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> 1 USD is ~Rs 66. That is a staggering difference in purchasing power! How on earth do you derive purchasing power from comparison of arbitrary units? ~Rs 1

> 1 USD is ~Rs 66. That is a staggering difference in purchasing power! How on earth do you derive purchasing power from comparison of arbitrary units? ~Rs 1 does not have the purchasing power of 1 USD,. 1 Zimbabwean dollar does not have the purcahsing power of 1 GBP.

slg 10y ago
The grandparent comment wasn't comparing arbitrary units, they were comparing the units of each country's currency denominations. The largest active legal tender in the US is worth $100 while the largest in India was worth $15 (now will be $30). I think it is a fair assumption that those numbers aren't arbitrary and that some thought went into choosing those denominations. That gives you insight into the economies of each country.
- Scirra_Tom 10y ago
  Largest banknote in UK is £50, largest in EU is €500. That does not imply a staggering difference in purchasing power between £ and €.
  - 1024core 10y ago
    I guess what the OP meant was that the difference in what the highest note can buy is staggering.
    - deleted 10y ago
      [deleted]
    - Scirra_Tom 10y ago
      Which is meaningless
      - 1024core 10y ago
        It's just an observation that someone finds mildly interesting. Attaching "meaning" to it, on the other hand, is meaningless.
  - slg 10y ago
    I wasn't particurarly supporting the argument that it is a foolproof way to measure buying power. Just that the decisions central banks make about their currency denominations aren't arbitrary and they do lend insight into the economies that they manage. The €500 probably isn't about buying power but it does tell something about the motivations for easing a transition to the Euro. In fact, now that the transition has been completed, the bill is being phased out. I wouldn't be surprised if that was the plan from the beginning. Things in the UK are a little more complicated with their multiple central banks, but the £100 note is still being printed and while uncommon, it is in circulation throughout the UK.
    - aninhumer 10y ago
      Some £100 notes are circulated by some Scottish and Northern Irish banks (which are allowed to print their own currency), but given how rare the £50 note is, I'd expect the £100s be very rare even locally, and almost non-existent anywhere in England. They almost certainly wouldn't be accepted anywhere except banks (many shops are suspicious of even low value non-standard notes), so I don't know if you can really call that "in circulation throughout the UK".
  - deleted 10y ago
    [deleted]
  - stevekemp 10y ago
    In the UK there are £100 notes, except they're only issued by a couple of banks. Here is an example: http://www.worldbanknotescoins.com/2012/02/the-royal-bank-of-scotland-banknotes.html http://www.worldbanknotescoins.com/2012/02/the-royal-bank-of... I still remember the first time I got paid with cash, and received a couple of £100 notes. Most money I'd physically held in my hands up until then.
- Adverblessly 10y ago
  I don't see how that makes the argument of the grandgrandparent post. If some thought had been put into the denominations then what you'd assume to be normalized is purchasing power (since the smallest denominations should correspond to "a fraction of the cheapest thing I could buy" [if we include change] and the biggest should correspond to "more money than is reasonable to carry around for buying stuff"). Following that logic and combining it with yours the conclusion is "100$ in the US has similar purchase power to 15$ in India" or "things are cheaper in India", which really doesn't say much to me.
sundarurfriend 10y ago
To add some data to this discussion: the Purchasing Power Parity (PPP) was ~17 rupees to 1 dollar as of 2015, as per "The Organisation for Economic Co-operation and Development (OECD)". The PPP is, in simple terms, the amount of money in each currency that can buy similar amounts of goods; so taking this PPP at face value, what 1 dollar can buy in the US, 17 rupees can buy in India. This is of course not entirely true, because it's an averaged value, and there's other complications, but it's at least a better starting point than assuming Rs 66 per dollar. [1] https://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE4 https://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE4

slg 10y ago

The grandparent comment wasn't comparing arbitrary units, they were comparing the units of each country's currency denominations. The largest active legal tender in the US is worth $100 while the largest in India was worth $15 (now will be $30). I think it is a fair assumption that those numbers aren't arbitrary and that some thought went into choosing those denominations. That gives you insight into the economies of each country.

Scirra_Tom 10y ago
Largest banknote in UK is £50, largest in EU is €500. That does not imply a staggering difference in purchasing power between £ and €.
- 1024core 10y ago
  I guess what the OP meant was that the difference in what the highest note can buy is staggering.
  - deleted 10y ago
    [deleted]
  - Scirra_Tom 10y ago
    Which is meaningless
    - 1024core 10y ago
      It's just an observation that someone finds mildly interesting. Attaching "meaning" to it, on the other hand, is meaningless.
- slg 10y ago
  I wasn't particurarly supporting the argument that it is a foolproof way to measure buying power. Just that the decisions central banks make about their currency denominations aren't arbitrary and they do lend insight into the economies that they manage. The €500 probably isn't about buying power but it does tell something about the motivations for easing a transition to the Euro. In fact, now that the transition has been completed, the bill is being phased out. I wouldn't be surprised if that was the plan from the beginning. Things in the UK are a little more complicated with their multiple central banks, but the £100 note is still being printed and while uncommon, it is in circulation throughout the UK.
  - aninhumer 10y ago
    Some £100 notes are circulated by some Scottish and Northern Irish banks (which are allowed to print their own currency), but given how rare the £50 note is, I'd expect the £100s be very rare even locally, and almost non-existent anywhere in England. They almost certainly wouldn't be accepted anywhere except banks (many shops are suspicious of even low value non-standard notes), so I don't know if you can really call that "in circulation throughout the UK".
- deleted 10y ago
  [deleted]
- stevekemp 10y ago
  In the UK there are £100 notes, except they're only issued by a couple of banks. Here is an example: http://www.worldbanknotescoins.com/2012/02/the-royal-bank-of-scotland-banknotes.html http://www.worldbanknotescoins.com/2012/02/the-royal-bank-of... I still remember the first time I got paid with cash, and received a couple of £100 notes. Most money I'd physically held in my hands up until then.
Adverblessly 10y ago
I don't see how that makes the argument of the grandgrandparent post. If some thought had been put into the denominations then what you'd assume to be normalized is purchasing power (since the smallest denominations should correspond to "a fraction of the cheapest thing I could buy" [if we include change] and the biggest should correspond to "more money than is reasonable to carry around for buying stuff"). Following that logic and combining it with yours the conclusion is "100$ in the US has similar purchase power to 15$ in India" or "things are cheaper in India", which really doesn't say much to me.

sundarurfriend 10y ago

To add some data to this discussion: the Purchasing Power Parity (PPP) was ~17 rupees to 1 dollar as of 2015, as per "The Organisation for Economic Co-operation and Development (OECD)". The PPP is, in simple terms, the amount of money in each currency that can buy similar amounts of goods; so taking this PPP at face value, what 1 dollar can buy in the US, 17 rupees can buy in India. This is of course not entirely true, because it's an averaged value, and there's other complications, but it's at least a better starting point than assuming Rs 66 per dollar. [1] https://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE4 https://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE4