of the reporting period.

A company implementing IAS 29 has however departed from HCA the moment it started implementing IAS 29. Now what? From the second year on, it is not complying with IAS 29, because it has departed from HCA: it does not implement HCA anymore.

Fortunately, this problem is very easy to overcome: All accounting items are recorded at their original or historical values (costs). So, it is very easy to satisfy the requirement of IAS 29 to ‘restate’ Historical Cost financial statements: simply run a set of HC financial statements from the original data and IAS 29 is complied with. A company can always print a set of HC financial statements for the sole reason of complying with IAS 29. The HC financial statements would serve no other purpose: they are completely meaningless during hyperinflation, but, IAS 29 requires them. So, they are printed simply to satisfy the requirement in IAS 29.

A company, in fact, departed from HCA in the first year it adopted IAS 29.

Nicolaas Smith

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

Understanding IAS 29 per PricewaterhouseCoopers: Correction 7: PricewaterhouseCoopers does not understand IAS 29

Understanding IAS 29 per PricewaterhouseCoopers: Correction 7: PricewaterhouseCoopers does not understand IAS 29

Because IAS 29 incorrectly and misleadingly states in Par 2 that

‘Money loses purchasing power at such a rate that comparison of amounts from transactions and other events that have occurred at different times, even within the same accounting period, is misleading.’

PricewaterhouseCoopers misleadingly and incorrectly states

‘Significant changes in the purchasing power of money mean that financial statements unadjusted for inflation are likely to be misleading. Amounts are not comparable between periods, and the gain or loss in general purchasing power that arises in the reporting period is not recorded. Financial statements unadjusted for inflation do not properly reflect the company’s position at the balance sheet date, the results of its operations or cash flows.’

PricewaterhouseCoopers Understanding IAS 29 2006 p3

Neither the IASB nor PricewaterhouseCoopers understands IAS 29.

 Implementing Historical Cost Accounting during hyperinflation is suicidal for a company and a country (see Zimbabwe in 2008 and Yugoslavia before that), not because financial statements are misleading, but because

1.      The real value of only monetary items are hyper-destroyed by hyperinflation (hyper-inflate your economy long enough and you can wipe out the real value of your entire money supply: see Zimbabwe on 20 November 2008 and Yugoslavia three times during four months before that) and

2.      The constant real non-monetary value of only constant real value non-monetary items never maintained constant in terms of units of constant purchasing power in terms of the Daily CPI or daily USD (or other relatively stable foreign currency) parallel rate are hyper-destroyed by, not inflation as the IASB, PricewaterhouseCoopers, other Big Four audit firms, the Argentinian Accounting Federation, the Brazilian accounting authorities, the Chilean Accounting Authorities and most Historical Cost accountants believe, but, by the implementation of the stable measuring unit assumption, i.e., by the implementation of HCA during hyperinflation.

What is stated in the 1 and 2 above is what happens during hyperinflation and what IAS 29 is unsuccessfully trying to stop with the incomplete IASB guidelines to the implementation of Capital Maintenance in Units of Constant Purchasing Power.

Yes, PricewaterhouseCoopers is correct when the firm states

‘Amounts are not comparable between periods, and the gain or loss in general purchasing power that arises in the reporting period is not recorded.’

But, that is not what it is about during hyperinflation: What is stated in 1 and 2 above is what it is about during hyperinflation.

IAS 29 is not implemented simply to (i) make amounts comparable between periods and (ii) to record the gain or loss in general purchasing power that arises in the reporting period.

IAS 29 is supposed to implement Capital Maintenance in Units of Constant Purchasing Power during hyperinflation - a form of which was very successfully done during 30 years in Brazil from 1964 to 1994 (IAS 29 was authorized in 1989) when that country inflation-adjusted, not all, but some monetary items daily and measured most non-monetary items – variable real value non-monetary items and constant real value non-monetary items – in units of constant purchasing power in terms of a government supplied daily index.

Unfortunately IAS 29 does not result in Capital Maintenance in Units of Constant Purchasing Power because the monthly and not the Daily CPI is used in the implementation of IAS 29.

Nicolaas Smith

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

Understanding IAS 29 per PricewaterhouseCoopers: Correction 6: Reporting year financial statements are never adjusted for inflation under IAS 29

Understanding IAS 29 per PricewaterhouseCoopers: Correction 6: Reporting year financial statements are never adjusted for inflation under IAS 29

 ‘Significant changes in the purchasing power of money mean that financial statements unadjusted for inflation are likely to be misleading.’

PricewaterhouseCoopers Understanding IAS 29 2006 p3

It is impossible to adjust reporting year financial statements for inflation under IAS 29. Reporting year financial statements are never adjusted for inflation under IAS 29.

