A dollar here, a dollar there, a dollar there.

October 15, 2010 7:30 AM

For the first time in their freely-traded history, the Australian Dollar, the Canadian Dollar and the US Dollar are all within a penny of parity.
posted by 256 (56 comments total)

What are they worth in Big Macs?
posted by chavenet at 7:35 AM on October 15, 2010

Ahh, there it is: OANDA's Big Mac Index

AUD = 16% overvalued vs USD
CAD = 12% overvalued vs USD
posted by chavenet at 7:38 AM on October 15, 2010 [1 favorite]

Currency syzygy.
posted by permafrost at 7:38 AM on October 15, 2010 [2 favorites]

Good thing I converted all my currency to antique gold coins!
posted by yeti at 7:39 AM on October 15, 2010 [3 favorites]

Today in Collapsing Empire Watch...
posted by T.D. Strange at 7:41 AM on October 15, 2010 [4 favorites]

And yet you still have to pay 4 bucks more for a book in the Great White North.
posted by waitingtoderail at 7:41 AM on October 15, 2010 [9 favorites]

Three coins from three countries sought clarity:
Which of them had the most popularity?
A.U.D. said "I'm strongest!"
Loonie cried - "not for longest!"
And ol' greenback just sneered at their parity.
posted by the quidnunc kid at 7:49 AM on October 15, 2010 [40 favorites]

And yet you still have to pay 4 bucks more for a book in the Great White North.
But in return you get free health care and cheaper (and arguably better) education. I'm pretty sure it's a wash in the end.
posted by reformedjerk at 7:50 AM on October 15, 2010 [4 favorites]

For many, many years, I toiled in Japan to send money home to cover my school loans, changing money at a rate between 125-135 yen to the dollar. Now, when I actually have some money back home, and would dearly like to bring it back to Japan, the yen is at 81 to the dollar, and showing signs of continuing its climb.

In related news, the lane at the super market I switched to ended up taking longer than the one I started in.
posted by Ghidorah at 7:54 AM on October 15, 2010 [8 favorites]

The price of consumer goods in Canada compared to the US is only kind of affected by a strong (or weak) Loonie. The real reason why crap is 20% cheaper in the States is because the American market is 10 times bigger than that of Canada.
posted by KokuRyu at 7:55 AM on October 15, 2010 [1 favorite]

But in return you get free health care and cheaper (and arguably better) education. I'm pretty sure it's a wash in the end.

It would if Amazon.ca paid for our health care.
posted by Durn Bronzefist at 7:57 AM on October 15, 2010

The real reason why crap is 20% cheaper in the States is because the American market is 10 times bigger than that of Canada.

This is true. Though I seem to be one of the few people who remember booksellers slapping price-increase stickers when the currency gap widened.
posted by Durn Bronzefist at 7:59 AM on October 15, 2010 [1 favorite]

Call that a dollar? 'Ats not a dollar. This! Is a dollar!
posted by mannequito at 8:00 AM on October 15, 2010 [8 favorites]

So my free Canadian healthcare is now equivalent to free American healthcare?
posted by blue_beetle at 8:10 AM on October 15, 2010 [1 favorite]

How does one value the almighty dollar?
Well! Says this financial scholar,
You can swap your few cents
For equivalent pence
And go live in colder, or much hotter, squalor.
posted by the quidnunc kid at 8:17 AM on October 15, 2010 [2 favorites]

Across two seas the gold of nations unites
Yet shall be eclipsed by the odorous cabbage of Koryo
The scholar will take butter from the cow and complete endless sums
The wealthy architect reveals old secrets but the sallow ink repels the eye

- Nostradamus Century VII:43
posted by crapmatic at 8:17 AM on October 15, 2010 [3 favorites]

Though I seem to be one of the few people who remember booksellers slapping price-increase stickers when the currency gap widened.

And then removing the US prices from the covers when parity occurred earlier, to prevent a customer backlash.

The real reason why crap is 20% cheaper in the States is because the American market is 10 times bigger than that of Canada.

