Value is never generated by moving money around or by reporting financial statements differently. Value is only created by innovation and that happens only in real markets. Accounting, a necessary evil, should be as simple as possible, so that policy makers do not have to burn the midnight oil in the next crisis trying to “relax” and “tighten” accounting rules to save the economy. Simple accounting, however, could substantially increase the unemployment rate as it will flush out the value destroying activities in the financial sector, that is growing like cancer on real productive parts of the economy.
The prescription to grow the economy is simple – let entrepreneurship thrive in a regime of simple and consistent reporting of financials.