A dollar gets you 69

What does that mean? I refer to the arcane world of currency conversion. Today an American Dollar can be exchanged at a bank for a princely sum of 69 Indian Rupees. This within a short 10 year span where the Rupee saw itself drop like a stone against the American fiat. Never mind India had its share of Fiats (but they were from Italy and not very good).

Frankly it is all made up. If you turned the clock way back to the spring of 1792 you would have found that an American Dollar was worth 24 grams of pure silver. Now why someone would care to carry around pure silver is worth debating but back then people killed each other for that metal.

In today's terms where silver trades for around $15 per 24 grams one would be correct to say that the inherent value of the USD has depreciated itself by 15 x.

How and why this happens is very confusing and the rules and regs that govern all this are set by very powerful people who get to decide how the world should operate. Much has to (in theory) to do with the gross domestic product or GDP of a given region. GDP is defined as the sum total of all the value produced by a country.

Which takes us into a whole new realm of defining what value is. The dictionaries define it as 'usefulness of something.' By that measure the whole system we have setup is debatable.

Here is my simple explanation. For a given set of conditions if one has a choice to buy something and if that something were American vs. Indian the former has 69 times more demand than the Indian version. Everything else is just smoke and mirrors. Both of which might cost you a lot of dollars or rupees depending on what you want to do with them. Just ask the Mexicans.

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