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Pretty significant changes in economic activity has occurred due to brexit or brexit-pending insecurity. Currency markets aren't completely meaningless you know

Pretty significant changes in economic activity has occurred due to brexit or brexit-pending insecurity. Currency markets aren't completely meaningless you know. It's a leading indicator for predicted slowdowns.

rahimnathwani 9y ago
You've missed my main point: the position of an economy in the list is highly dependent on exchange rates. Back to my haircut example: if GBP is now worth 20% less against EUR than it was before, does that mean that the relative value of a haircut in Croydon vs one in Fontainbleu has gone down by 20%. Of course not: their relative value, whatever it was, is unchanged. It's only how we count that value (i.e. how we calculate and compare GDP across countries) that has changed. But that's an artifact of measurement. In this particular case, the difference between #5 on the list and #6 is less than 1%. But that's much smaller than the drop in the value of GBP vs. a trade-weighted basked of currencies. And the UK economy is still growing in GBP terms. So it's clear that the change is more driven by exchange rates than by a change in economic activity (i.e. there aren't fewer goods and services being produced in the UK). This is my main point. BTW - I'm not defending the UK. Just pointing out that GDP is a far from perfect measure of economic output.
- KaoruAoiShiho 9y ago
  You have a freshman level understanding of exchange rates. Let's start from the beginning with your haircut example. The beijing haircut indeed produces less value on average than the British haircut. To make the example more clear, say you're a surgeon who's performing a life saving operation. If you save the life of Elon Musk vs the life of a homeless methhead, do you create the same amount of value in the world? Even if the job is equivalent effort-skill, you have still contributed to the world more just by saving a higher-value person. I know this is morally reprehensible but we're talking economics here. Scale the example back down to haircuts. So similarly with Britain. Just because the value of all of Britain decreased, so has the value of all the work done in Britain even if the work itself didn't change. As another example, think bitcoin. If you mine for 3 hours and you get 1 satoshi the value of your 3 hours are worth different things if bitcoin was worth $100 vs $8000. In either case you did the same amount of work, the only difference is what foreigners, ie, non-bitcoiners think the value of your work is. That's how it is with GBP. So long as the currency changes are driven by real events, they matter, they matter a lot.
  - rahimnathwani 9y ago
    "You have a freshman level understanding of exchange rates." Please attack my arguments rather than insulting me personally. "The beijing haircut indeed produces less value on average than the British haircut." I get some of my hair cuts in Croydon, and some in Beijing. They are all of the same economic value. But the ones in Croydon contribute more to GDP measures.
    - KaoruAoiShiho 9y ago
      Sorry, my comment was meant to be informative and is in no way an attack. I don't have anything more to say, if you want to know more, take a class.

rahimnathwani 9y ago

You've missed my main point: the position of an economy in the list is highly dependent on exchange rates. Back to my haircut example: if GBP is now worth 20% less against EUR than it was before, does that mean that the relative value of a haircut in Croydon vs one in Fontainbleu has gone down by 20%. Of course not: their relative value, whatever it was, is unchanged. It's only how we count that value (i.e. how we calculate and compare GDP across countries) that has changed. But that's an artifact of measurement. In this particular case, the difference between #5 on the list and #6 is less than 1%. But that's much smaller than the drop in the value of GBP vs. a trade-weighted basked of currencies. And the UK economy is still growing in GBP terms. So it's clear that the change is more driven by exchange rates than by a change in economic activity (i.e. there aren't fewer goods and services being produced in the UK). This is my main point. BTW - I'm not defending the UK. Just pointing out that GDP is a far from perfect measure of economic output.

KaoruAoiShiho 9y ago
You have a freshman level understanding of exchange rates. Let's start from the beginning with your haircut example. The beijing haircut indeed produces less value on average than the British haircut. To make the example more clear, say you're a surgeon who's performing a life saving operation. If you save the life of Elon Musk vs the life of a homeless methhead, do you create the same amount of value in the world? Even if the job is equivalent effort-skill, you have still contributed to the world more just by saving a higher-value person. I know this is morally reprehensible but we're talking economics here. Scale the example back down to haircuts. So similarly with Britain. Just because the value of all of Britain decreased, so has the value of all the work done in Britain even if the work itself didn't change. As another example, think bitcoin. If you mine for 3 hours and you get 1 satoshi the value of your 3 hours are worth different things if bitcoin was worth $100 vs $8000. In either case you did the same amount of work, the only difference is what foreigners, ie, non-bitcoiners think the value of your work is. That's how it is with GBP. So long as the currency changes are driven by real events, they matter, they matter a lot.
- rahimnathwani 9y ago
  "You have a freshman level understanding of exchange rates." Please attack my arguments rather than insulting me personally. "The beijing haircut indeed produces less value on average than the British haircut." I get some of my hair cuts in Croydon, and some in Beijing. They are all of the same economic value. But the ones in Croydon contribute more to GDP measures.
  - KaoruAoiShiho 9y ago
    Sorry, my comment was meant to be informative and is in no way an attack. I don't have anything more to say, if you want to know more, take a class.