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The Big Mac index: Our interactive currency comparison tool

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Re: The Big Mac index: Our interactive currency comparison tool

#181

Post by e4e78a06 »

seanmcdirmid wrote: post #177
e4e78a06 wrote: post #167

Earlier quoted context omitted.

> And...it is not like you HAVE to live in SF, there are plenty of cities nearby All of which have even more draconian zoning policies that permit only SFH (not even a 5+1). If SF had 10 times as much housing maybe we'd have 10 times as many people being productively employed in industries in the city instead of being forced to locate elsewhere. Maybe some of those people wouldn't HAVE to work in tech/finance to affo…

I’m not against density, density does bring benefits that I prefer, just not affordability. Just that if SF was even more dense than it was now, it would still be NYC expensive, hardly affordable. Affordability isn’t a problem you can build your way out of, not in any context I’ve seen (Tokyo being a sole exception, we just have to have a falling birth rate and block off immigration for it to work). If SF had 10x the…

Shanghai real estate is expensive because China has no property tax. Coincidentally, California also has a problem with extremely high property valuations due to Prop 13 lowering taxes.

> NYC expensive, hardly affordable

NYC has record low new supply of housing relative to demand. Not a great example.

Re: The Big Mac index: Our interactive currency comparison tool

#182

Post by mym1990 »

gruez wrote: post #69
mym1990 wrote: post #30

Earlier quoted context omitted.

It isn't about converting currency as much as a hypothetical arbitrage play in the difference between exchange rates and actual prices. If I took a bunch of dollars to Turkey, converted them, bought an obscene amount of Big Macs, brought them back to the US, and resold them, there would be a lot of money to be made due to the value gap. Obviously ignore the fact that Big Macs are perishable goods(arguable?) and that…

I'm not sure if you realize this, but your entire comment can essentially be summarized to "offshoring".

This isn’t really accurate. Offshoring is the act of moving services or processes to a foreign entity, and while the processes can be the production of goods, my example is simply explaining price arbitrage between goods that are existing. The same thing can be done in forex markets, but the markets are too efficient to actually find those opportunities regularly. And I wouldn’t call forex trading “offshoring”.

Re: The Big Mac index: Our interactive currency comparison tool

#183

Post by imtringued »

beachwood23 wrote: post #141
arcticbull wrote: post #110

Earlier quoted context omitted.

From the right side: > "You're now losing -1% of your money to inflation per year or 1.0% per month" What on earth does that mean? Inflation of 6% annualized is 0.4% per month. Big Macs against the S&P 500 is some sort of chart crime. Yeah, companies became more valuable because we're good at making companies. That's got very little to do with ... anything. [edit] Especially since the S&P 500 isn't some sort of plato…

> Further, wage growth not matching production efficiencies or even decelerating is not a monetary policy issue (or anything to do with inflation) but a social policy issue. Specifically, minimum wage not tracking inflation, and in my opinion, a broad-based rejection of unions. It can be both a monetary policy issue and a social policy issue. Entities that are close to the money-creation spigot that is the Fed have a…

You should worry about the federal tax "spigot" instead. It does not take very many brain cells to understand that taxes are collected everywhere and paid out wherever politicians want leading to geographical inequality.

Interest rates and capital gains kinda act like a tax as well because wealthy people concentrate in a few high profile cities and are not spread out like local bank branches.

Oh and land is a natural monopoly so land owners get their cut as well.

Re: The Big Mac index: Our interactive currency comparison tool

#184

Post by imtringued »

andriesm wrote: post #175
arcticbull wrote: post #149

Earlier quoted context omitted.

The "money creation spigot" is lending. Anywho who borrows money is at the spigot - that's how fractional reserve lending works, and that's where money comes from. This means anyone with a mortgage, anyone with a credit card, anyone with a post-paid phone plan. Indexing minimum wage to inflation substantially solves the problem. Can you quantify the spread you claim exists here? I feel like just pointing to the "cant…

I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. Also perhaps fractional reserve banking does create the issue thatp those who can borrow money and buy assers have an advantage over those at the bottom who strugglle to buy assets and cannot borrow. I…

A lot can be fixed with demurrage currency. Eternal currency inspired by the gold standard does not work because time doesn't stand still when you don't spend your money, there are people on the other side waiting for you to spend your money so they can buy food.

"Printing" money is a side effect caused by people delaying their spending eternally. You can have an fixed supply inflation free 0% interest currency with an annual fee on excess liquitiy (often known as negative interest). All you need to do is implement the demurrage fee on cash via expiration dates. Expired notes require a fee to be exchanged, the expiry date is printed on a replaceable sticker.

Re: The Big Mac index: Our interactive currency comparison tool

#185

Post by imtringued »

seanmcdirmid wrote: post #163
arcticbull wrote: post #162

Earlier quoted context omitted.

> SF is one of the densest cities in the USA (17k/sqm vs. NYC's 27k/sqm). This is irrelevant, it's obviously not sufficiently dense to meet demand. If you look at the photo you'll obviously see that it's simply not particularly dense by visual inspection. > Houses are expensive in SF because people want to live in SF. They are expensive because they do not permit sufficient construction to meet the demand, what about…

> This is irrelevant, it's obviously not sufficiently dense to meet demand. If you look at the photo you'll obviously see that it's simply not particularly dense by visual inspection. Why does demand always have to be met in one smallish (geographically speaking) city? > They are expensive because they do not permit sufficient construction to meet the demand, what about that do you disagree with? It's not just that p…

>Why does demand always have to be met in one smallish (geographically speaking) city?

Because wealthy people who live off capital gains live there. Tell them to spend their money somewhere else. People move there because they want or need the billionaire's money.

