www.CostaRicaTicas.com

You are right Mugsy. We are talking about real life costs in CR. They are out of line with reality, the reality of the country's economy.

Not just food, but all daily necessities. CR is way too darn expensive relative to ALL regional countries, yes including all of Latin America. There is no justification for that other than the overvaluation of the CR colon.

It will come back to bite the economy and all ticos! But the politicians play their games

I'm sorry bud, but one doesn't mean the other. You assume that the price of commodities is fixed relative to the dollar, and therefore costs the same to tourists, thus highlighting an artificially inflated exchange rate. But this logic does not hold. The commodity can rise or fall en todo, regardless of the currency you are measuring. Gold is an extreme example, and though there are miles separating gold versus a chicken dinner, that same separation of commodity value to currency exists.

Take a look at Orange's hamburger chart. Though not actually meant to measure individual currencies, it states that as of June 2015 the 'real' value of the colón is 448 to the dollar, and not in the 600's where you suggest. Now, agreed it is hardly a solid measure, but it's the first real piece of economic statistics posted in this thread.

Now, what is relevant is the current deflation rate versus the hardcoded rise in wages. I don't really understand the whole cycle of economic whatevers, but to me, this situation will either devalue the currency or ignite inflation. In the past 3 deflation cycles in the US, statistics show a reduction in base wages. There was an article on this exact topic from a British study of UK rates for 40 years, and I am looking for it to post.

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bypassin' kinky, and usin' the whole chicken!!!

This subject has had alot of good information, and it doesnt seem like there is any consensus one way or the other. Lets try this:

1. would you rather keep $10,000 in dollars and exchange as needed over the next year?

or 2. would you rather exchange it all for colones today, and expect a profit if the exchange rates change. ?

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Having too much fun. 8)

I did not say CR is experiencing inflation, I said if they devalue it is the same as inflation (reducing the value of paper money relative to real goods).

Yes the USA is fighting deflation, which is a result of the bursting of the credit bubble of 2003-2008, and perhaps now exacerbated by the China bubble starting to deflate.

So here's where we might as well stop talking confusing terms, inflation refers to the inflation of the supply of money and credit, which may or may not lead to an increase in the general level of prices.

Because there are so many examples in history of inflation leading to higher prices, people have come to call increases in prices 'inflation.' Understandable, but technically incorrect, and leads to confusion when people point out that the Fed is printing money like crazy, yet the price stats do not show a huge increase.
Lots of reasons for that, velocity of money, credit tightening, etc.

Cost of living indexes are notoriously manipulated, as governments don't like to have to pay more money out for indexed pensions, so take them with a grain of salt. Clearly in most countries, especially in NA, prices for some things have sky rocketed. By that I mean 30% plus increases for some basic necessities. But CPI doesn't show that and never will.

The Big Mac index is so widely used and regarded that the Argentine government actually forced McD's to lower the price of a Big Mac to the point where McD's took it off all menus, but you can still get it if you ask for it, at a greatly reduced price compared to their other sandwiches. I know this to be true as I tested it.

#1. The exchange rate has been flat, and if it does change drastically, it'll be to the benefit of Dollar holders. No good news has been coming out, so unless the Dollar suddenly tanks hard (that crawling peg thing) I do not expect the colón to rise in value more than a wiggle here and there.

I'd vote dollars.

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bypassin' kinky, and usin' the whole chicken!!!

I wholeheartedly agree with your vote, BD

You're coming over to our side....

Nope. Your side thinks that the colón is being artificially inflated for the benefit of the 1%ers ...

I'm only saying that if the current situation persists without the gov't cutting costs, then their currency will suffer.

Not the same thing.

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bypassin' kinky, and usin' the whole chicken!!!

Here's why the Big Mac Index isn't worth a shit. The Big Mac isn't a tradeable good. The individual components are but the Big Mac itself isnt. It's not an exchange traded good. It's value is driven by society's perception.

imo its a scratch trade...

for the record i am short euro fx futures and long natty gas spreads, which by proxy makes me long colones relative to euros

and that means im hedged for the cien club dues

how was halloween this year btw?

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its easier to fool people than to convince them they have been fooled- mark twain

It serves a statistical purpose: measuring things against each other, and not many-to-one, which is what the great colón debate is about.

Keep in mind that they are measuring consumption pricing, and not trade pricing. I think someone should debunk the whole thing by factoring the entire meal cost. Some countries charge down to the Ketchup packets.

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bypassin' kinky, and usin' the whole chicken!!!

I should have put a smiley face when I posted about the Big Mac index. They teach it (or introduce it) in undergrad basic economics classes, but I doubt economists take it seriously.

It's a nice idea but can't be used in practice because there are many factors that make up the price of any product/good. The biggest being, the price and availability of the raw materials used to create the product. If for example, cheese is very scarce in a particular country and they have to import it to make a Big Mac, it's obviously going to cost more than if cheese had been available locally. That is not a indication of the valuation of the currency, so it wouldn't be fair to value currency based on an unequal product.

It has nothing to do with being a publicly traded good.

I can't believe you guys are still arguing over this whole topic.

Nutin else to argue over. Just floatin along til the next topic comes along.

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bypassin' kinky, and usin' the whole chicken!!!

So does the inflation rate over the years justify cien? Just kidding guys. I really do not want to go there.

I think it is safe to say we would all agree with this statement…

The $cien we paid in 2006 @HDR was less in colones back then than the colones you get today for the same $cien. However, those old time colones bought you more in CR back then, than the 52,900 colones the chica gets today for the $cien.

Inflation in CR, in colones, is greatly underreported

go at it...

BB57 has mentioned it many times, as has Pops and several long-time members. They know what the colón used to buy, and how far $100 would go.

By the way, were you actually paying cien back in 2006? Jez, if you ain't paying em $275 a session now, you're cheatin' em!!!

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bypassin' kinky, and usin' the whole chicken!!!