O God, who gladden us year by year with the solemnity of the Lord's Resurrection, graciously
grant, that, by celebrating these present festivities, we may merit through them to
reach the eternal joys of Heaven.
Hi everybody, Bishop Callahan here.
Christ is Risen!
He is Risen Indeed!
Yes, Christ has risen from the dead and we have reason to believe!
For two thousand years, and here in our diocese the past one hundred fifty, people of Faith
have been marking for us the anniversary of Christ's brutal passion, His
death, and His Resurrection from the dead so that we will remember - Jesus Christ, God
the Second Person of the Blessed Trinity, loves us.
His love for us was made real by his resurrection, and also through the gift of the Holy Spirit.
The Holy Spirit is an expression of the Love between God the Father and God the Son.
The outpouring of the Holy Spirit animates the Church, and animates us.
When we reflect on the Gifts of the Holy Spirit and use them to guide our lives, we are allowing
ourselves to be open to the Will of God.
Easter is a time for us to celebrate the great gift we have been given!
Make it a point to share the Easter Joy with those around you.
Easter is also a time for us to deepen our awareness of the presence of the Holy Spirit
in our lives, and to pray for the strength we need to merit the promise of eternal joy
in Heaven.
Christ yesterday and today the Beginning and the End the Alpha and the
Omega All time belongs to him and all the ages.
To him be glory and power through every age and forever.
Amen Blessed Easter to you - and I'll see you
at Sunday Mass!
For more infomation >> Christ is Risen! He is Risen Indeed! - Duration: 2:40. -------------------------------------------
April Fools Is Bad #DramaAlert - Duration: 1:54. 
What is up #UnseeNation! I am your host ME1312,
and let's get right into the news!
Now guys, today we are going to be interviewing Is Bad
and we have him right here on the line
and he's over there saying that April Fool's is actually bad.
The first question I have for you Is Bad is
Are you fucking kidding me?
[I already knew what you were gonna say about this]
[and...]
[I came prepared]
[Well, you see here...]
[April Fools Is Bad]
[because everybody is already expecting it]
[because it always happens on April 1st!]
[We should move it so that it isn't always]
[on April 1st!] But that doesn't make any sense!
You can't have April Fool's in May.
[What?]
[Are you questioning me!?]
[What is wrong with you?]
[What do you think you are?]
[How could you?]
Alright ladies and gentlemen you have heard it here from Is Bad
if you enjoyed this interview make sure you slap a like on it
we have more is bads coming out whatever this asshole decides to upload
so if you're new here make sure you sub for reviews
you want to be in the loop; you don't want to be outside the loop
#UnseeNation now over negative one
subscribers.
For more infomation >> April Fools Is Bad #DramaAlert - Duration: 1:54. -------------------------------------------
What is Internalization? | Definition & Explanation of Internalization - Duration: 5:09. 
Internalization has different definitions depending on the field that the term is used
in.
Internalization is the opposite of externalization.
Generally, internalization describes the psychological outcome of a conscious mind reasoning about
a specific subject; the subject is internalized, and the consideration of the subject is internal.
Internalization of ideals might take place following religious conversion, or in the
process of, more generally, moral conversion.
Internalization is directly associated with learning within an organism (or business)
and recalling what has been learned.
Psychology and sociology: In sciences such as psychology and sociology,
internalization involves the integration of attitudes, values, standards and the opinions
of others into one's own identity or sense of self.
In psychoanalytic theory, internalization is a process involving the formation of the
super ego.
Internalization is how man is a product of society.
In sociology internalization is the last step.
First comes externalization, then comes objectivation, and finally internalization.
Many theorists believe that the internalized values of behavior implemented during early
socialization are key factors in predicting a child's future moral character.
The self-determination theory proposes a motivational continuum from the extrinsic to intrinsic
motivation and autonomous self-regulation.
Some research suggests a child's moral self starts to develop around age three.
These early years of socialization may be the underpinnings of moral development in
later childhood.
Proponents of this theory suggest that children whose view of self is "good and moral" tend
to have a developmental trajectory toward pro-social behavior and few signs of anti-social
behavior.
In one child developmental study, researchers examined two key dimensions of early conscience
– internalization of rules of conduct and empathic affects to others – as factors
that may predict future social, adaptive and competent behavior.
Data was collected from a longitudinal study of children, from two parent families, at
age 25, 38, 52, 67 and 80 months.
Children's internalization of each parent's rules and empathy toward each parent's simulated
distress were observed at 25, 38 and 52 months.
Parents and teachers rated their adaptive, competent, pro-social behavior and anti-social
behavior at 80 months.
The researchers found that first, both the history of the child's early internalization
of parental rules and the history of his or her empathy predicted the children's competent
and adaptive functioning at 80 months, as rated by parents and teachers.
Second, children with stronger histories of internalization of parental rules from 25
to 52 months perceived themselves as more moral at 67 months.
Third, the children that showed stronger internalization from 25 to 52 months came to see themselves
as more moral and "good".
These self-perceptions, in turn, predicted the way parents and teachers would rate their
competent and adaptive functioning at 80 months.
As a symptom: In behavioral psychology, the concept of internalization
may also refer to disorders and behaviors in which a person deals with stressors in
manners not externally evident.
Such disorders and behaviors include depression, anxiety disorder, bulimia and anorexia.
Biology: In sciences such as biology, internalization
is another term for endocytosis, in which molecules such as proteins are engulfed by
the cell membrane and drawn into the cell.
Economics and management: In economics, internalization theory explains
the practice of multinational enterprises (MNEs) to execute transactions within their
organization rather than relying on an outside market.
It must be cheaper for an MNE to internalize the transfer of its unique ownership advantages
between countries than to do so through markets.
In other words, the alternative to internalization through direct investment is some form of
licensing of the firm's know-how to a firm in the target economy.
Finance: In finance, internalization can refer to several
concepts.
"When you place an order to buy or sell a stock, your broker has choices on where to
execute your order.
Instead of routing your order to a market or market-makers for execution, your broker
may fill the order from the firm's own inventory – this is called 'internalization'.
In this way, your broker's firm may make money on the "spread" – which is the difference
between the purchase price and the sale price."
For a related issue regarding trade execution, see payment for order flow.
Thanks for watching.
Please, subscribe to our channel.
For more infomation >> What is Internalization? | Definition & Explanation of Internalization - Duration: 5:09. -------------------------------------------
First Roseanne, now another major Pro-Trump actor is infuriating libs with huge new Show! - Duration: 7:31. 
First Roseanne, now another major Pro-Trump actor is infuriating libs with huge new Show!
America has once again come together to show Hollywood that what we will support pro-Conservative, decent content. That was shown to them very clearly after the smashing successes of the pro-Trump Roseanne re-boot that broke records earlier this week. The show, which was a remake of a classic comedy, came back into our lives with big success, breaking records and surprising liberals.
The all original cast (plus a few new faces) showed the world that you don't have to be politically correct to make good on television. Their success has in fact drawn not just views, but executives to examine why exactly we are watching this show. Previously. Hollywood has been a liberal monopoly and conservatives were wary if that could ever be changed.
Roseanne might be bringing back with it another conservative favorite that was previously snuffed out in the prime of its life. The Daily Caller reports that Fox Entertainment is considering bringing back it's former hit "Last Man Standing" in the wake of Rosanne's success:
"Tim Allen's 'Last Man Standing,' could be next in line for a reboot on Fox thanks to the massive ratings from Tuesday night's premiere of 'Roseanne.
Over 18 million viewers tuned in to see the blue-collar Conner family return to the small screen, and that is at least partly attributed to the fact that Roseanne is a Trump supporter.
This, according to a report from TMZ, could open the door for Allen's conservative character Mike Baxter. "Last Man Standing," which was produced by Fox for ABC, was canceled [sic] in 2017.
Although at the time ABC denied rumors that politics played a part in the cancellation, Allen wasn't sure that was the case.
'There's nothing more dangerous to me, especially in this climate, than a funny, likable conservative,' Allen said at the time. 'That was the most dangerous thing, because he was mitigated on his show by a family of women that had different opinions — but the guy was a likable guy, a principled guy, just about work and ethics and all this stuff. I think there's nothing more dangerous now than a likable conservative character.'.
Allen, who always wanted Mike Baxter to be an Archie Bunker-type and 'push boundaries,' may get a second chance to do just that. TMZ's report suggests that 'Last Man Standing' now tops the short list, followed by 'That 70s Show' and 'Malcolm in the Middle.'.
If it all comes down to Allen, the reboot is as good as made. He told Fox News in January, 'I, along with the talented writers, wonderful crew and terrific actors would definitely entertain the idea of bringing the show back as there is so much gas left in the tank, more to be said, and laughs to be had.".
Just how big a success was Rosanne, you might be wondering? Here are some of the statistics that Daily Vine reported earlier in the week, provided by Yahoo about how many viewers the conservative-friendly sit-com brought in:
"The first episode in the double episode opener is reported to have drawn 17.7 million pairs of eyes and have a 4.9 rating in adults 18-49. The second episode at 8:30 PM rose even higher to 18.6 million viewers and a 5.3 in 18-49. For the 8 PM hour, Roseanne averaged a 5.1 in 18-49 and 18.2 million viewers.
To make the success even more impressive is the fact that this broadcast shows an audience that was up 10% from the May 1997 finale telecast 21 years ago and topped the viewership of the final 12 telecasts of the original run's 1996-97 season.
Despite the obviously pro-Trump main character, Roseanne scored as the highest rated show on entertainment television in 6 years among adults 18-49 and TV's highest-rated comedy telecast on any night in 3-1/2 years– since 9/22/14. It is the top scripted telecast this season only behind the post-Super Bowl episode of This Is Us.".
The limousine liberals that run the left coast have all bought into the theory that their idealistic and unrealistic visions of how they think life should be, displayed on our TV screens, day after day, will make us want to strive for a better world. In reality, it's just alienating their audience and making way for the more relateable genre of programming.
What we might have hoped that the entire nation would have learned from the Trump election is that the silent majority might not be as loud and obnoxious as their counterparts on the left, but when something great comes along, they show up and support it. That's what they saw a peak of with "Last Man Standing" and it's what they saw in a big way in November of 2016.
Hopefully Hollywood will soon understand that any time the target audience is hardworking, taxpaying middle Americans, conservative values will win the day.
Will you watch "Last Man Standing" if Fox produces new episodes? Let us know in the comments and share with your friends!.
This will be AWESOME if it happens!!.
[Don't forget to SUBSCRIBE, LIKE, SHARE and COMMENT to get the latest news].
For more infomation >> First Roseanne, now another major Pro-Trump actor is infuriating libs with huge new Show! - Duration: 7:31. -------------------------------------------
The Future of Work is Inclusive | Women Empowered | Cognizant Brazil - Duration: 3:28. 
When we look at other executives occupying positions that
we all want to reach one day, it's very inspiring.
All the panels presented were very exciting and
showed us their routine
It's awesome to be in a company that
promotes this kind of discussion,
which brings up the challenges,
and we discuss ways to deal with it and solve it.
