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Value Meal Index

The Economist Magazine’s “Hamburger Standard Big Mac Index” tries to compare the value of world currencies with a simple, yet accurate standard.  They compare prices of a McDonald’s hamburger or value meal in different countries around the world.  Since McDonald’s is truly global and has become efficient enough to cut the cost of distributing and managing its stores around the world, McDonald’s serves as a good laboratory for comparing the price of simple goods on a global scale.  The value meal index release on July 16th, 2009 shows that China, Hong Kong, and Malaysia all have currencies that need to increase by about 50% versus the dollar.  All of these countries are focusing on exporting to foreign countries with a particular emphasis on the United States.  It shows just how much these countries have kept their currencies low in order to pump up the demand for their exports.  It also shows just how hand tied China is in buying treasuries.  If China cannot keep its export engine humming now, just imagine what would happen if the price of all of their goods increased by 30-50%…

Asia Pegged to the Dollar

Asia Pegged to the Dollar

Posted in Economics, Markets.

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