Post 1: The Global Accounting Principle

Post 1: 

The Global Accounting Principle

How did it all came to life?

It is important to remember our roots in the world of money. 
How do we remember what we ordered? How do we analyze our income and expenses? How do we know if we made a profit? How do we know if we have money to spend or how mach we saved into our investment accounts? Only one way, and thanks to our history and the makers, we have our present accounting system.

I will quote from other sources: 

Luca Pacioli

Accounting Basics: History Of Accounting. The name that looms largest in early accounting history is Luca Pacioli, who in 1494 first described the system of double-entry bookkeeping used by Venetian merchants in his “Summa de Arithmetica, Geometria, Proportioni et Proportionalita.”

The modern profession of the chartered accountant originated in Scotland in the nineteenth century. 

 

A short story of our accounting system.

As we see in above note, this accounting system is as old as the mountains, so to speak. It has survived all these years and no other system will ever be able to replace it, proven beyond a doubt by the users. As it happens, no better system could have been chosen, since it fits into our economic patterns with an exact nature, subject to enormous scrutiny and tests. The amazing point about the matrix of its design is that it could be tailored as civilization demanded from it and it fitted like a glove into the IT world. So far, nobody could ever fault the system.

What is the nature of this system?

In its purest form, it is just an income and expense sheet. Everything else revolves around this concept. It could not be an easier system.

Is there any other system actively used on the planet?

No or perhaps I should say I don't think so. If you know of any please enlighten me.
Reference: https://saylordotorg.github.io/text_international-business/s19-01-international-accounting-stand.html

Why was this accounting system initially developed?

Initially, it became necessary to record transactions because of the volume of goods trading hands as well as the frequency of trades. It displaced the barter system which was good for trade on a small scale and usually only for physical items, mostly agricultural goods. With much larger populations it was an easy way for the government to collect tax. If you recorded your transactions the could and did force you to keep those records for their own inspections and as a result of your turnover on black and white, your taxation could be determined accurately and fast.

What is a barter?

A barter is an exchange of goods, normally of agriculture nature, and not necessarily of the same kind. It has become a conviction in economics that a barter is not a trade, because a trade will/could involve products like services, and payment systems which a barter does not allow for. This method of transacting, barter, is time consuming and impractical when discussing or procuring goods, long distance.

Is a barter allowed in the accounting system of today?

Theoretically and practically, it is not allowed, unless you can determine the tax which has to be paid to the government, on the transaction. But it still happens often and is then usually undisclosed. In the present condition of sanctions imposed by the USA on Iran, as example, Iran now barters oil for goods falling withing the scope of the sanctions. What is important is that value in this case has a definitive value linked to either oil market price or the commodity rate of products withing the barter. since the transaction is concluded between Nations there is no tax added so it is not a serious bookkeeping issue. This leads us to say that a barter still exists but the exact value is very difficult to determine and account for, in the financial papers of anybody or company. The next point is that tax has become an exact/forensic science in the predictions/forecasting of national income and expenditures. There is no place for transactions where price cannot be determined, before the trade is established. It is however important to realize that the accounting system is linked to a trade and that the reverse is not true. A trade can be transacted without tax, in certain conditions, and not be recorded on an accounting system. Many individuals and companies dodge the tax laws by paying cash for goods and this is then not recorded. 

Is it then fair to say that tax laws will become more strict?

Of course. Most of the Nations/Countries who are reliant on tax, needs to stop the gap of avoidance, in order to pay it's debts. Everybody is always trying to avoid paying tax. So the game is becoming more critical and intense. There are many fraud cases today of tax avoidance, yet many are not visible enough to be attached. It is therefore common knowledge that the countries are changing many criteria in order to secure the tax revenue. In this example I can only think of the early days of Paypal and now Bitcoin and all the transactions involving invisible currencies. I'm not sure of the exact flow of accounting in these companies, but I'm sure that much of it escapes the tax net. I can also remember the Panama Papers and all the offshore accounts which escape the net of tax. Until recently expats of a country escape the net as well but that gap seems to have been closed or will be shortly. We can therefore assume that the global banking system is guided to account for all transactions, local and foreign. It will be prevalent that everybody who earns a salary, will have to have income paid to bank accounts, where their income can be justified. The use of cash is coming under the spotlight more and more and less cash is injected into economies, to force every earner to use a bank account. More and more loans are afforded against proper delivery into a bank account related to a paper trail, for the same reason. Every account holder, scooped into the tax net, will provide details, of those signed up, and the income which should provide tax. We see all the debt burdens globally, this is one way the countries can get more tax avoider's into the tax net. Many countries give amnesties as a decoy for surveillance on activity within anonymity, to redeem discount on prosecution of tax avoidance. The amnesty is just a tool to secure all the information of those who have been avoiding the net all along.

