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Because doing this inflates the price of everything, including the exchange rate. Imagine the following (simplified) situation: Before inflation, a beer costs
by fla 7y ago
Because doing this inflates the price of everything, including the exchange rate.
Imagine the following (simplified) situation:
Before inflation, a beer costs 10CHF, Euro is at parity:
10EUR = 10CHF = 1 beer
After inflation of 10x, beer now costs 100CHF:
10EUR = 100CHF = 1 beer
In the end, if you pay in EUR, a beer always costs 10EUR. The value of the CHF has not really weaken (only numerically)
- ulfw 7y agoThat's assuming said beer is fully important vs a beer made domestically (with only domestic ingredients), which should still be closer to 10 CHF in your example (or now 1 EUR)