Uploaded June 2026 | Updated September 2026, 3 weeks ago
Most people think accounting records what has already happened: profits earned, cash received, assets owned, and liabilities owed. But that is no longer how much of modern accounting works.
In this video, I explain how accounting has been transformed from a system based on prudence and evidence into one that increasingly relies on expectations about the future. Using a simple example, I show how an investment purchased for £10,000 can be valued at £20,000 almost immediately, even though no additional cash has been received and no profit has actually been earned.
The key to understanding this process is discounting. Future cash flows are brought back into the present using an assumed discount rate, creating a present value that accounting often treats as if it were real wealth today.
As a result, expected future gains can be recognised now, long before they have actually occurred.
In effect, accounting creates a financial time machine, importing the future into the present and treating estimates and assumptions as if they were facts.
I explain how this logic underpins mark-to-market accounting, why it became embedded in global accounting standards, and why it represents a profound break with the traditional accounting principle of prudence, under which profits could not be anticipated, but losses had to be recognised as soon as they became likely.
But this, as I explain, is about far more than accounting rules.
The same logic shapes financial markets, share prices, pension funds, investment decisions and corporate behaviour. Tomorrow’s income becomes today’s wealth, and future possibilities become present-day profits.
I argue that this process inflates reported wealth, reinforces inequality, redistributes power towards those who own financial assets, and even affects how we think about issues such as climate change, where future costs can be discounted until they appear almost insignificant.
The result is a financial system that often presents uncertainty as certainty and speculation as fact.
So is modern accounting providing a true and fair view of economic reality? Or has it become a mechanism for claiming ownership of a future that does not yet exist?
That is the question at the heart of this video.
The Cebate Ammunition for this video is available here. taxresearch.org.uk/Blog/2026/06/01/debate-ammunition-the-accounting-time-machine
Take a look at the poll below: youtube.com/post/UgkxHCyrfwrpY9lEROuWGGK8j7MqO_WQ8pSm
TRANSCRIPT
A transcript for this video is available at: taxresearch.org.uk
IF YOU WANT TO WRITE TO YOUR MP ABOUT ISSUES IN THIS VIDEO
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here. taxresearch.org.uk/Blog/2025/06/20/chatgpt-prompt-for-a-letter-to-your-mp
HOW TO SUPPORT US
Please consider donating: ko-fi.com/taxresearch
ABOUT RICHARD MURPHY
Richard Murphy is Emeritus Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best-known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
RICHARD MURPHY ON BLUESKY:
https://bsky.app/profile/richardjmurphy.bsky.social
OR
ON MY BLOG: taxresearch.org.uk/Blog
HIT SUBSCRIBE & GET NOTIFICATIONS
Subscribe and get notified of new videos released.
INTRODUCTION: youtube.com/watch?v=HdHsRPy3060
PLAYLISTS:
The Wealth Series
youtube.com/playlist?list=PLvRueM6wBgobQLeyZYAagFDMjEFTKbhRD
Ecenomics
youtube.com/playlist?list=PLvRueM6wBgob54Gs-fOL-8OAQ-IpduwB4
Britain
youtube.com/playlist?list=PLvRueM6wBgobwTT4ATvJjsf8OO6S7wD10
Tax
youtube.com/playlist?list=PLvRueM6wBgoaMni_12J6ULp3yUJisUZoY
MMT
youtube.com/playlist?list=PLvRueM6wBgoZ6jvRGSW5YXu8qogE6aClX
Money
youtube.com/playlist?list=PLvRueM6wBgoYnLk1c7syTvoIo8bKYUs5m
Climate Change
youtube.com/playlist?list=PLvRueM6wBgob4_wsYaVivWd2WumpPLYwJ
USA
youtube.com/playlist?list=PLvRueM6wBgoYYd3dSyU2Oyl3x7bWJOP7H
Labour
youtube.com/playlist?list=PLvRueM6wBgoa-KhzG-fnjDSg1WROL1zMw
The Trump Administration
youtube.com/playlist?list=PLvRueM6wBgobz41-GLimTho27A3flVWQx
#richardmurphy #richardjmurphy #economy #economics #accountancy #accounting #tax #uktax #ukeconomy #uk #money #economy #politics #government #tax #labour #health #life #Accounting #Finance #Economics #PoliticalEconomy #AccountingStandards #MarkToMarket #FairValueAccounting #PresentValue #DiscountRates #CorporateFinance #FinancialMarkets #Investment #Valuation #Auditing #Accountancy #FinancialReporting #CapitalMarkets #StockMarket #CorporateGovernance #EconomicTheory #FutureValue #BusinessFinance #ModernFinance #CharteredAccountant #FinancialSystem #EconomicAnalysis #Neoliberalism #Economy
Most people think accounting records what has already happened: profits earned, cash received, assets owned, and liabilities owed. But that is no longer how much of modern accounting works.
