AI Got it Wrong
- tbgidley
- Jun 22
- 2 min read
The question: How do I build a Constant Purchasing Power, Real Return Debt Market, one that employs standard accounting and amortization? AI did not understand how we calculated our numerous patents.
With many iterations of the question, the pattern of the response was consistent.
The Answer: Tax problems, too complex, currency risks, multiple transactions at the required layers, accounting difficulties, reporting risks…AI was wrong.
A Constant Purchasing Power (CPP) Debt Market must provide for the ability for all to be borrowers or lenders. It requires the ability to participate without the need to print money or be affected by the accretion of future debt balances or refinancing risks. All sub-classes of participants, governments, supra-national, political subdivisions, corporations, mortgages, leases, pensions, annuities… must be able to be either the borrower or the lender. To have that action generate free cash flow, improve their income statement, balance sheet, credit score, improve Asset/Liability Management, and provide for Inflation Risk Management, etc.
If you want to receive Constant Purchasing Power, you need assets that pay in Constant Purchasing Power.
Real Return Methodologies (RRM) Vs. Linker’s, TIPS, SeLFIES, RendA+, Self-E’s
RRM is NOT an accretion of debt model. It is not a mismatch of the Liability to be paid to the Assets supporting the payment. It DOES return the Principal in Constant Purchasing Power in a nontaxable manner. It can utilize the tax model of matching too. Return of principal is return of principal and the interest or shared risk (SUKUK financing) is the taxable component.
The competing methods ARE accretion of debt models. They weaken balance sheets, do not match Known Real Payments to Expected Real Incomes, do not match the durations of the Liabilities to the Assets and CAN NOT be duplicated effectively and efficiently by other participants in the debt market, such as mortgages, leases or political subdivisions, without the ability to print money. All of which reduce or remove risk management, ALM, credit scoring, etc.
If you are comfortable with vastly under-designed and built products, OK.
Or you can Choose the robust and stable foundation of Constant Purchasing Power and RRM engineering.
And the Financial Services Industry gets an entirely NEW and NON-CORRELATED Asset Class.
Real Return Methodologies
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