It's wonderful to see that Cognizant has this initiative,
and really promotes it.
I think it's fantastic to have female and male speakers,
that holds leadership positions,
so we have people inspiring us.
So, as women, we know
what are the next steps
that we need to take.
It was very enriching to me to attend
this panel with these inspiring women.
I would like to thank Cognizant for this
opportunity provided to us.
It was really amazing to hear these women
who showed a great strength and a exciting life story. Inspiring!
For more infomation >> The Future of Work is Inclusive | Women Empowered | Cognizant Brazil - Duration: 3:28. -------------------------------------------
Lena Dunham's mother thinks she bit Beyonce - What Is The Reason?!!! [SEE DETAILS] - Duration: 3:33. 
Lena Dunhams mother is weirdly doubtful of her after she was accused of biting Beyoncé.
The Girls creator was had the finger pointed at her by many fans on social media after actress Tiffany Haddish caused a stir earlier this week when she claimed an unidentified guest had bitten the Formation singer on the cheek at a party they attended together last year.
The search to discover who the culprit was has been widespread since the news broke, and although Lena has already denied being involved, she has now revealed that even her own mother thinks she might have something to do with the alleged altercation.
Taking to Twitter on Friday (3003.18) night, she wrote: To the paps who chased me through the airport yelling we need to know- did you bite Beyonce!? A- I basically only leave home for work and ginger ale.
B- No, you dont need to know. C- What the f**k do you think?. But can someone explain to my mom why anyone THINKS I bit Beyonce? She seems mad and also weirdly doubtful of me.
And the 31-year-old actress is still perplexed by the whole situation.
On Saturday (3103. 18) morning, she added: Woke up with this thought: having to deny biting anyone as an adult is its own special hell/not the reality I was hoping to inhabit (sic).
Meanwhile, 38-year-old Tiffany recently revealed she would never expose the identity of the biter, as she has allegedly signed a non-disclosure agreement preventing her from saying anything.
Speaking in her Instagram Story while getting her hair done, she said: NDAs are real, so Im not saying s**t about nothing.
Previously, Chrissy Teigen admitted she thought she knew who the mystery person was because they were the worst.
She Tweeted: I cannot leave this planet without knowing who bit Beyonce in the face. I can only think of one person who would do this. but I cannot say. but she.is the worst. .
But the Lip Sync Battle star - who is married to musician John Legend - subsequently revealed that her original guess about the culprit was proven to be wrong.
She confessed: My initial guess was wrong. The real person? I *never* would have guessed. IVE SAID TOO MUCH .
For more infomation >> Lena Dunham's mother thinks she bit Beyonce - What Is The Reason?!!! [SEE DETAILS] - Duration: 3:33. -------------------------------------------
What is Inflation? | Definition & Explanation of Inflation - Duration: 55:10. 
In economics, inflation is a sustained increase in the general price level of goods and services
in an economy over a period of time.When the price level rises, each unit of currency buys
fewer goods and services; consequently, inflation reflects a reduction in the purchasing power
per unit of money – a loss of real value in the medium of exchange and unit of account
within the economy. A chief measure of price inflation is the inflation rate, the annualized
percentage change in a general price index, usually the consumer price index, over time.
The opposite of inflation is deflation. Inflation affects economies in various positive
and negative ways. The negative effects of inflation include an increase in the opportunity
cost of holding money, uncertainty over future inflation which may discourage investment
and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding
out of concern that prices will increase in the future. Positive effects include reducing
the real burden of public and private debt, keeping nominal interest rates above zero
so that central banks can adjust interest rates to stabilize the economy, and reducing
unemployment due to nominal wage rigidity. Economists generally believe that high rates
of inflation and hyperinflation are caused by an excessive growth of the money supply.Views
on which factors determine low to moderate rates of inflation are more varied. Low or
moderate inflation may be attributed to fluctuations in real demand for goods and services, or
changes in available supplies such as during scarcities. However, the consensus view is
that a long sustained period of inflation is caused by money supply growing faster than
the rate of economic growth. Inflation may also lead to an invisible tax in which the
value of currency is lowered in contrast with its actual reserve ultimately, leading individuals
to hold devalued legal tender. Today, most economists favor a low and steady
rate of inflation. Low (as opposed to zero or negative) inflation reduces the severity
of economic recessions by enabling the labor market to adjust more quickly in a downturn,
and reduces the risk that a liquidity trap prevents monetary policy from stabilizing
the economy. The task of keeping the rate of inflation low and stable is usually given
to monetary authorities. Generally, these monetary authorities are the central banks
that control monetary policy through the setting of interest rates, through open market operations,
and through the setting of banking reserve requirements.
Venezuela has the highest inflation in the world, with an annual inflation of around
536.2% as of October 2017. History:
Rapid increases in quantity of the money or in the overall money supply (or debasement
of the means of exchange) have occurred in many different societies throughout history,
changing with different forms of money used. For instance, when gold was used as currency,
the government could collect gold coins, melt them down, mix them with other metals such
as silver, copper, or lead, and reissue them at the same nominal value. By diluting the
gold with other metals, the government could issue more coins without also needing to increase
the amount of gold used to make them. When the cost of each coin is lowered in this way,
the government profits from an increase in seigniorage. This practice would increase
the money supply but at the same time the relative value of each coin would be lowered.
As the relative value of the coins becomes lower, consumers would need to give more coins
in exchange for the same goods and services as before. These goods and services would
experience a price increase as the value of each coin is reduced.
Song Dynasty China introduced the practice of printing paper money to create fiat currency.
During the Mongol Yuan Dynasty, the government spent a great deal of money fighting costly
wars, and reacted by printing more money, leading to inflation. Fearing the inflation
that plagued the Yuan dynasty, the Ming Dynasty initially rejected the use of paper money,
and reverted to using copper coins. Historically, large infusions of gold or silver
into an economy also led to inflation. From the second half of the 15th century to the
first half of the 17th, Western Europe experienced a major inflationary cycle referred to as
the "price revolution", with prices on average rising perhaps sixfold over 150 years. This
was largely caused by the sudden influx of gold and silver from the New World into Habsburg
Spain. The silver spread throughout a previously cash-starved Europe and caused widespread
inflation. Demographic factors also contributed to upward pressure on prices, with European
population growth after depopulation caused by the Black Death pandemic.
By the nineteenth century, economists categorized three separate factors that cause a rise or
fall in the price of goods: a change in the value or production costs of the good, a change
in the price of money which then was usually a fluctuation in the commodity price of the
metallic content in the currency, and currency depreciation resulting from an increased supply
of currency relative to the quantity of redeemable metal backing the currency. Following the
proliferation of private banknote currency printed during the American Civil War, the
term "inflation" started to appear as a direct reference to the currency depreciation that
occurred as the quantity of redeemable banknotes outstripped the quantity of metal available
for their redemption. At that time, the term inflation referred to the devaluation of the
currency, and not to a rise in the price of goods.
This relationship between the over-supply of banknotes and a resulting depreciation
in their value was noted by earlier classical economists such as David Hume and David Ricardo,
who would go on to examine and debate what effect a currency devaluation (later termed
monetary inflation) has on the price of goods (later termed price inflation, and eventually
just inflation). The adoption of fiat currency by many countries,
from the 18th century onwards, made much larger variations in the supply of money possible.
Since then, huge increases in the supply of paper money have taken place in a number of
countries, producing hyperinflations – episodes of extreme inflation rates much higher than
those observed in earlier periods of commodity money. The hyperinflation in the Weimar Republic
of Germany is a notable example. Related definitions:
The term "inflation" originally referred to increases in the amount of money in circulation.
However, most economists today use the term "inflation" to refer to a rise in the price
level. An increase in the money supply may be called monetary inflation, to distinguish
it from rising prices, which may also for clarity be called "price inflation". Economists
generally agree that in the long run, inflation is caused by increases in the money supply.
Conceptually, inflation refers to the general trend of prices, not changes in any specific
price. For example, if people choose to buy more cucumbers than tomatoes, cucumbers consequently
become more expensive and tomatoes cheaper. These changes are not related to inflation,
they reflect a shift in tastes. Inflation is related to the value of currency itself.
When currency was linked with gold, if new gold deposits were found, the price of gold
and the value of currency would fall, and consequently prices of all other goods would
become higher. Other economic concepts related to inflation
include: deflation – a fall in the general price level; disinflation – a decrease in
the rate of inflation; hyperinflation – an out-of-control inflationary spiral; stagflation
– a combination of inflation, slow economic growth and high unemployment; reflation – an
attempt to raise the general level of prices to counteract deflationary pressures; and
Asset price inflation – a general rise in the prices of financial assets without a corresponding
increase in the prices of goods or services. Since there are many possible measures of
the price level, there are many possible measures of price inflation. Most frequently, the term
"inflation" refers to a rise in a broad price index representing the overall price level
for goods and services in the economy. The Consumer Price Index (CPI), the Personal consumption
expenditures price index (PCEPI) and the GDP deflator are some examples of broad price
indices. However, "inflation" may also be used to describe a rising price level within
a narrower set of assets, goods or services within the economy, such as commodities (including
food, fuel, metals), tangible assets (such as real estate), financial assets (such as
stocks, bonds), services (such as entertainment and health care), or labor. Although the values
of capital assets are often casually said to "inflate," this should not be confused
with inflation as a defined term; a more accurate description for an increase in the value of
a capital asset is appreciation. The Reuters-CRB Index (CCI), the Producer Price Index, and
Employment Cost Index (ECI) are examples of narrow price indices used to measure price
inflation in particular sectors of the economy. Core inflation is a measure of inflation for
a subset of consumer prices that excludes food and energy prices, which rise and fall
more than other prices in the short term. The Federal Reserve Board pays particular
attention to the core inflation rate to get a better estimate of long-term future inflation
trends overall. Measures:
The inflation rate is widely calculated by calculating the movement or change in a price
index, usually the consumer price index. The inflation rate is the percentage change of
a price index over time. The Retail Prices Index is also a measure of inflation that
is commonly used in the United Kingdom. It is broader than the CPI and contains a larger
basket of goods and services. To illustrate the method of calculation, in
January 2007, the U.S. Consumer Price Index was 202.416, and in January 2008 it was 211.080.
The formula for calculating the annual percentage rate inflation in the CPI over the course
of the year is: The resulting inflation rate for the CPI in this one-year period is 4.28%,
meaning the general level of prices for typical U.S. consumers rose by approximately four
percent in 2007. Other widely used price indices for calculating
price inflation include the following: Producer price indices (PPIs) which measures
average changes in prices received by domestic producers for their output. This differs from
the CPI in that price subsidization, profits, and taxes may cause the amount received by
the producer to differ from what the consumer paid. There is also typically a delay between
an increase in the PPI and any eventual increase in the CPI. Producer price index measures
the pressure being put on producers by the costs of their raw materials. This could be
"passed on" to consumers, or it could be absorbed by profits, or offset by increasing productivity.
