Practical Economics:   How to make the economy go zoooom in the night. The main determinants of long-term economic prosperity and growth are explained. Part 1 of 2 ECONOMIC PROSPERITY A major factor involved in the growth and prosperity of a nation today is whether or not the culture within that nation encourages and rewards [...]

Previous student question: For years, I have always believed that some of the government regulation in place has not worked well and has distorted the economy and the financial market. I also feel the problem of the current weak economy and the on-going housing troubles includes regulatory inadequacy. Is there no regulation in place when [...]

Will America or China dominate the 21st Century? China’s per capita GDP today is close to $4,000, about 20 times more than in the 1970s, moving that country’s overall GDP directly behind America’s.[i] Teng Hsiaop’ing, Mao’s pragmatic successor, pushed wide open the spout of market forces flooding economic growth across China. Will China’s economy inevitably [...]

The Wonder of The Free Market – 3 Question from MBA Candidate  (student) – “But can citizens and the free market really fix themselves? A comment from the website of the Department of Justice (2011) states that the competitive process, which is found within free markets, only works when competitors set prices honestly and independently.” [...]

Part 10 of 10, Fraud Inoculation Other Possible Areas of Fraud One of the areas of possible fraud, despite the above level of monitoring, includes employing the assets for personal use and not reimbursing the firm. Another is stealing either assets or inventory. Unless there is a 100% physical inventory every day, inventory remains vulnerable [...]

Part 9 of 10, Fraud Inoculation The Payoff for this Intensive Monitoring The owner of the firm that suffered this large-scale embezzlement never wants to be materially defrauded again. He has the cash balance in his head, every day. In effect, by going over the cash flows in and out regularly, and having a reporting [...]

Part 8 of 10, Fraud Inoculation Fraud Inoculation May I put approximate time requirements on the necessary monitoring activities? First of all, to start such a comprehensive program requires a 100% physical inventory, perhaps involving every employee for one day. Setting up this forward-going scenario would require a one-time investment of time of 10 to [...]

Part 7 of 10, Fraud Inoculation Fraud Risk Reduction Because material fraud rears its ugly head mostly over cash issues, we need to identify cash activities, thereby identifying the fraud risk candidates. The main areas of cash flow out, in small businesses are: Payroll checks Vendor checks Cash register refund transactions – checks/cash/credit cards Loan [...]

Part 6 of 10, Fraud Inoculation Cash Flow Forecast Of course one large contributor to survival was reducing the workforce. From the date of the fraud discovery to three and ½ years later, sales have decreased by almost half, yet payroll expenses have been reduced by more than 50%. With the small monthly repayment plans [...]

Part 5 of 10, Fraud Inoculation Working Capital Inventory replenishment became an intricate chess game as on-the-shelf inventory value in the warehouse quickly dropped from well over $1 million to less than $500,000, causing the purchasing manager major headaches. Many stretched vendors began to do business with this firm on a cash-on-delivery or paid-in-advance basis. [...]