Articles by Andrew Reynolds

Dividend Imputation Credits – or how to send non-accountants to sleep

Accountants, and particularly tax accountants, have a wonderful way of making themselves indispensable. They use explanatory terms that induce creeping somnolence and decreasing sentience amongst the general population. In other words, they use sentences that put you to sleep. Once you are asleep, they can issue their bills and there is not much you can disagree with them on as you slept through the entire process. Sign here, please.

Dividend imputation is one of those terms that just seems to cause abject boredom to everyone else but gets many accountants excited.

First, an explainer. In most of the world companies pay tax and then, when they pay dividends, those dividends are also taxed as income to the shareholders. This, as you may have noticed, is effectively taxing the same income twice. The result is that many companies don’t pay much in dividends or they seek out tax havens to reduce … Read the rest


Why the ‘Great Inflation’ didn’t happen

Along with many others, I expected that the great money printing binge that the US Federal Reserve kicked off in November 2008 to create massive inflation. As the Fed does, they came up with a great term to make it seem as if they knew what they were doing (Quantitative Easing, or QE for short, of which there have now been three programs, QE1 through QE3) and a rationale for it, based firmly in Keynesian economics: that triggering inflation would stimulate demand.

Those of us who consider classical (i.e. pre-Keynesian) economics to be a better depiction of reality took one look at this and either shook our heads sadly or laughed hysterically. Many of the classical (or Austrian economics) writers claimed this would inevitably lead to inflation, and probably hyper-inflation given the massive scale of the printing.

Why then have we not seen the prices of everyday goods spiralling upwards … Read the rest


What will a future monetary system look like?

The ways in which money has evolved over the last century are greater than the changes that have happened since it first emerged millennia ago. Money emerged as a means of simplifying barter transactions, acting (in a way) as a central counterparty between buyers of good A and sellers of service B. By the end of the 19th century it had changed from being a physical good (think gold or silver) that both parties to a transaction would accept, into certificates representing physical gold and silver. They were still acceptable to both sides as they knew (or thought they knew) that there was real gold and silver available if they wanted to front up to their local bank.

That started to change as the world’s governments nationalised and monopolised the central banking system. This process started in the early 19th century in Europe and was largely completed by … Read the rest