I've been referencing the Big Mac Index for many years, mostly as a fun fact, but with high impact on citizens' standard of living. Today, it's as relevant as ever.
interpretation of the data is slightly different. A high dollar cost
could also indicate relative weakness of the local currency, and rising
inflation. In other words, it takes more dollars to buy said Big Mac.
But I do agree with the author's conclusion that the dollar is
overvalued RELATIVE to other foreign currencies. In other words, ALL
fiat currencies are destined to drop in value, some faster than others.
That's why it requires more fiat currencies to buy tangible, real
assets. It's called a currency war--a race to the bottom. It often
leads to trade wars (see Trump's rhetoric) and military conflict.
3 years ago