Inflation only affects the real value of monetary items. It is impossible to adjust non-monetary items for inflation. Thus only monetary items can be adjusted for inflation. This happens in the case of, for example, daily inflation-adjusted government bonds (TIPS in the US) on an almost worldwide basis ; all mortgages in Colombia are inflation-adjusted daily in terms of the Colombian Real Value Unit; all 90-day deposits and many other items (25 per cent of the broad M3 money supply) are inflation-adjusted daily in Chile in terms of the Unidad da Fomento (UF), etc.

Actual monetary items values in reporting year financial statements are never adjusted for inflation under IAS 29. What is done is the net monetary loss or gain on monetary items are calculated and accounted under IAS 29 and under Capital Maintenance in Units of Constant Purchasing Power. That is the case with monetary items.

It is impossible to adjust constant real value non-monetary items for inflation in current year financial statements or anywhere else because inflation has no effect on the real value of non-monetary items. What happens is that constant real value non-monetary items are measured in units of constant purchasing power as authorized in the Conceptual Framework (2010), Par 4.59 (a) and guide-lined in IAS 29.

The PricewaterhouseCooper´s statement that

‘Significant changes in the purchasing power of money mean that financial statements unadjusted for inflation are likely to be misleading.’

should thus be corrected to state:

Significant changes in the purchasing power of money mean that financial statements prepared under the Historical Cost principle are likely to be misleading because the net monetary item loss or gain is not accounted.

The implementation of the stable measuring unit assumption means that Historical Cost financial statements are likely to be misleading because constant real value non-monetary items are measured in nominal monetary units during inflation, hyperinflation and deflation and result in the unnecessary erosion (destruction) of real value in constant real value non-monetary items never maintained constant under this model during inflation and hyperinflation.

Nicolaas Smith

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

Understanding IAS 29 per PricewaterhouseCoopers: Correction 5: The stable measuring unit assumption erodes real value during low inflation too

Understanding IAS 29 per PricewaterhouseCoopers: Correction 5: The stable measuring unit assumption erodes real value during low inflation too

 ‘This produces a meaningful result provided that there are no dramatic changes in the purchasing power of money.’

PricewaterhouseCoopers Understanding IAS 29 2006 p3

The generally accepted, globally implemented, traditional Historical Cost Accounting model, i.e., financial capital maintenance in nominal monetary units, does not result in maintaining the real value of capital constant during inflation and deflation since this is impossible, per se.

‘Dramatic changes’ are considered by PricewaterhouseCoopers and all Historical Cost accountants to be 26 per cent inflation for three years in a row, i.e., 100 per cent cumulative inflation over three years, the generally accepted definition of hyperinflation by millions of accountants worldwide who follow the IASB´s definition of hyperinflation.  A few academics, particularly Prof Steve Hanke, very unscientifically do not recognize the IASB´s generally accepted definition of hyperinflation. These few academics follow Cagan´s definition of 50 per cent inflation per month.

Thus PricewaterhouseCoopers, the IASB and all Historical Cost accountants consider inflation of 15 or 20 per cent per annum as not dramatic and would not require the implementation of IAS 29. This is obviously a mistake. This is in the process of being corrected by the IASB. This however takes a very long time via the IFRS process. The Argentinian Accounting Federation submitted a proposal, entitled ‘IFRS X INFLATION’ to the IASB in 2010 which proposes changes to the accounting model at inflation of 10 per annum or cumulative inflation of 26 per cent over three years. I amended the Argentinian Federation´s proposal in January 2012 to ‘IFRS X CAPITALMAINTENANCE IN UNITS OF CONSTANT PURCHASING POWER’. The IASB voted unanimously in May 2012 to make the replacement of IAS 29 a research project in the future. This research project has not jet started at the IASB.

The implementation of the very destructive stable measuring unit assumption, even at 2 per cent inflation per annum, results in the erosion (destruction) of hundreds of billions of US Dollars in the real value of constant real value non-monetary items per annum in the world economy. PricewaterhouseCoopers, the IASB and most HC accountants do not understand this.

Nicolaas Smith

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

Understanding IAS 29 per PricewaterhouseCoopers: Correction 4: Inflation only affects the real value of only monetary items.

 ‘The impact of inflation is ignored.’ P3

PricewaterhouseCoopers Understanding IAS 29 2006 p3

This should be stated as follows:

The impact of

(a)   inflation and deflation on the real value of only monetary items and

(b)   the implementation of the stable measuring unit assumption on the real value of constant real value non-monetary items during inflation and deflation

is ignored.

PricewaterhouseCoopers, like most people, mistakenly thinks that inflation affects non-monetary items. That is impossible. Inflation only affects the real value of monetary items – nothing else.

