Okay, I’m not sure how to phrase what I’m asking, but I’ll give it a shot.
Recently the Canadian dollar has gained parity (in fact it is slightly more valuable) than the U.S. Dollar.
The last time I was in Canada, you could get $1.50 Canadian for $1 US in exchange.
I remember seeing a price on something saying, for example, $12, and I would think, “Damn, that is expensive!” but then I would realize that it was only 8 “real” dollars (the term that I had to remind the boy to quit using around the locals ).
How is is now? Have the prices come down to 8 dollars or are they still 12 meaning the U.S. dollar is less valuable?
Ok, I’m sure at this point many of you are screaming, “Yes, the U.S. Dollar IS less valuable!!!” But, if that is the case, then why isn’t inflation rampant here? Last I saw it is only 3 to 4 percent, and we are promised that under the cautious eye of the federal reserve, we don’t have to worry about inflation.
Lunch at a fast food joint is 5 to 6 bucks. The same price it has been for the last 10 or so years. Are American vendors undervaluing their products?
On the same front, I was watching Gordon Ramsay’s Kitchen Nightmares show and he was asking a guy on a ladder hanging a sign if 18GBP was a good price for a 3 course meal, and the guy said, “Of course”.
Now, my handy calculator tells me that this is almost $36 US per person. $72 for dinner for two. I don’t know of many guys in the US that hang signs who takes his wife for $72 dinners.
I guess my question is, how much is the relative currency values related to the actual purchasing power of that money in the local economy. Can I make a basic calculation like that? Can I say that if something cost $4CAN in New Brunswick that it would be like an American paying $4 US for that same thing in Kansas?