I would think that the market in Canada and the States is homogenous enough that it could be considered one large North American market. But unfortunately there are subsidies/trade barriers to consider.
posted by Kabanos at 8:22 AM on October 15, 2010

The Canadian dollar may be worth exactly the same as an American dollar, but I burn 100x more calories hauling it around in my pocket. I call that a bargain.
posted by googly at 8:23 AM on October 15, 2010 [2 favorites]

And then removing the US prices from the covers when parity occurred earlier, to prevent a customer backlash.

That I don't remember. I remember a lot of press attention on why this wasn't happening and in return a lot of excuses about how stock orders work and pricing in advance (and no mention of the aforementioned stickers). I did note some independent booksellers, as they still do, having pay U.S. price "sales", though.
posted by Durn Bronzefist at 8:28 AM on October 15, 2010

Oh, stickers and parity, yes, but not parity and cover pricing, which remains two-tiered for the majority of booksellers. Out of stickers?
posted by Durn Bronzefist at 8:30 AM on October 15, 2010

I propose these countries adopt a single currency, preferably a Big Mac coupon based system.
posted by mazola at 8:31 AM on October 15, 2010

And now I've talked entirely too much about this one tiny issue in the overall topic. Carry on.
posted by Durn Bronzefist at 8:32 AM on October 15, 2010

Yet shall be eclipsed by the odorous cabbage of Koryo

I you think there was an uproar about converting $1 and $2 bills to coins, just wait till you have to try and squish a bunch of kimchi into your wallet!
posted by Kabanos at 8:38 AM on October 15, 2010

Book and magazine prices are where the disparity is most visible to us as consumers, but it happens all over. When the dollars were unequal, publishers increased the Canadian price (plus some margin for gouging), but when the currencies became more equal they kept the price differential as a 100% gouging surcharge without merit. Why do they do that? Because we may grumble a little but in the end we keep paying what they tell us to pay.
posted by rocket88 at 8:42 AM on October 15, 2010

My local comic book store actually stickered lower prices over the Canadian price for TPBs last time we were around parity, as his costs for ordering the books had gone down.

This is why it's good to have a local comic book store.
posted by Shepherd at 8:49 AM on October 15, 2010

Yeah, actually I think that all this discussion of book prices is directly relevant and entirely on-topic. It's fundamentally the same issue as the Big Mac Index and Purchasing Power Parity stuff linked upthread.

The currency market right now is really volatile and, thankfully, prices on consumer goods do not change as quickly to keep pace. It may be that the Canadian and Australian dollar are currently over-valued (or more precisely, that the US Dollar is undervalued). In fact, I suspect that's the case. But even if it happens that this change is for the long haul and the three currencies stay at or near parity for several years, it will take a while for consumer prices to change to reflect that.

Unfortunately for Canadians and Australians, that change will certainly be reflected in increased prices in the US rather than decreased prices abroad. And salaries adjust even more slowly.
posted by 256 at 8:49 AM on October 15, 2010

As long as we're all in the same boat and have no money to compare with each other.
posted by QuarterlyProphet at 9:00 AM on October 15, 2010

Having no need to change USD into another currency at the moment, I hope the USD remains weak for a while. Perhaps it will help our export industries. It does underline the need of immediately working to reduce our energy imports, however. This weak USD is playing havoc with gas prices. :P
posted by wierdo at 9:03 AM on October 15, 2010

The dollar's at par! Well, OK, so
It's a big deal, (if you say so).
But for equality of bucks
I don't give a fuck
If they're still not worth more than the Peso.
posted by Capt. Renault at 9:03 AM on October 15, 2010 [2 favorites]

Yeah, as QuarterlyProphet said, I ain't got none of any so no big whoop.
posted by Mister_A at 9:08 AM on October 15, 2010

There was enough awareness of the discrepancy in car pricing (in part thanks to the media push) that some dealers were having "U.S. specials", where they'd apparently go get cars in the U.S. and sell them at a price point somewhere (I think about 2/3) between the cost of that car in Canada and what it would cost to go get it yourself in the States.

Ordering stuff online from U.S. locations is always a bit of a gamble, though, or it feels that way, since it's never clear what customs is going to gouge you for. But I definitely am more active purchasing online when parity rolls around -- not to mention topping up donations to various causes, since my dollars aren't being discounted for a change.
posted by Durn Bronzefist at 9:09 AM on October 15, 2010

I propose these countries adopt a single currency

That's a good idea. But what to call it?