In India and the United States, an earlier version of the PPI was called the Wholesale
price index. Commodity price indices, which measure
the price of a selection of commodities. In the present commodity price indices are weighted
by the relative importance of the components to the "all in" cost of an employee.
Core price indices: because food and oil prices can change quickly due to changes in
supply and demand conditions in the food and oil markets, it can be difficult to detect
the long run trend in price levels when those prices are included. Therefore, most statistical
agencies also report a measure of 'core inflation', which removes the most volatile components
(such as food and oil) from a broad price index like the CPI. Because core inflation
is less affected by short run supply and demand conditions in specific markets, central banks
rely on it to better measure the inflationary impact of current monetary policy.
Other common measures of inflation are: GDP deflator is a measure of the price
of all the goods and services included in gross domestic product (GDP). The US Commerce
Department publishes a deflator series for US GDP, defined as its nominal GDP measure
divided by its real GDP measure. ∴
Regional inflation The Bureau of Labor Statistics breaks down CPI-U calculations
down to different regions of the US. Historical inflation Before collecting
consistent econometric data became standard for governments, and for the purpose of comparing
absolute, rather than relative standards of living, various economists have calculated
imputed inflation figures. Most inflation data before the early 20th century is imputed
based on the known costs of goods, rather than compiled at the time. It is also used
to adjust for the differences in real standard of living for the presence of technology.
Asset price inflation is an undue increase in the prices of real or financial assets,
such as stock (equity) and real estate. While there is no widely accepted index of this
type, some central bankers have suggested that it would be better to aim at stabilizing
a wider general price level inflation measure that includes some asset prices, instead of
stabilizing CPI or core inflation only. The reason is that by raising interest rates when
stock prices or real estate prices rise, and lowering them when these asset prices fall,
central banks might be more successful in avoiding bubbles and crashes in asset prices.
Issues in measuring: Measuring inflation in an economy requires
objective means of differentiating changes in nominal prices on a common set of goods
and services, and distinguishing them from those price shifts resulting from changes
in value such as volume, quality, or performance. For example, if the price of a 10 oz. can
of corn changes from $0.90 to $1.00 over the course of a year, with no change in quality,
then this price difference represents inflation. This single price change would not, however,
represent general inflation in an overall economy. To measure overall inflation, the
price change of a large "basket" of representative goods and services is measured. This is the
purpose of a price index, which is the combined price of a "basket" of many goods and services.
The combined price is the sum of the weighted prices of items in the "basket". A weighted
price is calculated by multiplying the unit price of an item by the number of that item
the average consumer purchases. Weighted pricing is a necessary means to measuring the impact
of individual unit price changes on the economy's overall inflation. The Consumer Price Index,
for example, uses data collected by surveying households to determine what proportion of
the typical consumer's overall spending is spent on specific goods and services, and
weights the average prices of those items accordingly. Those weighted average prices
are combined to calculate the overall price. To better relate price changes over time,
indexes typically choose a "base year" price and assign it a value of 100. Index prices
in subsequent years are then expressed in relation to the base year price. While comparing
inflation measures for various periods one has to take into consideration the base effect
as well. Inflation measures are often modified over
time, either for the relative weight of goods in the basket, or in the way in which goods
and services from the present are compared with goods and services from the past. Over
time, adjustments are made to the type of goods and services selected to reflect changes
in the sorts of goods and services purchased by 'typical consumers'. New products may be
introduced, older products disappear, the quality of existing products may change, and
consumer preferences can shift. Both the sorts of goods and services which are included in
the "basket" and the weighted price used in inflation measures will be changed over time
to keep pace with the changing marketplace. Inflation numbers are often seasonally adjusted
to differentiate expected cyclical cost shifts. For example, home heating costs are expected
to rise in colder months, and seasonal adjustments are often used when measuring for inflation
to compensate for cyclical spikes in energy or fuel demand. Inflation numbers may be averaged
or otherwise subjected to statistical techniques to remove statistical noise and volatility
of individual prices. When looking at inflation, economic institutions
may focus only on certain kinds of prices, or special indices, such as the core inflation
index which is used by central banks to formulate monetary policy.
Most inflation indices are calculated from weighted averages of selected price changes.
This necessarily introduces distortion, and can lead to legitimate disputes about what
the true inflation rate is. This problem can be overcome by including all available price
changes in the calculation, and then choosing the median value. In some other cases, governments
may intentionally report false inflation rates; for instance, during the presidency of Cristina
Kirchner (2007–2015) the government of Argentina was criticised for manipulating economic data,
such as inflation and GDP figures, for political gain and to reduce payments on its inflation-indexed
debt. Causes:
Historically, a great deal of economic literature was concerned with the question of what causes
inflation and what effect it has. There were different schools of thought as to the causes
of inflation. Most can be divided into two broad areas: quality theories of inflation
and quantity theories of inflation. The quality theory of inflation rests on the
expectation of a seller accepting currency to be able to exchange that currency at a
later time for goods that are desirable as a buyer. The quantity theory of inflation
rests on the quantity equation of money that relates the money supply, its velocity, and
the nominal value of exchanges. Adam Smith and David Hume proposed a quantity theory
of inflation for money, and a quality theory of inflation for production.
Currently, the quantity theory of money is widely accepted as an accurate model of inflation
in the long run. Consequently, there is now broad agreement among economists that in the
long run, the inflation rate is essentially dependent on the growth rate of money supply
relative to the growth of the economy. However, in the short and medium term inflation may
be affected by supply and demand pressures in the economy, and influenced by the relative
elasticity of wages, prices and interest rates. The question of whether the short-term effects
last long enough to be important is the central topic of debate between monetarist and Keynesian
economists. In monetarism prices and wages adjust quickly enough to make other factors
merely marginal behavior on a general trend-line. In the Keynesian view, prices and wages adjust
at different rates, and these differences have enough effects on real output to be "long
term" in the view of people in an economy. Keynesian view:
Keynesian economics proposes that changes in money supply do not directly affect prices,
and that visible inflation is the result of pressures in the economy expressing themselves
in prices. There are three major types of inflation,
as part of what Robert J. Gordon calls the "triangle model":
Demand-pull inflation is caused by increases in aggregate demand due to increased private
and government spending, etc. Demand inflation encourages economic growth since the excess
demand and favourable market conditions will stimulate investment and expansion.
Cost-push inflation, also called "supply shock inflation," is caused by a drop in aggregate
supply (potential output). This may be due to natural disasters, or increased prices
of inputs. For example, a sudden decrease in the supply of oil, leading to increased
oil prices, can cause cost-push inflation. Producers for whom oil is a part of their
costs could then pass this on to consumers in the form of increased prices. Another example
stems from unexpectedly high Insured losses, either legitimate (catastrophes) or fraudulent
(which might be particularly prevalent in times of recession).
Built-in inflation is induced by adaptive expectations, and is often linked to the "price/wage
spiral". It involves workers trying to keep their wages up with prices (above the rate
of inflation), and firms passing these higher labor costs on to their customers as higher
prices, leading to a 'vicious circle'. Built-in inflation reflects events in the past, and
so might be seen as hangover inflation. Demand-pull theory states that inflation accelerates
when aggregate demand increases beyond the ability of the economy to produce (its potential
output). Hence, any factor that increases aggregate demand can cause inflation. However,
in the long run, aggregate demand can be held above productive capacity only by increasing
the quantity of money in circulation faster than the real growth rate of the economy.
Another (although much less common) cause can be a rapid decline in the demand for money,
as happened in Europe during the Black Death, or in the Japanese occupied territories just
before the defeat of Japan in 1945. The effect of money on inflation is most obvious
when governments finance spending in a crisis, such as a civil war, by printing money excessively.
This sometimes leads to hyperinflation, a condition where prices can double in a month
or less. Money supply is also thought to play a major role in determining moderate levels
of inflation, although there are differences of opinion on how important it is. For example,
Monetarist economists believe that the link is very strong; Keynesian economists, by contrast,
typically emphasize the role of aggregate demand in the economy rather than the money
supply in determining inflation. That is, for Keynesians, the money supply is only one
determinant of aggregate demand. Some Keynesian economists also disagree with
the notion that central banks fully control the money supply, arguing that central banks
have little control, since the money supply adapts to the demand for bank credit issued
by commercial banks. This is known as the theory of endogenous money, and has been advocated
strongly by post-Keynesians as far back as the 1960s. It has today become a central focus
of Taylor rule advocates. This position is not universally accepted – banks create
money by making loans, but the aggregate volume of these loans diminishes as real interest
rates increase. Thus, central banks can influence the money supply by making money cheaper or
more expensive, thus increasing or decreasing its production.
A fundamental concept in inflation analysis is the relationship between inflation and
unemployment, called the Phillips curve. This model suggests that there is a trade-off between
price stabilityand employment. Therefore, some level of inflation could be considered
desirable to minimize unemployment. The Phillips curve model described the U.S. experience
well in the 1960s but failed to describe the stagflation experienced in the 1970s. Thus,
modern macroeconomics describes inflation using a Phillips curve that is able to shift
due to such matters as supply shocks and structural inflation. The former refers to such events
like the 1973 oil crisis, while the latter refers to the price/wage spiral and inflationary
expectations implying that inflation is the new normal. Thus, the Phillips curve represents
only the demand-pull component of the triangle model.
Another concept of note is the potential output (sometimes called the "natural gross domestic
product"), a level of GDP, where the economy is at its optimal level of production given
institutional and natural constraints. (This level of output corresponds to the Non-Accelerating
Inflation Rate of Unemployment, NAIRU, or the "natural" rate of unemployment or the
full-employment unemployment rate.) If GDP exceeds its potential (and unemployment is
below the NAIRU), the theory says that inflation will accelerate as suppliers increase their
prices and built-in inflation worsens. If GDP falls below its potential level (and unemployment
is above the NAIRU), inflation will decelerate as suppliers attempt to fill excess capacity,
cutting prices and undermining built-in inflation. However, one problem with this theory for
policy-making purposes is that the exact level of potential output (and of the NAIRU) is
generally unknown and tends to change over time. Inflation also seems to act in an asymmetric
way, rising more quickly than it falls. Worse, it can change because of policy: for example,
high unemployment under British Prime Minister Margaret Thatcher might have led to a rise
in the NAIRU (and a fall in potential) because many of the unemployed found themselves as
structurally unemployed (also see unemployment), unable to find jobs that fit their skills.
A rise in structural unemployment implies that a smaller percentage of the labor force
can find jobs at the NAIRU, where the economy avoids crossing the threshold into the realm
of accelerating inflation. Unemployment:
A connection between inflation and unemployment has been drawn since the emergence of large
scale unemployment in the 19th century, and connections continue to be drawn today. However,
the unemployment rate generally only affects inflation in the short-term but not the long-term.
