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Written by Pat Norton
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Wednesday, 14 May 2008 03:58 |
Long ago in a galaxy far, far away, one British Pound traded for five Dollars, and both currencies could be redeemed for a fixed amount of gold. That was the world of the classical gold standard, in the decades before World War I. Now, for a brief and no doubt transient moment, we have returned to a world of simple rates of exchange among some of the world’s major currencies.
One reason for this temporary but memorably simple constellation is the decline of the Dollar. Another is that the Euro is now used in at least 15 different countries, replacing many individual local currencies. Here, then, are selected exchange rates listed for Monday May 11, 2008: 1. Starting with the simplest cases, we find several virtual 1-to-1 ratios: One U.S. Dollar = 1.00 Canadian Dollars = 0.96 Swiss Francs = 1.06 Australian Dollars. 2. Other roughly decimal links include Mexico, Japan, and South Korea: One U.S. Dollar = 10.5 Pesos = 104 Yen = 1,043 Won. 3. Then, of course, there are two other E-Z ratios, the Pound and the Euro: One Pound (£) = $1.96. One Euro (€) = $1.55. With a little poetic license (and a maximum rounding error of six percent, for the Australian Dollar), we can simplify these rates to make them easier to remember. In particular, the rounded numbers in the first table simplify the standard exercise of flipping (taking the reciprocal of) the exchange rates, to reverse the perspective.
The first column shows that one U.S. (or Canadian or Australian) Dollar equals about one Swiss Franc, 10 Pesos, 100 Yen, or 1,000 South Korean Won. The first row shows that one Peso equals about 10 cents (listed as .1 of one Dollar), one Yen equals one cent, and one Won equals 0.1 cent. That feels E-Z, doesn’t it? But what about the Pound and the Euro? The Pound can be rounded from $1.96 to $2, and the Euro from $1.55 to $1.50 to keep the fractions simple. (The maximum rounding error here is less than four percent.) Then we’ll call $1.50 “3/2 of a Dollar.”
Now the first column shows that a U.S. Dollar (or Canadian Dollar, or Australian Dollar, or a Swiss Franc) will buy 2/3 of a Euro. The first row shows that a Euro will buy the reciprocal, 3/2 of a Dollar. Similarly for the Euro and the Pound: 3/4 and 4/3. Of course, most currencies are messier, including in particular the Chinese Yuan. It has risen nearly 20 percent recently but is still viewed by most observers as seriously undervalued. The Yuan now trades at about 14 cents, or about 7 to the U.S. dollar. But who knows? Maybe a year from now it will have risen enough (or the Dollar will have fallen enough) to make the numbers easier to remember.
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Inflation and the gov is taking away our money from the bank with the depressed dollar and the turning of the printing presses on to full steam to pay off those debts of the Iraqi War and over funding for our political representatives, i refrain from noting political leaders.... I tend to think that they don't really lead.
The CPI, which is maintained by the gov, says inflation is at current rates of 2-3%, funny I know gas shot up more than 10 percent in the last three months and food prices, well lets just say I planted a garden!
Bring back the gold standard, but this time the gov won't be collecting my coins like they did in 1933. No sir, those are staying with me!