Quote:
Originally Posted by northface
Wrong! In fact PPP has more meaning in the real world. I can buy better quality say capsicum 1 kg for 25 cents in India, i get that for 12 Dollars in NZ. I pay 1.5 USD for 5 green chilli's packed in a branded packet in reunion Island in the Indian ocean, i don't pay anything for that in India. PPP has certainly more value reflecting real economic condition than a market exchange based mechanism.
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And you absolutely don't get it. It means SQUAT ALL in the international scheme of things. Ok, so you can get capsicum for 25 cents/kg in India. Does that mean that I as a Canadian when I come to your country expect to pay $12-$15 for it? Does that mean when you come to my country, you can only pay 25 cents for it? Try it and see just how long you can do business. Get it? The value of the money doesn't change. Not one bit.
Just because capsicum is 25 cents in India and $12 in Canada/NZ, PPP skews it so that it means your 25 cents is worth my $12. Does that make sense in the real world? Yeah, just try to buy $12 of Canadian goods with an Indian 25 cents.
PPP has its place. What exactly I will leave it to others more learned than I but to use it to keep score in a p!ssing contest? You're going to go broke real fast.