You are assuming that prices do reflect value. Isn't that a sketchy premise?
I just gave an example in which the GDP is 100,000,000 times larger then the observable transaction outside us two people ($20M vs. $0.20). It is perfectly ok from legal and tax perspectives (income and expenses cancel out; accounts were netted).
Now, given how easy that is to do, why would you assume that prices properly reflect value?
As an example, the GAP and Banana republic will sell you everything at 50% discount if you know what you are doing (there is a 40%-or-so discount window for "loyal customers" every week, and other coupons and rebates that stack up). What price should Banana Republic consider their inventory in? The higher price, or the lower price?
Now, when they transfer this to Banana Republic UK, what are the prices (and values) they should use?
This is all ripe for perversion, and it is this "flexibility" that allows Google and Microsoft and other multinational corps to pay 3% tax on one hand, and companies to present arbitrary GDP numbers on the other.
Prices and values only reflect each other in efficient markets -- but those are almost nowhere to be found.
I just gave an example in which the GDP is 100,000,000 times larger then the observable transaction outside us two people ($20M vs. $0.20). It is perfectly ok from legal and tax perspectives (income and expenses cancel out; accounts were netted).
Now, given how easy that is to do, why would you assume that prices properly reflect value?
As an example, the GAP and Banana republic will sell you everything at 50% discount if you know what you are doing (there is a 40%-or-so discount window for "loyal customers" every week, and other coupons and rebates that stack up). What price should Banana Republic consider their inventory in? The higher price, or the lower price?
Now, when they transfer this to Banana Republic UK, what are the prices (and values) they should use?
This is all ripe for perversion, and it is this "flexibility" that allows Google and Microsoft and other multinational corps to pay 3% tax on one hand, and companies to present arbitrary GDP numbers on the other.
Prices and values only reflect each other in efficient markets -- but those are almost nowhere to be found.