It must have been great for American travellers in those days. When I was in Germany, from 1977 - 78, a dollar was generally around DM1.80, and that seemed very reasonable. Many things, including restaurant and pub prices, seemed cheaper in Germany than they would have cost back home.
Well, bashere, it sounds like you really know your stuff. So, let’s say the president is reelected and that he continues or even augments his current policies and the dollar continues heading south. Or let’s say we have an Argentinian-like meltdown. What would a Yankee with a few extra bucks in the piggy want to do with his jack?
What exactly do you mean by purchasing power parity? If we look at OECD purchasing power parity statistics (here - warning, pdf) we see that the purchasing power parity of Canada is (or was, in 2003) 1.21 to the USA’s 1.00. As of closing yesterday (Oct 25th), US$1 purchased Cdn$1.2217. So the Canadian dollar is already within a cent puchasing power parity with the US dollar, so long as we’re talking about the purchasing power of the Canadian dollar in Canada vs. the purchasing power of the US dollar in the US. And from all I’ve read, everyone’s still very bullish on the Canadian dollar.
Note that I’m not overly happy about this. The stronger our dollar gets, the worse it will be for our export-oriented economy. Though I should say that my job is in an import-oriented business, and we do better with a higher Cdn dollar, so long as it’s not so high as to put our customers into the poor house.
All of Measure for Measure’s posts are completely correct, but a few things deserve further highlighting. I glossed over productivity gains but want to comment on something he said:
Somewhat perversely, as wages increase, so does productivity. Companies only invest in productivity enhancement when doing so is cheaper than simply hiring more workers (or, more broadly, when investing in productivity enhancement is more lucrative than not investing). A labor surplus in many fields in the US, notably manufacturing where we have been sitting at circa 75% factory utilization means that there is not reason to invest in productivity enhancement. The skeptical reader is invited to look to the example of China, where productivity gains have been, if I understand correctly, fairly modest. In this regard, a falling dollar is a good thing; more employed Americans means it becomes cheaper to invest in productivity enhancements (and therefore employ fewer workers). I don’t really know what to make of this, but thought it worth pointing out.
While I appreciate the compliment, reading the responses, it appears that in this thread, like on so many threads on the StraightDope, I may well be the least-well informed poster. I would posit a few things, although none of them are investment advice, but things to think about.
The first is that I think a Kerry victory might lead to a lower dollar value in the near to immediate future. Right now, the only major currency that can appreciate against the dollar is the Euro. The rupee, xuan, and yen are all stabilized against the dollar by government interference. During the last currency crisis I remember (1991ish), Greenspan met with the heads of the reserve banks of Europe and they assisted in lowering the value of the dollar in order to combat the trade deficit (one may remember the constant wailing and gnashing of teeth as the dollar constantly lost ground to the yen). While some of the European countries, such as Ireland, are no doubt pleased with the current value of the Euro, others, such as Germany and France, are tired of being the only countries that can buy US-made stuff, and would, I suspect, prefer that the greenback depreciate a little against the other world currencies, allowing Germany and France to employ more workers. I suspect that Kerry will intentionally control the descent of the greenhack to a level more advantageous to the US in terms of trade. I suspect that, if Bush remains president, the trade deficit will continue until other countries decide to invest elsewhere, and the dollar will plummet. That said, I’m straight-up guessing; other posters on this thread have a lot more experience with currency matters. Bush attempted to “talk down the dollar” early in his presidency, and was slapped down for it. Strangely, currency policy isn’t mentioned by presidential candidates; there is a visceral reaction to a falling currency that is kind of hard to understand. “Talking down the dollar” was largely done in the early nineties, and Bush the Elder was castigated for it, which confuses me, since I believed it to be the right thing to do.
The situation that existed during the late 90s was something of an anomaly*. Two of the major currencies, the mark and the franc, were suddenly no more, and the Euro was having teething problems, effectively eliminating two of the major currencies from trade. Japan had an ongoing recession for most of the 90s, with Japan’s government keeping the yen artificially low in an attempt to export her way out of the recession. India and China were experiencing massive growth. Now that the Euro has stabilized a little, I think that we’ll go back to having a broader and more equalized basket of currencies, rather than depending on American hegemony the way the world did in the 90. I honestly believe this to be a good thing, but in answer to the question, I think it means that the dollar will fall against the rupee and xuan, I have no idea what it will do against the yen, and will eventually raise against the Euro. If Kerry is president, I think this will happen sooner, rather than later, and will last for a few years. If Bush is president, I don’t think this will begin for another year or two, and will be a more pronounced trend when it does.
Measure for Measure also pointed out that
Right now, there is little incentive for American’s to save. A weakening dollar is supposed to be offset by a rise in interest rates, which attracts foreign and domestic investment and stimulates savings, which in turn strengthens the dollar. Unfortunately, the economy is such that any raise in interest rates is likely to derail the economic growth. It seems easiest simply to let the dollar slide, if other countries can be convinced to allow it to happen.
I’m not an economist or financial professional, and I think there are some on the boards. That’s my best guess at what would happen, and indeed at would should happen, but I’d be more than happy to be corrected.
*everything in economics is something of an anomaly.
Well I made a prediction which (roughly speaking) I consider falsified.
The Canadian dollar (and Australian dollar for that matter) are at PPP for all practical purposes.
Good work Gornack.
BTW:
Those wishing to see a table of relative prices for all OECD countries, can look at this pdf file: http://www.oecd.org/dataoecd/48/18/18598721.pdf
On preview: Bashire, I’m afraid you spoke to soon (regarding the 1st sentence). 
Member of the Crow-Eating Community
bashere,
Thank you so much for that reply. I shall manage my money according to your advice and if it doesn’t pan out, I intend to sue. 