We can attain an implied exchange rate, or PPP, by dividing the cost of the Big Mac in Britain (using the value in pounds sterling) by the price charged in the US (in USD). In the United States, the same Big Mac cost 5.28.
But it’s more clearly summed up like this: the price of a Big Mac meal in Zurich is now so high (at $17.19) that a minimum wage employee in Minneapolis, Minnesota, would have to work for nearly 4-hours in order to afford it. The cost for a Big Mac in Britain in 2018 was £3.19, or 4.41 if converted using the exchange rate of 0.72. I can think of a lot of words to describe the performance of the US dollar. Now it takes $1.40 to buy a single franc. It wasn’t too long ago that it would take 1.20 francs to buy a US dollar. Increased demand for the Swiss franc coupled with expanded supply of dollars and euros has caused the franc to surge over the last weeks and months. You see, the Swiss franc is one of the few currencies that have given investors some sense of comfort recently Switzerland inspires confidence and stability, and the worse things get in the United States and Europe, the more investors pull their money out of the dollar and euro, and park it in the Swiss franc.
Well, the United States has just joined this proud cadre banana republics… at least if you’re from Switzerland. And you wonder how these people could possibly ever survive if they came to your country. There are certain places– Cambodia, Ecuador, Tanzania– that are so jaw-droppingly cheap that it almost seems unreal. I’ve been to roughly 100 countries, and I still find it amazing how much variance there is among things like food, property, and entertainment prices. One of the things that people pick up on very quickly as they travel are how different price levels are around the world. Just a quick thought on a ridiculously volatile day:
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