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  Can I get an order of Pommes Frites with my monetary stability indicator?

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Author Topic:   Can I get an order of Pommes Frites with my monetary stability indicator?
ActionFigure 1.0
Geek

Posts: 91
From: Rockford, IL--USA
Registered: Mar 2001

posted January 10, 2002 08:59     Click Here to See the Profile for ActionFigure 1.0   Click Here to Email ActionFigure 1.0     Edit/Delete Message   Reply w/Quote
One of the problems plaguing the ambitious movement to the Euro by the dozen or so nations shedding their erstwhile currency, is the conversion factor. Add to this the specter of inflation, and a few unscrupulous shopkeepers fleecing the public by jacking up prices before they actually know how much stuff really should cost. And after all why not? How much should stuff really cost anyway? If only we had a unifying factor against which to measure the currency of each nation. A gold standard, if you will.

Well, it seems they have a Golden Arches Standard. When watching the news, I noticed they compared prices of Big Macs at McDonalds across several European Nations. I thought, “Leave it to American News to put a US of A Spin on a European story.” What I didn’t realize was that it was not just the American News, but several European news Agencies were using the price of various Mickey D’s items to make sure that the Euro was being converted properly. I witnessed this phenomenon with increasing doubt. What a silly idea for the news folks both here and there. Well, apparently they got it from one of the high up, muckety mucks in charge of Financial Aspects or Europe—not his official title, but I saw it on the really late-ass news they put on CBS. They only thing I can remember accurately is Melissa Mcdermot gets hotter the sleepier you get. Anyway, said muckety muck compared prices of Big Macs post- and pre- Euro. “They are the same,” he said with an earnest mixture of pride and silliness.

Anyone else find this a bit off? Ahh, the cultural majesty of McEurope—super sized for only .39 Euros.

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Today is not a day for
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greycat
Super Geek

Posts: 182
From:
Registered: Oct 2001

posted January 10, 2002 09:12     Click Here to See the Profile for greycat     Edit/Delete Message   Reply w/Quote
The typical measurement of inflation in the USA is the Consumer Price Index, which is basically a weighted average of prices of commodity goods and services. And I can't think of any better way to do it, either -- the true worth of an abstraction like a "dollar" is what you can buy with it.

Of course, a CPI that's based on exactly one item -- and a brand name at that, rather than a commodity -- is pretty useless from a statistical point of view.

But if you're going to do something this shallow, you have to pick a brand name that actually exists in all of the countries you're comparing. I don't know how culturally diverse European consumer markets are these days... perhaps McDonald's is the only pan-European brand there is.

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Tau Zero
BlabberMouth, the Next Generation.

Posts: 1685
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Registered: Jan 2000

posted January 10, 2002 10:49     Click Here to See the Profile for Tau Zero     Edit/Delete Message   Reply w/Quote
quote:
Originally posted by greycat:
I don't know how culturally diverse European consumer markets are these days... perhaps McDonald's is the only pan-European brand there is.

How ironic it would be if the best measure of European monetary union is the price of products at an American (US-ian) restaurant chain.

(Notice I say "products", not "food". )

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ActionFigure 1.0
Geek

Posts: 91
From: Rockford, IL--USA
Registered: Mar 2001

posted January 10, 2002 10:52     Click Here to See the Profile for ActionFigure 1.0   Click Here to Email ActionFigure 1.0     Edit/Delete Message   Reply w/Quote
good move, TZ. It would be playing fast and loose with diction to call that stuff "food". I think the FDA would intervene.

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Today is not a day for
pants...But I'm a hoopy frood who knows where my towel is.

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Zwilnik
Alpha Geek

Posts: 291
From: London, UK
Registered: Dec 2000

posted January 10, 2002 17:36     Click Here to See the Profile for Zwilnik     Edit/Delete Message   Reply w/Quote
The Big Mac Index has been going for a few years. I think the idea is to show a rough idea of the price of consumer items in countries without going too far over people's heads.

http://www.economist.com/markets/Bigmac/Index.cfm

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LifetimeTrekker
Alpha Geek

Posts: 326
From: Albuquerque, NM, UD
Registered: Sep 2001

posted January 10, 2002 19:30     Click Here to See the Profile for LifetimeTrekker   Click Here to Email LifetimeTrekker     Edit/Delete Message   Reply w/Quote
Replying to the original question:

"I'm sorry, sir, but we don't have any Pommes Frites, but would you like some French Fries, instead?"

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greycat
Super Geek

Posts: 182
From:
Registered: Oct 2001

posted January 11, 2002 06:50     Click Here to See the Profile for greycat     Edit/Delete Message   Reply w/Quote
quote:
How ironic it would be if the best measure of European monetary union is the price of products at an American (US-ian) restaurant chain.

I thought about this one some more, and I think it's actually not ironic at all.

Suppose there were a really famous restaurant chain in Europe called "LeDonald's", which started in France and then expanded into the other countries. One could easily see that the prices (and/or quality) of LeDonald's food in France might be different from the prices in the other countries.

In order to remove any such bias, it makes perfect sense to use a brand whose country of origin is entirely outside Europe.

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