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China, world's first economy this year

Japan does considerably worse on the PPP comparison I note.

I wonder if that means the yen is overvalued?

Conversely, India jumps from #10 all the way up to #3 with PPP, so is the rupee undervalued?
 
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It means that according to the World Bank / IMF / OECD calculations the yen spot FX rate is stronger than PPP and the rupee rate is weaker. I'm still not entirely sure if/why those PPP sources differ (they are anyway quite close).

This doesn't mean that under freely floating exchange markets those currencies would instantly move (the JPY is freely floating and the INR fairly free-floating already), but it is an indication about valuation yes
 
Puppycow said:
And is China's currency actually undervalued due to government manipulation? For many years, this was the accusation.
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As has been the same accusation in respect of the US buck, particularly since QE1, 2, 3. Opponents of fiat currency regard all of them as government manipulated of course . . .
 
aleCcowaN said:
I'm getting from that that these news are far more traumatizing to certain sectors of the US' population than what I thought it would be. If there's some consolation, for decades to come US will retain a great deal of the big bombs and the ability to destroy the world. That is real power. That "you" DO have.
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To what sector is this "traumatizing"?
 
Puppycow said:
Japan does considerably worse on the PPP comparison I note.

I wonder if that means the yen is overvalued?

Conversely, India jumps from #10 all the way up to #3 with PPP, so is the rupee undervalued?
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Overvalued or undervalued would be an oversimplification. To avoid complications in such a broad topic, think that you can exchange your yens for dollars and vice-versa pretty easily, but think how easy is to use those recently acquired dollars to buy cheese in Vermont to sell it in Nagano, and how easy -and different- is to use those yens to purchase cheese in Hokkaidoo in order to sell it in Minnesota. This means that trade fluxes don't follow the strength of the national currencies. Think also in how much would you need to pay for a haircut in Japan or in the United States. You can't trade haircuts internationally, and such non-tradable services and goods make typically more than a half -sometimes three fourths- of GDPs. That's why there's PPP to use in comparisons. Tradable goods -with all the asymmetrical barriers that affect them- and capital fluxes -with different barriers and perceptions- end up determining the value of currencies and this drags most of the goods which are out of international markets.

As an example of how off would be considering the sole GDP PPP as evidence of over or undervaluation of national currencies, you have two countries that artificially keep an "official U.S. dollar value" pretty low in order to mask and clumsily control the inflationary processes their own governments provoke: Venezuela and Argentina. You could say bolivars and pesos are overvalued and you would be pretty right. However both countries have GDP with values higher when expressed in PPP, no matter the fact GDP at market values is estimated using those twisted official trade rate.
 
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Francesca R said:
Oh yes it does.
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Yes, the School of Salamanca, mainly old Martín de Azpilicueta (1493-1586). And as the even older saying tells "lo que natura non da, Salamanca non presta" -Salamanca can't grant what nature didn't give"-.

But I meant it as PPP not being a static concept linked to a narrow political ideology.
 
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jj said:
This is actually true, and I do wonder when their pollution is going to catch up to them. In several cities, I have to wear a particulate mask. Then there's the heavy-metals issues as well as the choices of fuel.

It will be interesting.

One thing I'm sure of. The people in the PRC like owning things, having their own property, and being able to buy and sell it, and that, ladies and gentlemen, will be extremely hard to back out of the "new" system. And by 'extremely hard' I don't think it's possible at this point.

As to purchasing power, we are totally, horribly screwed in comparison to China at the minute, and it's only going to get worse with all of our capital being offshored as manufacturer after manufacturer is plundered and closed.
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And now the two largest communist countries are firmly into the capitalism game. Oh, sweet irony.
 
Francesca R said:
Oh well OK, but you accidentally typed school of economics instead of narrow political ideology. I guess some of the letters are the same.
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Yours is an example of the constant play with imprecise and precise concepts, here at the fora. You -plural- can always start a feud based on that or give free rein to a substitute of sarcasm, sometimes good enough in a I-can't-believe-it's-not-sarcarsm way.

If by "school" you really intended to refer to the School of Salamanca, your clock is more than four centuries behind, and it's as relevant to determine the modern theory of value as Plato is to contemporary philosophy. If that's the case, I take your comment as tongue-in-cheek, at best. If by school you were implying something relevant to the last 50 years, you forgot to tell which one. Telling which contemporary school drives, as far as you know, this ppp thingy as opposed to what other contemporary schools may prescribe instead, that is really a good point to enrich this thread, which in more than one place has been more of the kind of "the thread's title doesn't exist because, didley-dee potatoes!"
 
aleCcowaN said:
Yours is an example of the constant play with imprecise and precise concepts, here at the fora. You -plural- can always start a feud based on that or give free rein to a substitute of sarcasm, sometimes good enough in a I-can't-believe-it's-not-sarcarsm way.

If by "school" you really intended to refer to the School of Salamanca, your clock is more than four centuries behind, and it's as relevant to determine the modern theory of value as Plato is to contemporary philosophy. If that's the case, I take your comment as tongue-in-cheek, at best. If by school you were implying something relevant to the last 50 years, you forgot to tell which one. Telling which contemporary school drives, as far as you know, this ppp thingy as opposed to what other contemporary schools may prescribe instead, that is really a good point to enrich this thread, which in more than one place has been more of the kind of "the thread's title doesn't exist because, didley-dee potatoes!"
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What? You wrote "school of economonics" which is very much different from "narrow political ideology". There is no way anyone would read the former and realize you meant the latter. This is a skeptics forum, precision is expected. If you make statement X and it's not precise expect to be called on it.
 
The price of a haircut here varies widely.
It depends on whether you go to a "barber" or a "hair salon"

The former is about 10 dollars, the latter starts around 40.
Then there cheapskates like me who have my wife do it. I offered to return the favor but she wasn't interested even though she'd be saving more than I would.
 
What are the implications of this? Does this mean that the Chinese people have a living standard that is better than every other country? Because that is what the numbers suggest. Yet this suggests certain things that are not true.
 
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