The Canadian Dollar, the Australian Dollar and the US Dollar...? Hmmm...

How about a Chaz Wazza?
posted by sodium lights the horizon at 9:12 AM on October 15, 2010

A currency trader got stuck
When he sold one American buck
For one loonie. Said he:
"Where's the profit for me?
This money now just ain't worth fuck".
posted by the quidnunc kid at 9:12 AM on October 15, 2010 [2 favorites]

AUD is at parity too? At that rate, the loonie has really slid internationally recently. Wow...
posted by Chuckles at 9:19 AM on October 15, 2010

Of dollars, there's three different brands
(Or four, if you want to count 'sand'),
They're equal, but still --
For paying MY bill
I only accept gold Krugerrands.
posted by Capt. Renault at 9:30 AM on October 15, 2010 [1 favorite]

For the British among you - pop quiz:
Who said "Give to Caesar what's his" - ?
It was Christ! So please render
All your legal tender
To our dearest Sovereign (Queen Liz).
posted by the quidnunc kid at 9:35 AM on October 15, 2010 [9 favorites]

Exchange rates are almost the same
US dollars are starting to wane
The almighty fed
is almost near-dead
GRAR CANADIAN BOOK PRICES
posted by benzenedream at 9:46 AM on October 15, 2010 [2 favorites]

For the love of the baby Jesus, why don't we just let Canada become the 51st state and get this nonsense over with!
posted by lometogo at 9:49 AM on October 15, 2010 [1 favorite]

Because we don't want you?
posted by Orange Pamplemousse at 9:54 AM on October 15, 2010 [1 favorite]

How cute. Almost like real dollars.
posted by qvantamon at 10:07 AM on October 15, 2010 [1 favorite]

Speaking of exchange rates, it can't possibly cost $257US for a Big Mac in Indonesia, can it?
Two years ago, it was considered a bargain there.
posted by MtDewd at 10:10 AM on October 15, 2010

For the love of the baby Jesus, why don't we just let Canada become the 51st state and get this nonsense over with!

Because then we'd get the vote and some sort of say in the process.
posted by mazola at 10:26 AM on October 15, 2010

Are books are more expensive in Canada because demand is higher? *lolUSians*
posted by Xoebe at 10:29 AM on October 15, 2010 [2 favorites]

MY NOBLE SIR -- you can hear me, ya?
You send U.S. dollars right here, ah, ya?
You wire them here
And when your funds clear
I'll mail you your cut from Nigeria.
posted by Capt. Renault at 10:32 AM on October 15, 2010 [1 favorite]

When the loonie drops significantly against the US dollar the Canadian media all tell us how bad this is for consumers and thus the economy in general. When it rises significantly the same media tell us how bad this is for Canadian exporters and thus the economy in general.
Lesson: The media has a vested interest in telling you bad news and raising your anxiety. It hooks you as a viewer/listener and makes you buy their advertisers' products.
posted by rocket88 at 10:36 AM on October 15, 2010 [1 favorite]

You an Aussie or Canuck or Yank?
Well, this you can take to the bank
Changing has no surprises
You get back the same sizes
And you've got the economy to thank
posted by It's Never Lurgi at 11:24 AM on October 15, 2010 [1 favorite]

If Canada became a part of the USA, you'd see American politics shift radically leftward, resulting in a civil war.
posted by blue_beetle at 11:39 AM on October 15, 2010

For the love of the baby Jesus, why don't we just let Canada become the 51st state and get this nonsense over with!

Well we'd be somewhere around the 51st to 64 th states inclusive as it doesn't make much sense to make Canada one big state. And because we are bigger the new super state would have to be called Canada.

Can you imagine how ~26 or more wildy left wing (by US standards) new senators would shake things up in the States. Boy howdy it would almost be worth it to see the head asploding.
posted by Mitheral at 12:55 PM on October 15, 2010 [1 favorite]

Hey very interesting FPP. I presented on something peripherally related this week - as the US Dollar continues to weak we're starting to see some inflation in the system. I always counsel clients to look three steps ahead of the market, rather than simply reacting to current news.

