How is it that Europe has 4% inflation with a currency that can buy 35% more than a US dollar and the US ..?

Question

inflation is relatively the same? In other words why are US inflationary numbers so low when it has lost at least 25% of its value to the euro in the last 3 years ?

if prices increase 4% in europe with the euro buying more than the dollar shouldnt prices in the US rise comparitively ? like 4% plus the devaluation ?

Answer 1

We've had an increase in IMPORTS relative to our EXPORTS which in turn LOWER the value of the American dollar. In addition, the FED put the icing on the cake by lowering the interest rates which put the final nail on the coffin.

When you buy a TOYOTA, you are actually LOWERING the value of the dollar because the dollar ends up being exchanged for the YEN in that purchase and it creates demand for YEN.

This creates a disparity over time where the YEN is in more demand. American dollars end up overseas and not within America - this is bad! When we lower the interest rates, that lowers the YIELD on the currency exchange for the dollar and more investors are less reluctant to buy into dollars when they can buy into the EURO or the YEN which has a MUCH higher yield.

Hope this helps!!

-Jerry

Answer 2

But you forgot the fact that America don't make any good produce. Eg. we don't buy your stupid cars over here. Make something good for a change and your value for money will go up.

Answer 3

Simple, the US government is excluding the price increases of both food and energy from it's inflationary calculations. So the numbers are not truly correct.