Nicolaas Smith

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

Inflation as a tool to stimulate the economy

Bank of Japan set to launch war on deflation

CNN

Understanding IAS 29 per PricewaterhouseCoopers: Correction: Assets are not stated at cost as PricewaterhouseCoopers states

Understanding IAS 29 per PricewaterhouseCoopers: Correction 3: Assets are not stated at cost as PricewaterhouseCoopers states

 ‘The individual assets, liabilities, shareholders’ equity, revenue, expenses and gains and losses are therefore stated at cost at the time at which these items were originated.’ P3

PricewaterhouseCoopers Understanding IAS 29 2006 p3

Assets are not stated at cost per se as PricewaterhouseCoopers states. Some assets can be stated at cost, but most are stated in terms of fair value, net realizable value, net present value, recoverable value, etc. in terms of IFRS.

Nicolaas Smith

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

Understanding IAS 29 per PricewaterhouseCoopers: Correction: Inflation has no effect on the real value of non-monetary items

Understanding IAS 29 per PricewaterhouseCoopers: Correction 2: Inflation has no effect on the real value of non-monetary items

 ‘Financial statements unadjusted for inflation in most countries are prepared on the basis of historical cost without regard to changes in the general level of prices.’ P3

PricewaterhouseCoopers Understanding IAS 29 2006 p3

This should be changed to:

Financial statements with (a) net monetary losses and gains (resulting from inflation – hyperinflation - and deflation) not accounted and (b) constant real value non-monetary items measured in nominal monetary units implementing the very destructive stable measuring unit assumption in most countries are prepared on the basis of historical cost without regard to (i) changes in the general level of prices and without regard to (ii) the fact that constant real value non-monetary items are measured in nominal monetary units during inflation (hyperinflation) and deflation.

Inflation only affects the real value of monetary items. Inflation has no effect on the real value of non-monetary items. It is thus misleading and incorrect to state that financial statements are unadjusted for inflation. Financial statements are never ‘adjusted for inflation’ since monetary items are not ‘adjusted for inflation.’ The net monetary loss or gain in monetary items is calculated and accounted under IAS 29, i.e., under capital maintenance in units of constant purchasing power.

Constant real value non-monetary items cannot be ‘adjusted for inflation’ because inflation has no effect on the real value of non-monetary items. Constant real value non-monetary items are measured in units of constant purchasing power in terms of the monthly published CPI in terms of IAS 29.

Financial statements are not ‘adjusted for inflation’ under IAS 29. (a) The net monetary loss or gain as a result of hyperinflation in only monetary items is calculated and accounted under IAS 29 and (b) constant real value non-monetary items are measured in units of constant purchasing power in terms of the monthly published CPI in terms of IAS 29.

IAS 29 is thus based on capital maintenance in units of constant purchasing power principles. However, implementing IAS 29 in terms of the monthly published CPI does not result in the maintenance of the constant purchasing power of capital during hyperinflation, specifically with respect to the current year´s profit (eventually retained income, i.e., part of capital). A part of current year profits is eroded (destroyed) as a result of the implementation of the monthly CPI (one single price-level change per month) when the price level changes at least 28 to 31 times per month or even more often (sometimes twice a day) generally at above 3000 per cent inflation per annum.

IAS 29 can also have absolutely no positive effect in a hyperinflationary economy. That is what happened in Zimbabwe where IAS 29 was implemented during the last 8 years of hyperinflation. The Zimbabwe economy imploded on 20 November 2008 with full implementation of IAS 29.

Nicolaas Smith

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

Understanding IAS 29 per PricewaterhouseCoopers: Corrections: Capital Maintenance in Units of Constant Purchasing Power principles instead of current purchasing power principles

Understanding IAS 29 per PricewaterhouseCoopers: Correction 1: Capital Maintenance in Units of Constant Purchasing Power principles instead of current purchasing power principles

‘Introduction

Why is this guide needed?

IAS 29 is based on current purchasing power principles and requires financial statements prepared in the currency of a hyperinflationary economy to be stated in terms of the value of money at the reporting balance sheet date.’

PricewaterhouseCoopers Understanding IAS 29 2006 P3

IAS 29 is not based on current purchasing power principles. IAS 29 contains the IASB´s specific guidelines on how to implement financial capital maintenance in units of constant purchasing power as authorized in the Conceptual Framework (2010), Par. 4.59 (a) during hyperinflation. Par. 4.59 (a) states ‘Financial capital maintenance can be measured in either nominal monetary units or in units of constant purchasing power.’ Capital maintenance in units of constant purchasing power is authorized in IFRS at all levels of inflation and deflation, including during hyperinflation as specifically guide-lined in IAS 29.