To accomplish this I like to look at indicators catching the attention of few folks, as thats the only way to make money in this business. If we look at the Journal of Commerce Commodity Index across the last 6M (default view), we see clear evidence of deflation. But the same presentation over the last three months (or one month or one week) shows we're starting to see some pricing pressure; inflation in other words.

This makes sense as over the past six months the US Dollar has been cratering, when compared to a basket of other currencies, and agricultural commodities have been showing the same story:

• Rice (CBOT RR) up up about 13% since June 2010
 
• Soybeans (CBOT S) up up about 27% since June 2010
 
• Wheat (CBOT W) up up about 50% since June 2010
 
• Sugar (CBOT SB) up up about 62% since June 2010

These are decidedly non trivial advances and NOT attributable to demand side increases. At the same time you've got The Fed almost openly indicating via press releases or comments dropped during interviews they are going to engage in QE 2:

• Chicago Fed President Charles Evans, Oct 9th 2010 -- “Unemployment is too high and inflation too low”
 
• New York Fed President William Dudley, Oct 10th 2010 -- “Current economic conditions are unacceptable”
 
• Why Obama is losing the political war, Oct 10th 2010 -- “mass anger and anxiety over unemployment. ”
 

So this is how The Fed works; soft announce it via Governors so the markets aren't surprised. It would seeM that QE 2 is a done deal. And Bernanke himself has long advocated inflation rather than deflation: Ben Bernanke in a speech to National Economists Club, Washington, D.C. November 21, 2002:

"U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.
By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.
We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

So yeh, interesting FPP. Many thanks for posting 'cause I hadn't noticed.
posted by Mutant at 1:13 PM on October 15, 2010 [8 favorites]

Can you imagine how ~26 or more wildy left wing (by US standards) new senators would shake things up in the States.

Are you sure the Maritimes and Prairie provinces would be "wildly left", even by US standards?
posted by kmz at 2:16 PM on October 15, 2010 [1 favorite]

Are you sure the Maritimes and Prairie provinces would be "wildly left", even by US standards?

According to Fire and Ice: The United States, Canada and the Myth of Converging Values, the short answer is (was?) yes.
posted by mhum at 2:36 PM on October 15, 2010

So USD5 = AUD5 = CAD5 ... same as in town....
posted by chavenet at 3:31 PM on October 15, 2010

I don't think Alberta, for the most part, is going to much more than a little bit right of American centre. Honestly I don't know about the Maritimes but considering the Conservatives haven't had a slam dunk sweep out there (the best is NB where they got 50% of the last elections seats) I think it's a fair bet the vast majority of Americans senators are going to consider the vast majority of the new canadain senators as firmly to the left of themselves.
posted by Mitheral at 3:32 PM on October 15, 2010

I'm American, in the middle of an 18-month adventure in Australia.

While I could sit around grumbling about the exchange rate, my bets are hedged as I have freelance clients in both countries, so I make income in both currencies. I feel much worse for my friends who are coming to visit in a few months... they will have 10% less fun over here in real terms since buying their tickets.

The goods that I'm most interested as a nerdy guy with hipsterish tendencies simply cost more over here. Prices that are frequently on my mind include:

- Subway does SEVEN dollar footlongs here. It doesn't have quite the same ring to it as "Five... Five... Five dollar footlongs!"

- The cheapest local beer at my local bottle shop is just under $2 AUD per bottle. No 24-packs of Pabst on super special. And check out keg prices.

- Macbook Pros start at $1499 AUD instead of $1199 USD. Much cheaper to buy one back home and have it shipped here.

Not everything is bad news, though:

- I'm paying far less rent to live in a hip part of Melbourne than I've paid to live in a comparable part of Los Angeles.

- As a temporary visitor I don't qualify for the national health care system. However, for $65 AUD per month I get a level of health and dental coverage that'd cost me $300-400 USD per month back home.
posted by adamk at 7:42 PM on October 15, 2010

Listen to me, sonny
It doesn't sound so funny
That the United States craters
While unemployment greaters
And we now use Monopoly money
posted by Blazecock Pileon at 11:42 PM on October 15, 2010

canada/australia
posted by evil_esto at 11:44 PM on October 15, 2010