In this video, I explain how accounting has been transformed from a system based on prudence and evidence into one that increasingly relies on expectations about the future. Using a simple example, I show how an investment purchased for £10,000 can be valued at £20,000 almost immediately, even though no additional cash has been received and no profit has actually been earned.
The key to understanding this process is discounting. Future cash flows are brought back into the present using an assumed discount rate, creating a present value that accounting often treats as if it were real wealth today.
As a result, expected future gains can be recognised now, long before they have actually occurred.
In effect, accounting creates a financial time machine, importing the future into the present and treating estimates and assumptions as if they were facts.
I explain how this logic underpins mark-to-market accounting, why it became embedded in global accounting standards, and why it represents a profound break with the traditional accounting principle of prudence, under which profits could not be anticipated, but losses had to be recognised as soon as they became likely.
But this, as I explain, is about far more than accounting rules.
The same logic shapes financial markets, share prices, pension funds, investment decisions and corporate behaviour. Tomorrow’s income becomes today’s wealth, and future possibilities become present-day profits.
I argue that this process inflates reported wealth, reinforces inequality, redistributes power towards those who own financial assets, and even affects how we think about issues such as climate change, where future costs can be discounted until they appear almost insignificant.
The result is a financial system that often presents uncertainty as certainty and speculation as fact.
So is modern accounting providing a true and fair view of economic reality? Or has it become a mechanism for claiming ownership of a future that does not yet exist?
That is the question at the heart of this video.
The Cebate Ammunition for this video is available here. taxresearch.org.uk/Blog/2026/06/01/debate-ammunition-the-accounting-time-machine
Take a look at the poll below: youtube.com/post/UgkxHCyrfwrpY9lEROuWGGK8j7MqO_WQ8pSm
TRANSCRIPT
A transcript for this video is available at: taxresearch.org.uk
IF YOU WANT TO WRITE TO YOUR MP ABOUT ISSUES IN THIS VIDEO
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here. taxresearch.org.uk/Blog/2025/06/20/chatgpt-prompt-for-a-letter-to-your-mp
HOW TO SUPPORT US
Please consider donating: ko-fi.com/taxresearch
ABOUT RICHARD MURPHY
Richard Murphy is Emeritus Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best-known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
RICHARD MURPHY ON BLUESKY:
https://bsky.app/profile/richardjmurphy.bsky.social
OR
ON MY BLOG: taxresearch.org.uk/Blog
HIT SUBSCRIBE & GET NOTIFICATIONS
Subscribe and get notified of new videos released.
INTRODUCTION: youtube.com/watch?v=HdHsRPy3060
PLAYLISTS:
The Wealth Series
youtube.com/playlist?list=PLvRueM6wBgobQLeyZYAagFDMjEFTKbhRD
Ecenomics
youtube.com/playlist?list=PLvRueM6wBgob54Gs-fOL-8OAQ-IpduwB4
Britain
youtube.com/playlist?list=PLvRueM6wBgobwTT4ATvJjsf8OO6S7wD10
Tax
youtube.com/playlist?list=PLvRueM6wBgoaMni_12J6ULp3yUJisUZoY
MMT
youtube.com/playlist?list=PLvRueM6wBgoZ6jvRGSW5YXu8qogE6aClX
Money
youtube.com/playlist?list=PLvRueM6wBgoYnLk1c7syTvoIo8bKYUs5m
Climate Change
youtube.com/playlist?list=PLvRueM6wBgob4_wsYaVivWd2WumpPLYwJ
USA
youtube.com/playlist?list=PLvRueM6wBgoYYd3dSyU2Oyl3x7bWJOP7H
Labour
youtube.com/playlist?list=PLvRueM6wBgoa-KhzG-fnjDSg1WROL1zMw
The Trump Administration
youtube.com/playlist?list=PLvRueM6wBgobz41-GLimTho27A3flVWQx
#richardmurphy #richardjmurphy #economy #economics #accountancy #accounting #tax #uktax #ukeconomy #uk #money #economy #politics #government #tax #labour #health #life #Accounting #Finance #Economics #PoliticalEconomy #AccountingStandards #MarkToMarket #FairValueAccounting #PresentValue #DiscountRates #CorporateFinance #FinancialMarkets #Investment #Valuation #Auditing #Accountancy #FinancialReporting #CapitalMarkets #StockMarket #CorporateGovernance #EconomicTheory #FutureValue #BusinessFinance #ModernFinance #CharteredAccountant #FinancialSystem #EconomicAnalysis #Neoliberalism #Economy