In the long term, the velocity of money is far more predictive of inflation than low
unemployment. In Marxian economics, the unemployed serve
as a reserve army of labor, which restrain wage inflation. In the 20th century, similar
concepts in Keynesian economics include the NAIRU (Non-Accelerating Inflation Rate of
Unemployment) and the Phillips curve. Monetarist view:
Monetarists believe the most significant factor influencing inflation or deflation is how
fast the money supply grows or shrinks. They consider fiscal policy, or government spending
and taxation, as ineffective in controlling inflation. The monetarist economist Milton
Friedman famously stated, "Inflation is always and everywhere a monetary phenomenon."
Monetarists assert that the empirical study of monetary history shows that inflation has
always been a monetary phenomenon. The quantity theory of money, simply stated, says that
any change in the amount of money in a system will change the price level.
Monetarists assume that the velocity of money is unaffected by monetary policy (at least
in the long run), and the real value of output is determined in the long run by the productive
capacity of the economy. Under these assumptions, the primary driver of the change in the general
price level is changes in the quantity of money. With exogenous velocity (that is, velocity
being determined externally and not being influenced by monetary policy), the money
supply determines the value of nominal output (which equals final expenditure) in the short
run. In practice, velocity is not exogenous in the short run, and so the formula does
not necessarily imply a stable short-run relationship between the money supply and nominal output.
However, in the long run, changes in velocity are assumed to be determined by the evolution
of the payments mechanism. If velocity is relatively unaffected by monetary policy,
the long-run rate of increase in prices (the inflation rate) is equal to the long-run growth
rate of the money supply plus the exogenous long-run rate of velocity growth minus the
long run growth rate of real output. Rational expectations theory:
Rational expectations theory holds that economic actors look rationally into the future when
trying to maximize their well-being, and do not respond solely to immediate opportunity
costs and pressures. In this view, while generally grounded in monetarism, future expectations
and strategies are important for inflation as well.
A core assertion of rational expectations theory is that actors will seek to "head off"
central-bank decisions by acting in ways that fulfill predictions of higher inflation. This
means that central banks must establish their credibility in fighting inflation, or economic
actors will make bets that the central bank will expand the money supply rapidly enough
to prevent recession, even at the expense of exacerbating inflation. Thus, if a central
bank has a reputation as being "soft" on inflation, when it announces a new policy of fighting
inflation with restrictive monetary growth economic agents will not believe that the
policy will persist; their inflationary expectations will remain high, and so will inflation. On
the other hand, if the central bank has a reputation of being "tough" on inflation,
then such a policy announcement will be believed and inflationary expectations will come down
rapidly, thus allowing inflation itself to come down rapidly with minimal economic disruption.
Austrian view: The Austrian School stresses that inflation
is not uniform over all assets, goods, and services. Inflation depends on differences
in markets and on where newly created money and credit enter the economy. Ludwig von Mises
said that inflation should refer to an increase in the quantity of money that is not offset
by a corresponding increase in the need for money, and that price inflation will necessarily
follow. Real bills doctrine:
The real bills doctrine asserts that banks should issue their money in exchange for short-term
real bills of adequate value. As long as banks only issue a dollar in exchange for assets
worth at least a dollar, the issuing bank's assets will naturally move in step with its
issuance of money, and the money will hold its value. Should the bank fail to get or
maintain assets of adequate value, then the bank's money will lose value, just as any
financial security will lose value if its asset backing diminishes. The real bills doctrine
(also known as the backing theory) thus asserts that inflation results when money outruns
its issuer's assets. The quantity theory of money, in contrast, claims that inflation
results when money outruns the economy's production of goods.
Currency and banking schools of economics argue the RBD, that banks should also be able
to issue currency against bills of trading, which is "real bills" that they buy from merchants.
This theory was important in the 19th century in debates between "Banking" and "Currency"
schools of monetary soundness, and in the formation of the Federal Reserve. In the wake
of the collapse of the international gold standard post 1913, and the move towards deficit
financing of government, RBD has remained a minor topic, primarily of interest in limited
contexts, such as currency boards. It is generally held in ill repute today, with Frederic Mishkin,
a governor of the Federal Reserve going so far as to say it had been "completely discredited."
The debate between currency, or quantity theory, and the banking schools during the 19th century
prefigures current questions about the credibility of money in the present. In the 19th century
the banking schools had greater influence in policy in the United States and Great Britain,
while the currency schools had more influence "on the continent", that is in non-British
countries, particularly in the Latin Monetary Union and the earlier Scandinavia monetary
union. Effects:
General: An increase in the general level of prices
implies a decrease in the purchasing power of the currency. That is, when the general
level of prices rise, each monetary unit buys fewer goods and services. The effect of inflation
is not distributed evenly in the economy, and as a consequence there are hidden costs
to some and benefits to others from this decrease in the purchasing power of money. For example,
with inflation, those segments in society which own physical assets, such as property,
stock etc., benefit from the price/value of their holdings going up, when those who seek
to acquire them will need to pay more for them. Their ability to do so will depend on
the degree to which their income is fixed. For example, increases in payments to workers
and pensioners often lag behind inflation, and for some people income is fixed. Also,
individuals or institutions with cash assets will experience a decline in the purchasing
power of the cash. Increases in the price level (inflation) erode the real value of
money (the functional currency) and other items with an underlying monetary nature.
Debtors who have debts with a fixed nominal rate of interest will see a reduction in the
"real" interest rate as the inflation rate rises. The real interest on a loan is the
nominal rate minus the inflation rate. The formula R = N-I approximates the correct answer
as long as both the nominal interest rate and the inflation rate are small. The correct
equation is r = n/i where r, n and i are expressed as ratios (e.g. 1.2 for +20%, 0.8 for −20%).
As an example, when the inflation rate is 3%, a loan with a nominal interest rate of
5% would have a real interest rate of approximately 2% (in fact, it's 1.94%). Any unexpected increase
in the inflation rate would decrease the real interest rate. Banks and other lenders adjust
for this inflation risk either by including an inflation risk premium to fixed interest
rate loans, or lending at an adjustable rate. Negative:
High or unpredictable inflation rates are regarded as harmful to an overall economy.
They add inefficiencies in the market, and make it difficult for companies to budget
or plan long-term. Inflation can act as a drag on productivity as companies are forced
to shift resources away from products and services to focus on profit and losses from
currency inflation. Uncertainty about the future purchasing power of money discourages
investment and saving. Inflation can also impose hidden tax increases. For instance,
inflated earnings push taxpayers into higher income tax rates unless the tax brackets are
indexed to inflation. With high inflation, purchasing power is redistributed
from those on fixed nominal incomes, such as some pensioners whose pensions are not
indexed to the price level, towards those with variable incomes whose earnings may better
keep pace with the inflation. This redistribution of purchasing power will also occur between
international trading partners. Where fixed exchange rates are imposed, higher inflation
in one economy than another will cause the first economy's exports to become more expensive
and affect the balance of trade. There can also be negative impacts to trade from an
increased instability in currency exchange prices caused by unpredictable inflation.
Cost-push inflation: High inflation can prompt employees to demand
rapid wage increases, to keep up with consumer prices. In the cost-push theory of inflation,
rising wages in turn can help fuel inflation. In the case of collective bargaining, wage
growth will be set as a function of inflationary expectations, which will be higher when inflation
is high. This can cause a wage spiral. In a sense, inflation begets further inflationary
expectations, which beget further inflation. Hoarding:
People buy durable and/or non-perishable commodities and other goods as stores of wealth, to avoid
the losses expected from the declining purchasing power of money, creating shortages of the
hoarded goods. Social unrest and revolts:
Inflation can lead to massive demonstrations and revolutions. For example, inflation and
in particular food inflation is considered as one of the main reasons that caused the
2010–11 Tunisian revolution and the 2011 Egyptian revolution, according to many observers
including Robert Zoellick, president of the World Bank. Tunisian president Zine El Abidine
Ben Ali was ousted, Egyptian President Hosni Mubarak was also ousted after only 18 days
of demonstrations, and protests soon spread in many countries of North Africa and Middle
East. Hyperinflation:
If inflation becomes too high, it can cause people to severely curtail their use of the
currency, leading to an acceleration in the inflation rate. High and accelerating inflation
grossly interferes with the normal workings of the economy, hurting its ability to supply
goods. Hyperinflation can lead to the abandonment of the use of the country's currency (for
example as in North Korea) leading to the adoption of an external currency (dollarization).
Allocative efficiency: A change in the supply or demand for a good
will normally cause its relative price to change, signaling the buyers and sellers that
they should re-allocate resources in response to the new market conditions. But when prices
are constantly changing due to inflation, price changes due to genuine relative price
signals are difficult to distinguish from price changes due to general inflation, so
agents are slow to respond to them. The result is a loss of allocative efficiency.
Shoe leather cost: High inflation increases the opportunity cost
of holding cash balances and can induce people to hold a greater portion of their assets
in interest paying accounts. However, since cash is still needed to carry out transactions
this means that more "trips to the bank" are necessary to make withdrawals, proverbially
wearing out the "shoe leather" with each trip. Menu costs:
With high inflation, firms must change their prices often to keep up with economy-wide
changes. But often changing prices is itself a costly activity whether explicitly, as with
the need to print new menus, or implicitly, as with the extra time and effort needed to
change prices constantly. Positive:
Labour-market adjustments: Nominal wages are slow to adjust downwards.
This can lead to prolonged disequilibrium and high unemployment in the labor market.
Since inflation allows real wages to fall even if nominal wages are kept constant, moderate
inflation enables labor markets to reach equilibrium faster.
Room to maneuver: The primary tools for controlling the money
supply are the ability to set the discount rate, the rate at which banks can borrow from
the central bank, and open market operations, which are the central bank's interventions
into the bonds market with the aim of affecting the nominal interest rate. If an economy finds
itself in a recession with already low, or even zero, nominal interest rates, then the
bank cannot cut these rates further (since negative nominal interest rates are impossible)
to stimulate the economy – this situation is known as a liquidity trap.
Mundell–Tobin effect: The Nobel laureate Robert Mundell noted that
moderate inflation would induce savers to substitute lending for some money holding
as a means to finance future spending. That substitution would cause market clearing real
interest rates to fall. The lower real rate of interest would induce more borrowing to
finance investment. In a similar vein, Nobel laureate James Tobin noted that such inflation
would cause businesses to substitute investment in physical capital (plant, equipment, and
inventories) for money balances in their asset portfolios. That substitution would mean choosing
the making of investments with lower rates of real return. (The rates of return are lower
because the investments with higher rates of return were already being made before.)