The discussion about the Accounting Principle ends here. Please feel free to send me your thoughts. Thank you.

The Sign Post Manifest: Final Analysis

The Sign Post Manifest

Global Economy in distress: The final analysis

We know what a sign post is and I decided to use the painted idea as my indexing method, in order to emphasize/table certain issues and posts.

At this time all my statements will be posted as questions, rather than answers. 

I'm writing a book which I should rather call a thesis. The difference being that it will have a much larger volume of words and cover a bigger range of ideas than one topical issue.


I had to make a serious decision about disclosure. Do I tell you what the book is about, upfront? Or do I leave you, to develop your own sense of the result, the author is aiming at. To keep your attention and focus I have decided on the latter course. A book about economics is never interesting unless one can capture the story line so uniquely camouflaged, involving your audience, to act as a fly in a spider's web.


 I will ask of anyone who read this blog, to get involved, to research the topic with me and give further narratives to expand this universe of economics and the warfare within it, in civil society. 

The topic is intense and the depth of search for the real answers could be construed as conspiracies. It is important that all issues are carefully diverged and dismantled so that the exact path can be visualized. 

The first few SIGN POSTS, those only a few yards from the starting point, will be about the journey up to now and some critical information I wish to surface, as a collection of important issues pertaining to this book. We tend to forget what it, global economics, is all about, and what the morphing principles are, which are included, to make economic paste. These first signposts will jog the memory about all issues resonating with or are assumed to tie in with the crux of the matter, which I'm dissecting. It may be that these signs will bore you. That is ok. I see it as reference material, almost as if the book is a jug and the difference in content is the mix. For some there will never be enough sweetener or alcohol in the mix.

I will answer all relevant questions per email and use/post here your rebuttal, only in cases where it supports the result. I do require your input, however trivial.

Before I start, I should emphasize that there are many volumes to this book. The study is hard and wide. Please read every page and find a historical similar.  If you do think that the passage is old and well known rhetoric, remember that I'm talking from the viewpoint that you know nothing, or that you have to refresh your memory. do not establish a narrative that I'm just writing about well known ideas, seeking to claim image. In order for you to get relevance in the path which I write on, it is imperative that you know about all increments which has an influence on the topic, regardless of your conscious viewpoint or knowledge. 

What is the result I'm seeking? 

In the first place, I have to qualify the story line. 

The economic life of the world/planet, has reached a point where we can scrutinize the updated lifetime of it and of this civilization, in a visual timeline.

That is what we will discuss, and which is the story line for the book. Although this book is about economics, it is not the normal number crunching diary. It is a look into past, present and future of our global choices, which could be leading to a severe breakdown in our economic welfare and the subsequent demise of many support systems in our global society. 

This blog is then intended for me to give you as the reader certain ideas to consider. I would prefer that you give me your own ideas about the posts. The reason why I do this is that I would like to get a fair estimate of the value of my mindset and to align a path of reasonable accuracy if not total, to the goal of highlighting the resulted outcome. 

As you know, in economic terms, we submit an idea and then the supporting data, to show an possible outcome. Most, almost all student of economics globally, are "within a train of thought and a supported track of learning", which is imposed by higher education, in order to form ideas on a scholastic page. Economist are all more or less aligned to talk about the same topics with answers which can be read from the same defined data and formulas, which is conceived as a hundred percent tested and correct. They then test their narratives against others in their field in order to have a reasonable chance of comparison. The best view I have of a formalized educated economist is of someone, who are brainwashed, to use a bath as a cleaning vehicle, instead of learning that many types of bathing methods exist and are in play. This is a convoluted idea and not surprising then that we get projection from these masters, that projects on that basis. Images which symbolize the harmonious economic conditions, edge on the Niagara falls type assessment as final barrier, as if it should be harnessed in that way and no other.

In this blog and the book, I/we will endeavor to give data analysis as I proceed but that part of the equation is not a requirement. It is only used to prove certain points raised and as a support for that option. There will be nothing to prove in this book, only a synopsis that could give leaders of our world an insight and it may act as a lever to bring change while there is still time to do so.

The contents of the book will be important to world leaders and people who are caretakers of global economies, who could use the ideas to change design in the fabric of GDP and issues which could contribute to a healthier economic society.