Originally posted by BlasterBates
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GBP - How low will it go?
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Old Greg - In search of acceptance since Mar 2007. Hoping each leap will be his last. -
Originally posted by clearedforlanding View Post*areYour friendly neighbourhood VirtualMonkey - Not giving financial advice since...well...ever.Comment
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Originally posted by Andy2 View Postsoon it will be GBP=USD=EUR=CHF
In 1963 £1 = CHF12, in 1970 £1 = CHF10 today, £1 = CHF1.19
I last visited Switzerland in 1997 and I was surprised to see that in real value terms, prices were lower relatively than they were in 1970. Petrol was certainly cheaper in Switzerland in 1997 than it was here. However, I'm earning 50 times more in actual amount now than I was in 1970.
So, exchange rates can only be relative to your income. There was a time when £1 = USD4, but most people in the UK couldn't afford a car then and certainly not a black and white TV, let alone a coloured one.
Can't remember when exactly, but I believe it was in the 1950's that France re-valued its Franc to 100 old Francs = 1 new Franc. The time will come when the UK may have to do the same and then exchange rates will become meaningless.
It would be better to compare prices based on more realistic criteria, e.g. how long must someone work at a country's average wage to buy specific items. So e.g., how long does someone have to work in the UK at the average wage in order to buy a litre of petrol, etc. then compare this with the same figure for Germany for e.g.Comment
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“Brexit is having a wee in the middle of the room at a house party because nobody is talking to you, and then complaining about the smell.”Comment
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Originally posted by JohntheBike View Post
does it really matter in the long term?
In 1963 £1 = CHF12, in 1970 £1 = CHF10 today, £1 = CHF1.19
I last visited Switzerland in 1997 and I was surprised to see that in real value terms, prices were lower relatively than they were in 1970. Petrol was certainly cheaper in Switzerland in 1997 than it was here. However, I'm earning 50 times more in actual amount now than I was in 1970.
So, exchange rates can only be relative to your income. There was a time when £1 = USD4, but most people in the UK couldn't afford a car then and certainly not a black and white TV, let alone a coloured one.
Can't remember when exactly, but I believe it was in the 1950's that France re-valued its Franc to 100 old Francs = 1 new Franc. The time will come when the UK may have to do the same and then exchange rates will become meaningless.
It would be better to compare prices based on more realistic criteria, e.g. how long must someone work at a country's average wage to buy specific items. So e.g., how long does someone have to work in the UK at the average wage in order to buy a litre of petrol, etc. then compare this with the same figure for Germany for e.g.
So let's say as an example at some point 1USD = 2£, so the UK would just print loads of money and double everyone's salary, that way the value of the average Brit salary in pounds would still be about 1:1 with the dollar. Obviously isn't that simple... With the amount of money UK would have to print and such a measure would depreciate the pound (way) further and potentially to 1USD = 4£ then the problem would stand...
Unless you know any miraculous solution to drastically increase salaries without printing money...or any other measures that would depreciate further a currency!
Sent from my ONEPLUS A6000 using Contractor UK Forum mobile appLast edited by CryingSheep; 6 August 2019, 21:16."The boy who cried Sheep"Comment
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To answer your question let's imagine 1€=1£ a Mercedes class c costing 40k€ would cost 40k£, someone earning 2000£ (a month and after taxes) would need 20 salaries to pay the car.
Now at some point 1€=2£, now the same car would cost 80k£ and the person on the same salary would need 40 salaries now.
An (apparently) easy solution would be to double Brits salary and now the same person would make 4000 and would be back on 20 salaries to buy the car...
The question is, how can a country do such thing without depreciating further their currency? I don't have a clue, do you?
Sent from my ONEPLUS A6000 using Contractor UK Forum mobile app"The boy who cried Sheep"Comment
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Originally posted by CryingSheep View PostI think things changed a bit in 50 years!
So let's say as an example at some point 2USD = 1£, so the UK would just print loads of money and double everyone's salary, that way the value of the average Brit salary in pounds would still be about 1:1 with the dollar. Obviously isn't that simple... With the amount of money UK would have to print and such a measure would depreciate the pound (way) further and potentially to 4USD = 1£ then the problem would stand...
Unless you know any miraculous solution to drastically increase salaries without printing money...or any other measures that would depreciate further a currency!
Sent from my ONEPLUS A6000 using Contractor UK Forum mobile app
The miraculous solution HMG employed in the 1970's was to introduce decimalisation of our currency. Overnight, the smallest increase in price was 2.4 times greater than previously. The policy resulted in 29% inflation at its height and brought our salaries and prices in line with those of the EU, so that we could join on fairly even terms.Comment
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Originally posted by CryingSheep View PostTo answer your question let's imagine 1€=1£ a Mercedes class c costing 40k€ would cost 40k£, someone earning 2000£ (a month and after taxes) would need 20 salaries to pay the car.
Now at some point 1€=2£, now the same car would cost 80k£ and the person on the same salary would need 40 salaries now.
An (apparently) easy solution would be to double Brits salary and now the same person would make 4000 and would be back on 20 salaries to buy the car...
The question is, how can a country do such thing without depreciating further their currency? I don't have a clue, do you?
Sent from my ONEPLUS A6000 using Contractor UK Forum mobile app
Also consider the reverse, i.e. our products would be half the cost in your scenario and so Germans would buy Jaguars for a time until things were levelled out again. This is what HMG engineered in the 1970's with decimalisation.
Our currency has been repeatedly devalued in exchange rate terms all my life, but we are still better off than we were when I was a child. This is why I contend that exchange rates are only a short term issue.
Venezuela is an interesting condition though. It has the largest oil reserves in the World and per capita, at its height, the ordinary person was better off apparently than we in the UK were. But then that's statistics for you.Comment
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Originally posted by JohntheBike View Postsee my latest reply and what happened to the French Franc.
Sent from my ONEPLUS A6000 using Contractor UK Forum mobile app"The boy who cried Sheep"Comment
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Originally posted by CryingSheep View PostAnd what do you think it would happen if you would get 30% inflation today in the UK!? 2008 would look like a good year compared to...
Sent from my ONEPLUS A6000 using Contractor UK Forum mobile appComment
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