The two related effects are known as the Mundell–Tobin effect. Unless the economy is already overinvesting
according to models of economic growth theory, that extra investment resulting from the effect
would be seen as positive. Instability with deflation:
Economist S.C. Tsiang noted that once substantial deflation is expected, two important effects
will appear; both a result of money holding substituting for lending as a vehicle for
saving.The first was that continually falling prices and the resulting incentive to hoard
money will cause instability resulting from the likely increasing fear, while money hoards
grow in value, that the value of those hoards are at risk, as people realize that a movement
to trade those money hoards for real goods and assets will quickly drive those prices
up. Any movement to spend those hoards "once started would become a tremendous avalanche,
which could rampage for a long time before it would spend itself." Thus, a regime of
long-term deflation is likely to be interrupted by periodic spikes of rapid inflation and
consequent real economic disruptions. Moderate and stable inflation would avoid such a seesawing
of price movements. Financial market inefficiency with deflation:
The second effect noted by Tsiang is that when savers have substituted money holding
for lending on financial markets, the role of those markets in channeling savings into
investment is undermined. With nominal interest rates driven to zero, or near zero, from the
competition with a high return money asset, there would be no price mechanism in whatever
is left of those markets. With financial markets effectively euthanized, the remaining goods
and physical asset prices would move in perverse directions. For example, an increased desire
to save could not push interest rates further down (and thereby stimulate investment) but
would instead cause additional money hoarding, driving consumer prices further down and making
investment in consumer goods production thereby less attractive. Moderate inflation, once
its expectation is incorporated into nominal interest rates, would give those interest
rates room to go both up and down in response to shifting investment opportunities, or savers'
preferences, and thus allow financial markets to function in a more normal fashion.
Controlling inflation: A variety of methods and policies have been
proposed and used to control inflation. Monetary policy:
Governments and central banks primarily use monetary policy to control inflation. Central
banks such as the U.S. Federal Reserve increase the interest rate, slow or stop the growth
of the money supply, and reduce the money supply. Some banks have a symmetrical inflation
target while others only control inflation when it rises above a target, whether express
or implied. Most central banks are tasked with keeping
their inter-bank lending rates at low levels, normally to a target annual rate of about
2% to 3%, and within a targeted annual inflation range of about 2% to 6%. Central bankers target
a low inflation rate because they believe deflation endangers the economy.
Higher interest rates reduce the amount of money because fewer people seek loans, and
loans are usually made with new money. When banks make loans, they usually first create
new money, then lend it. A central bank usually creates money lent to a national government.
Therefore, when a person pays back a loan, the bank destroys the money and the quantity
of money falls. In the early 1980s, when the federal funds rate exceeded 15 percent, the
quantity of Federal Reserve dollars fell 8.1 percent, from US$8.6 trillion down to $7.9
trillion. Monetarists emphasize a steady growth rate
of money and use monetary policy to control inflation by slowing the rise in the money
supply. Keynesiansemphasize reducing aggregate demand during economic expansions and increasing
demand during recessions to keep inflation stable. Control of aggregate demand can be
achieved using both monetary policy and fiscal policy (increased taxation or reduced government
spending to reduce demand). Fixed exchange rates:
Under a fixed exchange rate currency regime, a country's currency is tied in value to another
single currency or to a basket of other currencies (or sometimes to another measure of value,
such as gold). A fixed exchange rate is usually used to stabilize the value of a currency,
vis-a-vis the currency it is pegged to. It can also be used as a means to control inflation.
However, as the value of the reference currency rises and falls, so does the currency pegged
to it. This essentially means that the inflation rate in the fixed exchange rate country is
determined by the inflation rate of the country the currency is pegged to. In addition, a
fixed exchange rate prevents a government from using domestic monetary policy to achieve
macroeconomic stability. Under the Bretton Woods agreement, most countries
around the world had currencies that were fixed to the U.S. dollar. This limited inflation
in those countries, but also exposed them to the danger of speculative attacks. After
the Bretton Woods agreement broke down in the early 1970s, countries gradually turned
to floating exchange rates. However, in the later part of the 20th century, some countries
reverted to a fixed exchange rate as part of an attempt to control inflation. This policy
of using a fixed exchange rate to control inflation was used in many countries in South
America in the later part of the 20th century (e.g. Argentina (1991–2002), Bolivia, Brazil,
and Chile). Gold standard:
The gold standard is a monetary system in which a region's common media of exchange
are paper notes that are normally freely convertible into pre-set, fixed quantities of gold. The
standard specifies how the gold backing would be implemented, including the amount of specie
per currency unit. The currency itself has no innate value, but is accepted by traders
because it can be redeemed for the equivalent specie. A U.S. silver certificate, for example,
could be redeemed for an actual piece of silver. The gold standard was partially abandoned
via the international adoption of the Bretton Woods system. Under this system all other
major currencies were tied at fixed rates to the dollar, which itself was tied to gold
at the rate of US$35 per ounce. The Bretton Woods system broke down in 1971, causing most
countries to switch to fiat money – money backed only by the laws of the country.
Under a gold standard, the long term rate of inflation (or deflation) would be determined
by the growth rate of the supply of gold relative to total output.Critics argue that this will
cause arbitrary fluctuations in the inflation rate, and that monetary policy would essentially
be determined by gold mining. Wage and price controls:
Another method attempted in the past have been wage and price controls ("incomes policies").
Wage and price controls have been successful in wartime environments in combination with
rationing. However, their use in other contexts is far more mixed. Notable failures of their
use include the 1972 imposition of wage and price controls by Richard Nixon. More successful
examples include the Prices and Incomes Accord in Australia and the Wassenaar Agreement in
the Netherlands. In general, wage and price controls are regarded
as a temporary and exceptional measure, only effective when coupled with policies designed
to reduce the underlying causes of inflation during the wage and price control regime,
for example, winning the war being fought. They often have perverse effects, due to the
distorted signals they send to the market. Artificially low prices often cause rationing
and shortages and discourage future investment, resulting in yet further shortages. The usual
economic analysis is that any product or service that is under-priced is overconsumed. For
example, if the official price of bread is too low, there will be too little bread at
official prices, and too little investment in bread making by the market to satisfy future
needs, thereby exacerbating the problem in the long term.
Temporary controls may complement a recession as a way to fight inflation: the controls
make the recession more efficient as a way to fight inflation (reducing the need to increase
unemployment), while the recession prevents the kinds of distortions that controls cause
when demand is high. However, in general the advice of economists is not to impose price
controls but to liberalize prices by assuming that the economy will adjust and abandon unprofitable
economic activity. The lower activity will place fewer demands on whatever commodities
were driving inflation, whether labor or resources, and inflation will fall with total economic
output. This often produces a severe recession, as productive capacity is reallocated and
is thus often very unpopular with the people whose livelihoods are destroyed (see creative
destruction). Effect of economic growth:
If economic growth matches the growth of the money supply, inflation should not occur when
all else is equal. A large variety of factors can affect the rate of both. For example,
investment in market production, infrastructure, education, and preventive health care can
all grow an economy in greater amounts than the investment spending.
Cost-of-living allowance: The real purchasing power of fixed payments
is eroded by inflation unless they are inflation-adjusted to keep their real values constant. In many
countries, employment contracts, pension benefits, and government entitlements (such as social
security) are tied to a cost-of-living index, typically to the consumer price index. A cost-of-living
adjustment (COLA) adjusts salaries based on changes in a cost-of-living index. It does
not control inflation, but rather seeks to mitigate the consequences of inflation for
those on fixed incomes. Salaries are typically adjusted annually in low inflation economies.
During hyperinflation they are adjusted more often. They may also be tied to a cost-of-living
index that varies by geographic location if the employee moves.
Annual escalation clauses in employment contracts can specify retroactive or future percentage
increases in worker pay which are not tied to any index. These negotiated increases in
pay are colloquially referred to as cost-of-living adjustments ("COLAs") or cost-of-living increases
because of their similarity to increases tied to externally determined indexes.
Inflation expectations: Inflation expectations, inflationary expectations,
or expected inflation is the rate of inflation that is anticipated for some period of time
in the foreseeable future. There are two major approaches to modeling the formation of inflation
expectations. Adaptive expectations models them as a weighted average of what was expected
one period earlier and the actual rate of inflation that most recently occurred. Rational
expectations models them as unbiased, in the sense that the expected inflation rate is
not systematically above or systematically below the inflation rate that actually occurs.
A long-standing survey of inflation expectations is the University of Michigan survey.
Inflation expectations affect the economy in several ways. They are more or less built
into nominal interest rates, so that a rise (or fall) in the expected inflation rate will
typically result in a rise (or fall) in nominal interest rates, giving a smaller effect if
any on real interest rates. In addition, higher expected inflation tends to be built into
the rate of wage increases, giving a smaller effect if any on the changes in real wages.
Moreover, the response of inflationary expectations to monetary policy can influence the division
of the effects of policy between inflation and unemployment (see Monetary policy credibility).
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For more infomation >> What is Inflation? | Definition & Explanation of Inflation - Duration: 55:10. -------------------------------------------
Do You Need a 6 pack To Look Fit | Is a Six Pack Essential For You | Tamil - Duration: 10:05. 
you will hear about this repeatedly in thegym
and you will also be interested in knowing about 6 packs
but is getting 6 packs that important?
forget 10 years back
in today's world is 6 pack look the only fit look?
will you not consider a person fit if he does not have a 6 pack?
lets see about what I think about fitness and 6 packs
please do not skip this video or else you might not understand certain things..
be it 6 packs or 8 packs
all these depends on how much you drop your body fat % to low levels
some people drop body fat % to extreme levels and is considered unhealthy..
everybody likes a well toned midsection
thats why many are trying to get this
in an average gym
a person doesnt enter with the hopes of getting a 6 pack
an average person just wants to reduce their weight
and want to make sure that their hip size reduces to atleast a fraction
thats what most people worry
very few people dream of getting a 6 pack
thats the truth
so if an overweight person
reduces their hip size or body fat % slightly, wont you consider them fit?
a person with flat, well toned abdomen
is what I consider a fit person
for example a person might have started from 40 inches waist size
and dropped to 36 inches
so that is also considered fit only
fitter than they were having 40 inches waist size before the transformation..
even if they wanted to reach 30 inches finally for example
they have reached atleast 36 inches waist size
so thats a better transformation
so considered fitter than before
even if they reach a 30 inches hip size and not having a 6 pack
definiteley the person will be better looking and fit when
compared to how the person was when he had 40 inches hip size...
no doubts in that!!
definitely they are considered fit!!
a mistake people do in fitness is comparison
comparing yourself with others
you look at a physique
any good looking physique like a fitness model or a bodybuilder or a magazine cover
and start to think that you want to become like that (maybe in a short term)
and then you start working for it
aftyer start working out you realize that no
transformation is going to happen overnight
then what you do...You QUIT...
so whats the reason?
overexpectation - Having High Hopes
now lets rewind a bit and see whats happening here?
you are starting with the mindset of getting a 6 pack
(Not thinking about initial small transformation)
and inbetween
when you quit
forget about getting a 6 pack
you have not even achieved a small weight reduction in the process
and quit
so what happened finally?
you have not even done a small transformation because of overexpectation
if you had kept your expectation
in a reasonable small way,
like 'let me do a small initial transformation and then
finally let me think about getting an extreme transformation'
you may have done it
you might have achieved atleast a very small transformation
so over expecting in the beginning of transformation is the mistake many do..
