The Impossibility of Economic Calculation in a Fiat World
by Alasdair Macleod
Gold Money
The purpose of keeping accurate accounts is to quantify net worth at any given point in time – as well as the change from a prior date. It goes without saying that the measure used, money, should be constant if comparisons over time are to mean anything. Only then do prices of capital goods, consumer goods and services truly reflect their changing values, giving important signals to businessmen. With unstable fiat money market signals lose much of their meaning.
It is not normal for businessmen to fret over this. They tend to work from management accounts which are usually prepared monthly, and over that time-scale a depreciating currency is unnoticed – except in the case of monetary extremes. However, businessmen should pay attention to the problem, because the accumulation of entrepreneurial wealth is achieved over many years; its productive value can be significantly altered by fluctuations in the purchasing power of unstable money.
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2013-02-10 12:03:33
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