IAS 29 is thus based on capital maintenance in units of constant purchasing power principles. However, implementing IAS 29 in terms of the monthly published CPI does not result in the maintenance of the constant purchasing power of capital during hyperinflation, specifically with respect to the current year´s profit (eventually retained income, i.e., part of capital). A part of current year profits is eroded (destroyed) as a result of the implementation of the monthly CPI (one single price-level change per month) when the price level changes at least 28 to 31 times per month or even more often (sometimes twice a day) generally at above 3000 per cent inflation per annum.

IAS 29 can also have absolutely no positive effect in a hyperinflationary economy. That is what happened in Zimbabwe where IAS 29 was implemented during the last 8 years of hyperinflation. The Zimbabwe economy imploded on 20 November 2008 with full implementation of IAS 29.

Nicolaas Smith

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

Scam at previous Venezuela parallel rate site

Scam at previous Venezuela parallel rate site

Reblogged from The Devil´s Excrement


Moraima Garcia Says:
March 27, 2013 at 11:25 am
Glenn, in truth there is more to the Lechuga Verde case, apparently they were running a scam, selling people dollars at lower prices (apparently dollars they got from SITME) and at some point they stopped paying peolple. There is a web page of the victims with very direct threats to the people of Lechuga Verde. Not sure if the creators of the site have been arrested or even if people really know who they are, but from what you can read online it seems they were not saints wanting to give us information about the real price that must not be mentioned.

Reply

• Nicolaas Smith Says:

  
  March 27, 2013 at 11:59 am CNN indicates this site Dolar Today http://dolartoday.com/ quoting the parallel rate daily.”Precio del Dolar paralelo en Venezuela y noticias SIN CENSURA…” It seems to be a Colombian site.
  

  Reply

island canuck Says:

March 27, 2013 at 11:33 am There’s been some confusion about this.
Lechuagaverde.com was responsible for defrauding 100′s(?) of people by offering US$ at below market prices. After paying off a few early clients they just stopped paying the rest. A typical Ponzi scheme.
I think its these owners who Maduro was referring to.
In the meantime you will see efforts to block access to other sites inside Venezuela that post current rates. One notably is publishing the current price in Cucuta, Colombia (which is a legal & active market) & the Implicit rate (current Bs. in circulation (liquidity) divided by the international reserves on hand).
Efforts to block access are pretty useless as they also have Twitter & FB accounts.

Bloomberg:


Dollar-Desperate Venezuelans Get Defrauded on Internet

Parallel rate in Venezuela

Parallel rate in Venezuela

CNN indicates this site Dolar Today http://dolartoday.com/ quoting the parallel rate daily.”Precio del Dolar paralelo en Venezuela y noticias SIN CENSURA…”

It seems to be a Colombian site.

Nicolaas Smith

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

Official and parallel rate generally unify at the parallel rate

Official and parallel rate generally unify at the parallel rate

The experience with unification indicates that it usually takes place at the parallel exchange rate.

Parallel exchange rates in developing countries : lessons from eight case studies, Volume 1

Kiguel, Miguel A.; O'Connell, Stephen A.;

Policy, Research working paper; no. WPS 1265

Nicolaas Smith

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

Fundamental mistake in IFRIC 7

Dear Mr Hoogervorst,

Thank you for your reply dated 19 February.

I further wish to point out to you that there is a fundamental mistake in IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies as follows:

Par 3 Consensus states:

Therefore, in relation to non-monetary items measured at historical cost, the entity’s opening statement of financial position at the beginning of the earliest period presented in the financial statements shall be restated to reflect the effect of inflationfrom the date the assets were acquired and the liabilities were incurred or assumed until the end of the reporting period. For non-monetary items carried in the opening statement of financial position at amounts current at dates other than those of acquisition or incurrence, that restatement shall reflect instead the effect of inflation from the dates those carrying amounts were determined until the end of the reporting period.

Inflation has no effect on the real value of non-monetary items.

‘Purchasing power of non monetary items does not change in spite of variation in national currency value.’

Gucenme U and Arsoy A P 2005 Changes in financial reporting in Turkey, Historical Development of Inflation Accounting 1960 – 2005 Academy of Accounting Historians 2005 Research Conference 6-8 Oct 2005 Ohio State University Columbus Ohio USA (Second last item on website referenced.)

It is the stable measuring unit assumption, and not inflation, that affects the real value of non-monetary items. Inflation only affects the real value of monetary items.

Please change the word inflation in IFRIC 7, Par 3 above to “the stable measuring unit assumption”.

You stated in your reply to me that “It is important that our staff collaboration approach retains a degree of flexibilityand agility to respond to the circumstances.” I have found that to mean flexibility to ignore facts.

You are free to ignore the above fact too.

Yours sincerely,

Nicolaas Smith

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