Re: The Big Mac index: Our interactive currency comparison tool

#186

Post by ephbit »

arcticbull wrote: post #179
andriesm wrote: post #175

Earlier quoted context omitted.

I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. Also perhaps fractional reserve banking does create the issue thatp those who can borrow money and buy assers have an advantage over those at the bottom who strugglle to buy assets and cannot borrow. I…

> I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. The thing is, the breakdowns, source materials, algorithms, data - they're all published. This isn't Joe Biden goes to the podium and bestows unto us that the CPI was 7% annualized this quarter and d…

> I'm not rejecting the cantillon effect wholesale, I'm asking for a quantification ..

You might as well ask for a quantification of the Matthew Effect [1] ... you won't get one. Would it be helpful? Yes, probably.

But more important than having a quantification is, that people register the fact that such effects exist. Depending upon how most people would define fairness, the conclusion from the existence of these effects could then be: there need to be measures taken (taxes, subsidies, ...) so there's some degree of compensation, otherwise society will find itself in an (unnecessarily) instable dynamic.

[1] https://en.wikipedia.org/wiki/Matthew_effect

Re: The Big Mac index: Our interactive currency comparison tool

#187

Post by ephbit »

arcticbull wrote: post #179
andriesm wrote: post #175

Earlier quoted context omitted.

I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. Also perhaps fractional reserve banking does create the issue thatp those who can borrow money and buy assers have an advantage over those at the bottom who strugglle to buy assets and cannot borrow. I…

> I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. The thing is, the breakdowns, source materials, algorithms, data - they're all published. This isn't Joe Biden goes to the podium and bestows unto us that the CPI was 7% annualized this quarter and d…

> However, I strongly suspect poor folks and especially middle class folks, have far more debt as a percentage of net worth than rich folks do and so spend more time at the spigot so to speak - relatively, not in absolute terms.

It reads as if you put some kind of blame on those poorer people who borrow money .. or do I get this wrong?

You do realize that taking on debt doesn't make these poorer people the ones who create the money, right?

The banks lending out the money are the creators of fresh money. And likewise it's not the debtors but the banks who collect the interest. The interest, which represents the exact (and only) amount of money that'll effectively have been created out of nothing after everything will have been payed back. The much bigger credit sum which the banks hand out to the debtors, that's just lending from the future, not money creation.

Re: The Big Mac index: Our interactive currency comparison tool

#188

Post by ephbit »

arcticbull wrote: post #179
andriesm wrote: post #175

Earlier quoted context omitted.

I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. Also perhaps fractional reserve banking does create the issue thatp those who can borrow money and buy assers have an advantage over those at the bottom who strugglle to buy assets and cannot borrow. I…

> I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. The thing is, the breakdowns, source materials, algorithms, data - they're all published. This isn't Joe Biden goes to the podium and bestows unto us that the CPI was 7% annualized this quarter and d…

> If the stimulus creates economic activity yielding revenues in excess of the stimulus itself then it can be 'free.'

In a growing economy (where more tangible goods and services are delivered to customers) this can be true, yes.

Kind of off-topic: I very much doubt this concept/aspiration/narrative/foundation or principle of planning/budgeting worldwide economy/expenses will remain viable for more than 20 years from now.

Why? Because humankind would be well advised to regard consumption of fossil energy as peak value, from where it continuously needs to decrease (rapidly so). The one driver of economic growth - energy, key to any human activity - ought to better have a lid on for decades to come. Not a good outlook for growth (of said tangible goods and services).

Re: The Big Mac index: Our interactive currency comparison tool

#189

Post by arcticbull »

ephbit wrote: post #187
arcticbull wrote: post #179

Earlier quoted context omitted.

> I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. The thing is, the breakdowns, source materials, algorithms, data - they're all published. This isn't Joe Biden goes to the podium and bestows unto us that the CPI was 7% annualized this quarter and d…

> However, I strongly suspect poor folks and especially middle class folks, have far more debt as a percentage of net worth than rich folks do and so spend more time at the spigot so to speak - relatively, not in absolute terms. It reads as if you put some kind of blame on those poorer people who borrow money .. or do I get this wrong? You do realize that taking on debt doesn't make these poorer people the ones who c…

Not trying to blame anyone for anything here! My point was that in isolation, if wages keep pace with inflation, inflation benefits debtors (especially long term structured debt like mortgages) because you take out the debt in today dollars and can repay them with future dollars worth less.

For instance I have a 2.75-ish% APR 30 year fixed rate mortgage but inflation was 7%, so I made a ton of money by having that debt - factoring in tax breaks, I made nearly 6% return by having that mortgage over paying off my house.

I’m suggesting that lower and middle class folks have far more debt as a percentage of net worth and therefore benefit more as a percentage of net worth than wealthy folks from inflation (“being at the spigot”).

This is roughly right, as inflation rates go up to 12% inequality actually declines. Rich folks lose money on equities due to DCF modeling and folks with debt see it inflate away. I can find the study if you like.

But this is all conditional on wages keeping pace.

Re: The Big Mac index: Our interactive currency comparison tool

#190

Post by joshspankit »

In addition to other’s great points, this is skewed because there are countries where the Big Mac’s cost is highly subsidized by government (such as in the US with dairy and beef.)

> The U.S government spends $38 billion each year to subsidize the meat and dairy industries, but only 0.04 percent of that (i.e., $17 million) each year to subsidize fruits and vegetables. A $5 Big Mac would cost $13 if the retail price included hidden expenses that meat producers offload onto society.

- https://scet.berkeley.edu/wp-content/uploads/CopyofFINALSavi...

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