if you workout reasonably you will achieve atleast a small transformation
take for example in cricket,
every player dreaming of playing in big level wants to hit a century
but still,
they will learn the game in the beginning
after learning one by one, with proper batting improvement and scoring some runs
like 10, 20 runs initially, they better themselves
and later on they may hit a century or may not hit a century
but they will still look for ways on how to improve their batting
instead if they think
They want to hit a century in the first game
itself and start playing with over expectation
they have high chances of scoring low runs...
because getting century is an extreme level
first they have to improve the game by scoring small runs initially
then only they will gain that experience for knowing about the next level
even your 6 pack journey is not different
its an extreme level
first you have to start with normal fat loss process
you have to make sure your transformation is starting atleast on a small level
or are you reaching towards your weight goals slowly
or are you toned than before
or is your hip size reduced than before...Thats what
you have to be concerned about in the beginning
without thinking like this, if you think of reaching
an extreme level like a 6 pack in the beginning itself
you wont be showing progress
you will be frustrated
and without thinking why you started this transformation, you may quit...
quitting is your decision
but if you think of getting a 6 pack and start your workout
and quit without even achieving a small fat loss then that makes no sense..
so have only average hopes
even if you ask advise from any person
dont ask them how to get 6 packs in the beginning, especially overweight persons...
ask them advise regarding fat loss to occur in the beginning
suppose you want to reach your final weight
you will think practically in that fat loss journey
you will know the difficulty because of your involvement
you will know how hard is it to get a extreme transformation like a 6 pack
since you know the difficulty you decide at that
time when you lost most of your body fat...
your decision will be very clear at that time
if you ask me about 6 packs
you should NOT workout with the goal of getting a 6 pack
when you are working out for your normal fat loss
a 6 pack should come during that transformation (not aiming for it initially itself)
you might not get 6 packs also in that journey
you dont have to get a 6 pack definitely
which is not important (Forget about 6 packs)
but did you get transformed in that journey or not?
did you achieve a small change in your body
if you have transformes even slightley you will be considered fitter only..
so how do I see fitness?
if a person has a correct weight for his height
not overweight
no fat in sides
and no complains while he works like problems in sitting or standing
or complaining about neck pain or stiffness while working in office
not complaining about lifting groceries
no other complains
performing their day to day activities
is what I called a fitter person
and an average person wants this type of body only
and not for a 6 packs
so as age progresses
you must try to achieving this kind of a fitter body is more than enough
think about 6 pack after you made your maximum transformation
i dont suggest you to workout for a 6 pack from beginning
itself...Dont have too much expectations in the beginning
so think about whether you even want a 6 pack
if you know about the difficulty you will start working out sensibly
for fat loss and achieving a well toned body
and you might have seen many thin persons with a 6 pack
thats not somethng to be proud of
its not difficult in getting a six pack if you are so thin..Many people can do it..
remember these persons might be underweight
and thats not a proper way of getting a 6 pack
if you want you have to get a 6 pack with a muscular, bulky body
and truth to be told, not may can achieve that kind of a physique
maintenace will be difficult
with lots of hard work and dedication,
with high patience levels and sacrificing many things
so you should be thinking about how long can you
maintain a transformed body on the long run
if you start with these 6 pack goals
not many will be able to maintain it..so its short term...
and if you think of making a tranformation on a short term it doesn't make sense..
so instead of having a 6 pack with a thin, underweight body,
if you have a well built, toned, fitter look
will be better looking even without a 6pack..
and think about what are you going to do with a 6 pack
not many are going to walk in public shitless with a six pack right?
so aim to do proper weight loss
and achieve a well toned, fitter look
and then think about getting 6 packs
because you will know its difficulty
so you will know the truth
so you will take smart decision
So, even without a 6 pack you will be considered fit
if you maintain a well toned body with a proper workout
For more infomation >> Do You Need a 6 pack To Look Fit | Is a Six Pack Essential For You | Tamil - Duration: 10:05. -------------------------------------------
What is Intangible Asset? | Definition & Explanation of Intangible Asset - Duration: 8:28. 
An intangible asset is an asset that lacks physical substance (unlike physical assets
such as machinery and buildings) and usually is very hard to evaluate.
It includes patents, copyrights, franchises, goodwill, trademarks, trade names, the general
interpretation also includes software and other intangible computer based assets.
Contrary to other assets, they generally—though not necessarily—suffer from typical market
failures of non-rivalry and non-excludability.
Definition: Intangible assets have been argued to be one
possible contributor to the disparity between company value as per their accounting records,
and company value as per their market capitalization.Considering this argument, it is important to understand
what an intangible asset truly is in the eyes of an accountant.
A number of attempts have been made to define intangible assets:
Prior to 2005 the Australian Accounting Standards Board issued the Statement of Accounting
Concepts number 4 (SAC 4).
This statement did not provide a formal definition of an intangible asset but did provide that
tangibility was not an essential characteristic of asset.
International Accounting Standards Board standard 38 (IAS 38) defines an intangible
asset as: "an identifiable non-monetary asset without physical substance."
This definition is in addition to the standard definition of an asset which requires a past
event that has given rise to a resource that the entity controls and from which future
economic benefits are expected to flow.
Thus, the extra requirement for an intangible asset under IAS 38 is identifiability.
This criterion requires that an intangible asset is separable from the entity or that
it arises from a contractual or legal right.
The Financial Accounting Standards Board Accounting Standard Codification 350 (ASC
350) defines an intangible asset as an asset, other than a financial asset, that lacks physical
substance.
The lack of physical substance would therefore seem to be a defining characteristic of an
intangible asset.
Both the IASB and FASB definitions specifically preclude monetary assets in their definition
of an intangible asset.
This is necessary in order to avoid the classification of items such as accounts receivable, derivatives
and cash in the bank as an intangible asset.
IAS 38 contains examples of intangible assets, including: computer software, copyright and
patents.
Research and development: R&D is considered as one among several other
intangible assets (e.g., about 16 percent of all intangible assets in the US ), even
if most countries treat R&D as current expenses for both legal and tax purposes.
While most countries report some intangibles in their National Income and Product Accounts
(NIPA), no country has included a comprehensive measure of intangible assets.
Yet, economists recognize the growing contribution of intangible assets in long-term GDP growth.
IAS 38 requires any project that results in the generation of a resource to the entity
be classified into two phases: a research phase, and a development phase.
Research is defined as "the original and planned investigation undertaken with the prospect
of gaining new scientific or technical knowledge and understanding.
For example, a company can carry a research on one of its products which it will use in
the entity of which results in future economic income.
Development is defined as "the application of research findings to a plan or design for
the production of new or substantially improved materials, devices, products, processes, systems,
or services, before the start of commercial production or use."
The accounting treatment of such expenses depends on whether it is classified as research
or development.
Where the distinction cannot be made, IAS 38 requires that the entire project be treated
as research and expensed through the Statement of Comprehensive Income.
As research expenditure is highly speculative, there is no certainty that future economic
benefits will flow to the entity.
As such, prudence dictates that research expenditure be expensed through the Statement of Comprehensive
Income.
Development expenditure, however, is less speculative and it becomes possible to predict
the future economic benefits that will flow to the entity.
The matching concept dictates that development expenditure be capitalised as the expenditure
will generate future economic benefit to the entity.
The classification of research and development expenditure can be highly subjective, and
it is important to note that organisations may have an ulterior motive in its classification
of research and development expenditure.
Less scrupulous directors may manipulate financial statements through their classification of
research and development expenditure.
Financial accounting: General standards:
The International Accounting Standards Board (IASB) offers some guidance (IAS 38) as to
how intangible assets should be accounted for in financial statements.
In general, legal intangibles that are developed internally are not recognized and legal intangibles
that are purchased from third parties are recognized.
Wordings are similar to IAS 9.
Under US GAAP, intangible assets are classified into: Purchased vs. internally created intangibles,
and Limited-life vs. indefinite-life intangibles.
Expense allocation: Intangible assets are typically expensed according
to their respective life expectancy.
Intangible assets have either an identifiable or indefinite useful life.
Intangible assets with identifiable useful lives are amortized on a straight-line basis
over their economic or legal life, whichever is shorter.
Examples of intangible assets with identifiable useful lives include copyrights and patents.
Intangible assets with indefinite useful lives are reassessed each year for impairment.
If an impairment has occurred, then a loss must be recognized.
An impairment loss is determined by subtracting the asset's fair value from the asset's book/carrying
value.
Trademarks and goodwill are examples of intangible assets with indefinite useful lives.
Goodwill has to be tested for impairment rather than amortized.
If impaired, goodwill is reduced and loss is recognized in the Income statement.
Taxation: For personal income tax purposes, some costs
with respect to intangible assets must be capitalized rather than treated as deductible
expenses.
Treasury regulations generally require capitalization of costs associated with acquiring, creating,
or enhancing intangible assets.
For example, an amount paid to obtain a trademark must be capitalized.
Certain amounts paid to facilitate these transactions are also capitalized.
Some types of intangible assets are categorized based on whether the asset is acquired from
another party or created by the taxpayer.
The regulations contain many provisions intended to make it easier to determine when capitalization
is required.
Given the growing importance of intangible assets as a source of economic growth and
tax revenue, as well as the fact that their non-physical nature makes it easier for taxpayers
to engage in tax strategies such as income-shifting or transfer pricing, tax authorities and international
organizations have been designing ways to link intangible assets to the place where
they were created, hence defining nexus.
Intangibles for corporations are amortized over a 15-year period, equivalent to 180 months.
Definition of "intangibles" differs from standard accounting, in some US state governments.
These governments may refer to stocks and bonds as "intangibles."
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For more infomation >> What is Intangible Asset? | Definition & Explanation of Intangible Asset - Duration: 8:28. -------------------------------------------
What is Inventory or Stock? - Duration: 30:20. 
Inventory or stock is the goods and materials that a business holds for the ultimate goals
to have a purpose of resale (or repair).
Inventory management is a discipline primarily about specifying the shape and placement of
stocked goods.
It is required at different locations within a facility or within many locations of a supply
network to precede the regular and planned course of production and stock of materials.
The concept of inventory, stock or work-in-process has been extended from manufacturing systems
to service businesses and projects, by generalizing the definition to be "all work within the
process of production- all work that is or has occurred prior to the completion of production."
In the context of a manufacturing production system, inventory refers to all work that
has occurred - raw materials, partially finished products, finished products prior to sale
and departure from the manufacturing system.
In the context of services, inventory refers to all work done prior to sale, including
partially process information.
Definition: The scope of inventory management concerns
the balance between replenishment lead time, carrying costs of inventory, asset management,
inventory forecasting, inventory valuation, inventory visibility, future inventory price
forecasting, physical inventory, available physical space, quality management, replenishment,
returns and defective goods, and demand forecasting.
Balancing these competing requirements leads to optimal inventory levels, which is an ongoing
process as the business needs shift and react to the wider environment.
Inventory management involves a retailer seeking to acquire and maintain a proper merchandise
assortment while ordering, shipping, handling and related costs are kept in check.
