Thursday, July 12, 2007

Pounds of Dollars

A  friend of mine is going to England soon and with the  value of the Pound over $2 we were remarking at how the numerical portion of the price between the US and the UK seems to be stable regardless of the currency fluctuations.

So a McDonald's meal is roughly 5.  $5 in the US and 5 Pounds in the UK even though a Pound is worth 2 bucks. A small car rental is 500 for two weeks. In the UK it is about 500 pounds and in Orlando it's roughly $500.

If you're from England, the U.S.  is now your Wal-Mart, everything 1/2 off so come to Disney World!

 I don't know how many sectors of the economy this holds true across but we noticed the same thing  with the Euro when we were in Italy a few years ago. A Mickey D's meal was about 5. The Euro was running at about $1.10 to $1.20 at that time. I'm sure there's some grand economic theory behind this and it may be an aberration. Certainly this doesn't hold true with yen and it didn't work with Lira. You can't buy anything for 5 yen.

Somehow I think the marketing folks are responsible but I can't prove it yet.

[Random aside: It's cheaper to wipe yourself with Zimbabwe Dollars than to buy toilet paper. Today a Zimbabwe Dollar is worth .004 US Dollars or less than half a penny. A roll of Scott toilet paper at is $6 for a 1,000 rolls or .006 per sheet.  This should be an economic milestone. When it's cheaper to wipe yourself with cash than to buy toilet paper you need to overthrow your dictator. We won't even mention average life expectancy dropping from 60 to 37.]

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