Arabs, Knights Templar and double-entry bookkeeping

Introduction of Arabic numerals provided a pivotal advance over the cumbersome Roman numerals. This development of a more convenient number system assisted progress in science, accounting and bookkeeping. Key to this was the use of the number zero, a concept unknown to the Romans. These numerals were adopted by the Arabs, starting around 750 CE. Around 820 CE the mathematician Al-Khwarizmi studied them and used them in calculations. Al Khwarizmi originated "algebra". He applied this knowledge to contracts, surveying and tax collection. The use of this number system spread throughout the Muslim world over the next two centuries, assisting the development of science. The system was first mentioned in Europe around 1200 CE, [Fibonacci, "Liber Abbaci", 1202] but Christian adherence to the Roman system hindered its use and introduction.

Zero had two characteristics that made the Arabic numbering system so valuable. It created a placeholder making abstract operations possible, and it indicated a null value or the absence of value. The Arabs did not invent zero; they transported the concept from India to the West, refining it along the way. The Arabic word for zero is sifr.

The Knights Templar, with their chain of holdings to the Levant, were the main financial power during the 12th century partly because they found a way to benefit from the East-West dichotomy in the gold/silver ratio. When they were suppressed in 1307, the field was opened to the Italians. The Templars brought double-entry bookkeeping back from the Crusades and the Italians were among the first to master it. [Later theorized by Fra Luca Pacioli, "SUMMA DE ARITMETICA GEOMETRIA PROPORTIONI ET PROPORTIONALITA", 1494]

Distinguishing as it does between capital investment which is depreciated over its useful life and current spending, it is basic to double-entry bookkeeping. When they apply a bit of it here and there to produce a better statistic for impressing the bond-rating agencies, governments in our day hide what they are doing. With a total write-off of bridges buildings, and human investment in a single year governments are driven to raise more taxation in that year than is strictly necessary, and when the excess taxation shows up in a higher price level, they now proceed to pushup interest rates “to lick inflation.” What they need to lick is their stubbornness in resisting their auditors and refusing to adopt accrual accountancy, On the other hand excluding the depreciated value of their capital investments from their assets but including the debt incurred by financing them through the private banking system, leads to an exaggerated net deficit (i.e., the excess of debt over assets). This serves as a pretext for selling private assets that appear on their books at a token value at a small fraction of their real worth, to well-connected investors, who apply accrual accountancy to their acquisition, list it on the stock market, and by driving up user fees for what the taxpayers have already paid for in taxes, now pay for them a second time in users’ fees.