It also involves systems and processes that identify inventory requirements, set targets,
provide replenishment techniques, report actual and projected inventory status and handle
all functions related to the tracking and management of material.
This would include the monitoring of material moved into and out of stockroom locations
and the reconciling of the inventory balances.
It also may include ABC analysis, lot tracking, cycle counting support, etc.
Management of the inventories, with the primary objective of determining/controlling stock
levels within the physical distribution system, functions to balance the need for product
availability against the need for minimizing stock holding and handling costs.
Business inventory: Reasons for keeping stock:
There are five basic reasons for keeping an inventory
1.
Time - The time lags present in the supply chain, from supplier to user at every stage,
requires that you maintain certain amounts of inventory to use in this lead time.
However, in practice, inventory is to be maintained for consumption during 'variations in lead
time'.
Lead time itself can be addressed by ordering that many days in advance.
2.
Seasonal Demand: demands varies periodically, but producers capacity is fixed.
This can lead to stock accumulation, consider for example how goods consumed only in holidays
can lead to accumulation of large stocks on the anticipation of future consumption.
3.
Uncertainty - Inventories are maintained as buffers to meet uncertainties in demand, supply
and movements of goods.
4.
Economies of scale - Ideal condition of "one unit at a time at a place where a user needs
it, when he needs it" principle tends to incur lots of costs in terms of logistics.
So bulk buying, movement and storing brings in economies of scale, thus inventory.
5.
Appreciation in Value - In some situations, some stock gains the required value when it
is kept for some time to allow it reach the desired standard for consumption, or for production.
For example; beer in the brewing industry All these stock reasons can apply to any owner
or product.
Special terms used in dealing with inventory management:
Stock Keeping Unit (SKU) SKUs are clear, internal identification numbers assigned to
each of the products and their variants.
SKUs can be any combination of letters and numbers chosen, just as long as the system
is consistent and used for all the products in the inventory.
Stockout means running out of the inventory of an SKU.
"New old stock" (sometimes abbreviated NOS) is a term used in business to refer to
merchandise being offered for sale that was manufactured long ago but that has never been
used.
Such merchandise may not be produced anymore, and the new old stock may represent the only
market source of a particular item at the present time.
Typology: 1.
Buffer/safety stock 2.
Reorder level 3.
Cycle stock (Used in batch processes, it is the available inventory, excluding buffer
stock) 4.
De-coupling (Buffer stock held between the machines in a single process which serves
as a buffer for the next one allowing smooth flow of work instead of waiting the previous
or next machine in the same process) 5.
Anticipation stock (Building up extra stock for periods of increased demand - e.g. ice
cream for summer) 6.
Pipeline stock (Goods still in transit or in the process of distribution - have left
the factory but not arrived at the customer yet)
Average Daily/Weekly usage quantity X Lead time in days + Safety stock
Inventory examples: While accountants often discuss inventory
in terms of goods for sale, organizations - manufacturers, service-providers and not-for-profits
- also have inventories (fixtures, furniture, supplies, etc.) that they do not intend to
sell.
Manufacturers', distributors', and wholesalers' inventory tends to cluster in warehouses.
Retailers' inventory may exist in a warehouse or in a shop or store accessible to customers.
Inventories not intended for sale to customers or to clients may be held in any premises
an organization uses.
Stock ties up cash and, if uncontrolled, it will be impossible to know the actual level
of stocks and therefore impossible to control them.
While the reasons for holding stock were covered earlier, most manufacturing organizations
usually divide their "goods for sale" inventory into:
Raw materials - materials and components scheduled for use in making a product.
Work in process, WIP - materials and components that have begun their transformation to finished
goods.
Finished goods - goods ready for sale to customers.
Goods for resale - returned goods that are salable.
Stocks in transit.
Consignment stocks.
Maintenance supply.
For example: Manufacturing:
A canned food manufacturer's materials inventory includes the ingredients to form the foods
to be canned, empty cans and their lids (or coils of steel or aluminum for constructing
those components), labels, and anything else (solder, glue, etc.) that will form part of
a finished can.
The firm's work in process includes those materials from the time of release to the
work floor until they become complete and ready for sale to wholesale or retail customers.
This may be vats of prepared food, filled cans not yet labeled or sub-assemblies of
food components.
It may also include finished cans that are not yet packaged into cartons or pallets.
Its finished good inventory consists of all the filled and labeled cans of food in its
warehouse that it has manufactured and wishes to sell to food distributors (wholesalers),
to grocery stores (retailers), and even perhaps to consumers through arrangements like factory
stores and outlet centers.
Capital Projects: The partially completed work (or Work in Process)
is a measure of inventory built during the work execution of a capital project, such
as encountered in civilian infrastructure construction or oil and gas.
Inventory may not only reflect physical items (such as materials, parts, partially-finished
sub-assemblies) but also knowledge work-in-process (such as partially completed engineering designs
of components and assemblies to be fabricated).
Virtual inventory: A "virtual inventory" (also known as a "bank
inventory") enables a group of users to share common parts, especially where their availability
at short notice may be critical but they are unlikely to required by more than a few bank
members at any one time.
Virtual inventory also allows distributors and fulfilment houses to ship goods to retailers
direct from stock regardless of whether the stock is held in a retail store, stock room
or warehouse.
Costs associated with inventory: There are several costs associated with inventory:
Ordering cost Setup cost
Holding Cost Shortage Cost
Principle of inventory proportionality: Purpose:
Inventory proportionality is the goal of demand-driven inventory management.
The primary optimal outcome is to have the same number of days' (or hours', etc.) worth
of inventory on hand across all products so that the time of runout of all products would
be simultaneous.
In such a case, there is no "excess inventory," that is, inventory that would be left over
of another product when the first product runs out.
Excess inventory is sub-optimal because the money spent to obtain it could have been utilized
better elsewhere, i.e. to the product that just ran out.
The secondary goal of inventory proportionality is inventory minimization.
By integrating accurate demand forecasting with inventory management, rather than only
looking at past averages, a much more accurate and optimal outcome is expected.
Integrating demand forecasting into inventory management in this way also allows for the
prediction of the "can fit" point when inventory storage is limited on a per-product basis.
Applications: The technique of inventory proportionality
is most appropriate for inventories that remain unseen by the consumer, as opposed to "keep
full" systems where a retail consumer would like to see full shelves of the product they
are buying so as not to think they are buying something old, unwanted or stale; and differentiated
from the "trigger point" systems where product is reordered when it hits a certain level;
inventory proportionality is used effectively by just-in-time manufacturing processes and
retail applications where the product is hidden from view.
One early example of inventory proportionality used in a retail application in the United
States was for motor fuel.
Motor fuel (e.g. gasoline) is generally stored in underground storage tanks.
The motorists do not know whether they are buying gasoline off the top or bottom of the
tank, nor need they care.
Additionally, these storage tanks have a maximum capacity and cannot be overfilled.
Finally, the product is expensive.
Inventory proportionality is used to balance the inventories of the different grades of
motor fuel, each stored in dedicated tanks, in proportion to the sales of each grade.
Excess inventory is not seen or valued by the consumer, so it is simply cash sunk (literally)
into the ground.
Inventory proportionality minimizes the amount of excess inventory carried in underground
storage tanks.
This application for motor fuel was first developed and implemented by Petrolsoft Corporation
in 1990 for Chevron Products Company.
Most major oil companies use such systems today.
Roots: The use of inventory proportionality in the
United States is thought to have been inspired by Japanese just-in-time parts inventory management
made famous by Toyota Motors in the 1980s.
High-level inventory management: It seems that around 1880 there was a change
in manufacturing practice from companies with relatively homogeneous lines of products to
horizontally integrated companies with unprecedented diversity in processes and products.
Those companies (especially in metalworking) attempted to achieve success through economies
of scope - the gains of jointly producing two or more products in one facility.
The managers now needed information on the effect of product-mix decisions on overall
profits and therefore needed accurate product-cost information.
A variety of attempts to achieve this were unsuccessful due to the huge overhead of the
information processing of the time.
However, the burgeoning need for financial reporting after 1900 created unavoidable pressure
for financial accounting of stock and the management need to cost manage products became
overshadowed.
In particular, it was the need for audited accounts that sealed the fate of managerial
cost accounting.
The dominance of financial reporting accounting over management accounting remains to this
day with few exceptions, and the financial reporting definitions of 'cost' have distorted
effective management 'cost' accounting since that time.
This is particularly true of inventory.
Hence, high-level financial inventory has these two basic formulas, which relate to
the accounting period: 1.
Cost of Beginning Inventory at the start of the period + inventory purchases within the
period + cost of production within the period = cost of goods available
2.
Cost of goods available − cost of ending inventory at the end of the period = cost
of goods sold The benefit of these formulas is that the
first absorbs all overheads of production and raw material costs into a value of inventory
for reporting.
The second formula then creates the new start point for the next period and gives a figure
to be subtracted from the sales price to determine some form of sales-margin figure.
Manufacturing management is more interested in inventory turnover ratio or average days
to sell inventory since it tells them something about relative inventory levels.
Inventory turnover ratio (also known as inventory turns) = cost of goods sold / Average Inventory
= Cost of Goods Sold / ((Beginning Inventory + Ending Inventory) / 2)
and its inverse Average Days to Sell Inventory = Number of
Days a Year / Inventory Turnover Ratio = 365 days a year / Inventory Turnover Ratio
This ratio estimates how many times the inventory turns over a year.
This number tells how much cash/goods are tied up waiting for the process and is a critical
measure of process reliability and effectiveness.
So a factory with two inventory turns has six months stock on hand, which is generally
not a good figure (depending upon the industry), whereas a factory that moves from six turns
to twelve turns has probably improved effectiveness by 100%.
This improvement will have some negative results in the financial reporting, since the 'value'
now stored in the factory as inventory is reduced.
While these accounting measures of inventory are very useful because of their simplicity,
they are also fraught with the danger of their own assumptions.
There are, in fact, so many things that can vary hidden under this appearance of simplicity
that a variety of 'adjusting' assumptions may be used.
These include: Specific Identification
Lower of cost or market Weighted Average Cost
Moving-Average Cost FIFO and LIFO.
Inventory Turn is a financial accounting tool for evaluating inventory and it is not necessarily
a management tool.
Inventory management should be forward looking.
The methodology applied is based on historical cost of goods sold.
The ratio may not be able to reflect the usability of future production demand, as well as customer
demand.
Business models, including Just in Time (JIT) Inventory, Vendor Managed Inventory (VMI)
and Customer Managed Inventory (CMI), attempt to minimize on-hand inventory and increase
inventory turns.
VMI and CMI have gained considerable attention due to the success of third-party vendors
who offer added expertise and knowledge that organizations may not possess.
Inventory management in modern days is online oriented and more viable in digital.
This type of dynamics order management will require end-to-end visibility, collaboration
across fulfillment processes, real-time data automation among different companies, and
integration among multiple systems.
Accounting for inventory: Each country has its own rules about accounting
for inventory that fit with their financial-reporting rules.
