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In 2008 the dollar was historically cheap (70% of current), now it's pretty expensive. This swing is the main driver of this whole thing and means that yes, PPP
by htfu 3y ago
In 2008 the dollar was historically cheap (70% of current), now it's pretty expensive. This swing is the main driver of this whole thing and means that yes, PPP is superior for looking at growth. Not ideal, but much better.
Cheap imports are great for consumers, but a currency losing 20% certainly doesn't mean its economy has magically contracted 20%. If anything a weakish currency stimulates internal economic activity as it's good for exports.
The US economy is also not nearly "twice that of the EU", in nominal terms either - it's about 50% bigger. The (silly) chart is for the eurozone.
Seriously, the US always had a somewhat bigger/stronger economy, but a cheap dollar at the time made nominal almost equal, which was misleading.
Now, the US still has a slightly bigger economy, and has had better growth, while the price of the dollar makes it look like a massive difference, which is also misleading. The true output difference is high single digit. Why are you pretending otherwise?
- dogma1138 3y agoPPP cannot be used to measure growth at all on any level. https://www.oecd.org/sdd/prices-ppp/purchasingpowerparities-frequentlyaskedquestionsfaqs.htm https://www.oecd.org/sdd/prices-ppp/purchasingpowerparities-... Also GDP, GDP PPP and every other economic benchmark is calculated using CID - constant US dollar; specifically to avoid skewing results due to fluctuating exchange rates.
- htfu 3y ago*Real GDP, chart is nominal...
- dogma1138 3y ago? I’m replying to your statement: > This swing is the main driver of this whole thing and means that yes, PPP is superior for looking at growth. It is technically incorrect on every level. As GDP PPP fundamentally is unsuitable for calculating growth. The GDP of Greece pre crash was $355B today it’s $219B, it’s GDP PPP pre-crash was $341B today it’s $389B if you think the Greek economy grew over that period or that today it’s a better place to live in with 11% unemployment and youth unemployment approaching 40% with the entire population having its wealth cut by nearly half than pre-2008 Greece then I have an island in the Aegean to sell you…
- htfu 3y agoI'm saying given the choices of "US economy doubled! Eurozone completely stagnant" (nominal) and "both grew, US somewhat more" (PPP), PPP is by far a more accurate model of what has actually transpired. That is all. What it may or may not say about Greece is utterly irrelevant because that's not what I was talking about.
- dogma1138 3y agoBut the problem that it is not, you are using PPP for things that explicitly it shouldn’t be used for.
- Dylan16807 3y agoIf you're only saying it's better for this single ratio then that doesn't make it a more accurate model. Statistics can be closer on a single number by pure happenstance. If you want to say it's a more accurate model then you need to defend it more broadly.
- cbsmith 3y agoI am shocked, shocked! that a headline comparing data from a seemingly arbitrary date with today might be cherry picking data.