Giraffe
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- Jun 20, 2015
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Accounting principles (such as US-GAAP) are subject to legislation, and some of these principles may be dodgy. Double-entry bookkeeping is a method, a tool. It allows you to organize your data in a way that you get the information you need.Yes.
5 reasons why there is something wrong with it.
1. Their obligations are not settled in full due to the two tier Banking system ( hence fractional reserve Banking )
2. Debt assets grow exponentially while obligations are static
3. Losses are heavily socialized
4. They are able to direct markets by being the main headwater for Money allocation, whereas non-Banks are limited by Capital they actually have.
5. Bank "credit" is insured by the Government and denoted as legal tender so it's Money and not just credit.
None of this generally applies to a normal company with some exceptions in the case of point #3 when there are bailouts of large companies.
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