For example, organizations in the U.S. define inventory to suit their needs within US Generally
Accepted Accounting Practices (GAAP), the rules defined by the Financial Accounting
Standards Board (FASB) (and others) and enforced by the U.S. Securities and Exchange Commission
(SEC) and other federal and state agencies.
Other countries often have similar arrangements but with their own accounting standards and
national agencies instead.
It is intentional that financial accounting uses standards that allow the public to compare
firms' performance, cost accounting functions internally to an organization and potentially
with much greater flexibility.
A discussion of inventory from standard and Theory of Constraints-based (throughput) cost
accounting perspective follows some examples and a discussion of inventory from a financial
accounting perspective.
The internal costing/valuation of inventory can be complex.
Whereas in the past most enterprises ran simple, one-process factories, such enterprises are
quite probably in the minority in the 21st century.
Where 'one process' factories exist, there is a market for the goods created, which establishes
an independent market value for the good.
Today, with multistage-process companies, there is much inventory that would once have
been finished goods which is now held as 'work in process' (WIP).
This needs to be valued in the accounts, but the valuation is a management decision since
there is no market for the partially finished product.
This somewhat arbitrary 'valuation' of WIP combined with the allocation of overheads
to it has led to some unintended and undesirable results.
Financial accounting: An organization's inventory can appear a mixed
blessing, since it counts as an asset on the balance sheet, but it also ties up money that
could serve for other purposes and requires additional expense for its protection.
Inventory may also cause significant tax expenses, depending on particular countries' laws regarding
depreciation of inventory, as in Thor Power Tool Company v. Commissioner.
Inventory appears as a current asset on an organization's balance sheet because the organization
can, in principle, turn it into cash by selling it.
Some organizations hold larger inventories than their operations require in order to
inflate their apparent asset value and their perceived profitability.
In addition to the money tied up by acquiring inventory, inventory also brings associated
costs for warehouse space, for utilities, and for insurance to cover staff to handle
and protect it from fire and other disasters, obsolescence, shrinkage (theft and errors),
and others.
Such holding costs can mount up: between a third and a half of its acquisition value
per year.
Businesses that stock too little inventory cannot take advantage of large orders from
customers if they cannot deliver.
The conflicting objectives of cost control and customer service often pit an organization's
financial and operating managers against its sales and marketing departments.
Salespeople, in particular, often receive sales-commission payments, so unavailable
goods may reduce their potential personal income.
This conflict can be minimised by reducing production time to being near or less than
customers' expected delivery time.
This effort, known as "Lean production" will significantly reduce working capital tied
up in inventory and reduce manufacturing costs (See the Toyota Production System).
Role of inventory accounting: By helping the organization to make better
decisions, the accountants can help the public sector to change in a very positive way that
delivers increased value for the taxpayer's investment.
It can also help to incentive's progress and to ensure that reforms are sustainable and
effective in the long term, by ensuring that success is appropriately recognized in both
the formal and informal reward systems of the organization.
To say that they have a key role to play is an understatement.
Finance is connected to most, if not all, of the key business processes within the organization.
It should be steering the stewardship and accountability systems that ensure that the
organization is conducting its business in an appropriate, ethical manner.
It is critical that these foundations are firmly laid.
So often they are the litmus test by which public confidence in the institution is either
won or lost.
Finance should also be providing the information, analysis and advice to enable the organizations'
service managers to operate effectively.
This goes beyond the traditional preoccupation with budgets – how much have we spent so
far, how much do we have left to spend?
It is about helping the organization to better understand its own performance.
That means making the connections and understanding the relationships between given inputs – the
resources brought to bear – and the outputs and outcomes that they achieve.
It is also about understanding and actively managing risks within the organization and
its activities.
FIFO vs. LIFO accounting: When a merchant buys goods from inventory,
the value of the inventory account is reduced by the cost of goods sold (COGS).
This is simple where the cost has not varied across those held in stock; but where it has,
then an agreed method must be derived to evaluate it.
For commodity items that one cannot track individually, accountants must choose a method
that fits the nature of the sale.
Two popular methods in use are: FIFO (first in - first out) and LIFO (last in - first
out).
FIFO treats the first unit that arrived in inventory as the first one sold.
LIFO considers the last unit arriving in inventory as the first one sold.
Which method an accountant selects can have a significant effect on net income and book
value and, in turn, on taxation.
Using LIFO accounting for inventory, a company generally reports lower net income and lower
book value, due to the effects of inflation.
This generally results in lower taxation.
Due to LIFO's potential to skew inventory value, UK GAAP and IAS have effectively banned
LIFO inventory accounting.
LIFO accounting is permitted in the United States subject to section 472 of the Internal
Revenue Code.
Standard cost accounting: Standard cost accounting uses ratios called
efficiencies that compare the labour and materials actually used to produce a good with those
that the same goods would have required under "standard" conditions.
As long as actual and standard conditions are similar, few problems arise.
Unfortunately, standard cost accounting methods developed about 100 years ago, when labor
comprised the most important cost in manufactured goods.
Standard methods continue to emphasize labor efficiency even though that resource now constitutes
a (very) small part of cost in most cases.
Standard cost accounting can hurt managers, workers, and firms in several ways.
For example, a policy decision to increase inventory can harm a manufacturing manager's
performance evaluation.
Increasing inventory requires increased production, which means that processes must operate at
higher rates.
When (not if) something goes wrong, the process takes longer and uses more than the standard
labor time.
The manager appears responsible for the excess, even though s/he has no control over the production
requirement or the problem.
In adverse economic times, firms use the same efficiencies to downsize, rightsize, or otherwise
reduce their labor force.
Workers laid off under those circumstances have even less control over excess inventory
and cost efficiencies than their managers.
Many financial and cost accountants have agreed for many years on the desirability of replacing
standard cost accounting.
They have not, however, found a successor.
Theory of constraints cost accounting: Eliyahu M. Goldratt developed the Theory of
Constraints in part to address the cost-accounting problems in what he calls the "cost world."
He offers a substitute, called throughput accounting, that uses throughput (money for
goods sold to customers) in place of output (goods produced that may sell or may boost
inventory) and considers labor as a fixed rather than as a variable cost.
He defines inventory simply as everything the organization owns that it plans to sell,
including buildings, machinery, and many other things in addition to the categories listed
here.
Throughput accounting recognizes only one class of variable costs: the truly variable
costs, like materials and components, which vary directly with the quantity produced
Finished goods inventories remain balance-sheet assets, but labor-efficiency ratios no longer
evaluate managers and workers.
Instead of an incentive to reduce labor cost, throughput accounting focuses attention on
the relationships between throughput (revenue or income) on one hand and controllable operating
expenses and changes in inventory on the other.
National accounts: Inventories also play an important role in
national accounts and the analysis of the business cycle.
Some short-term macroeconomic fluctuations are attributed to the inventory cycle.
Distressed inventory: Also known as distressed or expired stock,
distressed inventory is inventory whose potential to be sold at a normal cost has passed or
will soon pass.
In certain industries it could also mean that the stock is or will soon be impossible to
sell.
Examples of distressed inventory include products which have reached their expiry date, or have
reached a date in advance of expiry at which the planned market will no longer purchase
them (e.g. 3 months left to expiry), clothing which is out of fashion, music which is no
longer popular and old newspapers or magazines.
It also includes computer or consumer-electronic equipment which is obsolete or discontinued
and whose manufacturer is unable to support it, along with products which use that type
of equipment e.g. VHS format equipment and videos.
In 2001, Cisco wrote off inventory worth US $2.25 billion due to duplicate orders.
This is considered one of the biggest inventory write-offs in business history.
Stock Rotation: Stock Rotation is the practice of changing
the way inventory is displayed on a regular basis.
This is most commonly used in hospitality and retail - particularity where food products
are sold.
For example, in the case of supermarkets that a customer frequents on a regular basis, the
customer may know exactly what they want and where it is.
This results in many customers going straight to the product they seek and do not look at
other items on sale.
To discourage this practice, stores will rotate the location of stock to encourage customers
to look through the entire store.
This is in hopes the customer will pick up items they would not normally see.
Inventory credit: Inventory credit refers to the use of stock,
or inventory, as collateral to raise finance.
Where banks may be reluctant to accept traditional collateral, for example in developing countries
where land title may be lacking, inventory credit is a potentially important way of overcoming
financing constraints.
This is not a new concept; archaeological evidence suggests that it was practiced in
Ancient Rome.
Obtaining finance against stocks of a wide range of products held in a bonded warehouse
is common in much of the world.
It is, for example, used with Parmesan cheese in Italy.Inventory credit on the basis of
stored agricultural produce is widely used in Latin American countries and in some Asian
countries.
A precondition for such credit is that banks must be confident that the stored product
will be available if they need to call on the collateral; this implies the existence
of a reliable network of certified warehouses.
Banks also face problems in valuing the inventory.
The possibility of sudden falls in commodity prices means that they are usually reluctant
to lend more than about 60% of the value of the inventory at the time of the loan.
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For more infomation >> What is Inventory or Stock? - Duration: 30:20. -------------------------------------------
Arnold Schwarzenegger Open heart surgery - What Is The Reason?!!! [SEE DETAILS] - Duration: 3:31. 
Sylvester Stallone has confirmed Arnold Schwarzenegger is better than ever following his open heart surgery.
The former Governor of California was admitted to hospital this week to have a catheter valve replaced, and after complications with the procedure, a team of doctors were forced to perform emergency surgery.
Now, Arnold is said to be awake and recovering from his ordeal, and his close pal Sylvester has wished him nothing but the best.
When asked about the Terminator stars condition, Sly said: Arnold is a strong man. Hell be bigger and better than ever..
The 71-year-old Hollywood legend also insisted that he would love to visit Arnold in the hospital if [he] gets a chance.
Following Arnolds health scare, some fans have suggested that he gives up his long-term habit of smoking cigars, and Sylvester - who shares the habit - has said it isnt something he thinks either of them will do.
He said: Some things you just cant give up, stogies and breathing. And when asked by TMZ if he thinks Arnold will put down the cigars, the Rocky star simply said: Doubt it.
Previously, Arnolds representative Daniel Ketchell shared a statement on Twitter in which he detailed the procedure which the Predator star underwent.
He wrote: Yesterday, Governor Schwarzenegger underwent a planned procedure at Cedars-Sinai to replace a pulmonic valve that was originally replaced due to a congenital heart defect in 1997.
That 1997 replacement valve was never meant to be permanent, and has outlived its life expectancy, so he chose to replace it yesterday through a less-invasive catheter valve replacement.
During that procedure, an open-heart surgery team was prepared, as they frequently are in these circumstances, in case the catheter procedure was unable to be performed.
Governor Schwarzeneggers pulmonic valve was successfully replaced and he is currently recovering from the surgery and in a stable condition.
We want to thank the entire medical team for their tireless efforts.. Daniel later revealed Arnold was awake and well following his surgery.
He tweeted: Update: @Schwarzenegger is awake and his first words were actually Im back, so he is in good spirits.
