Re:What being filthy rich in China looked like in 1, 1000, a...
by ZoomerCretin on Thursday October 26, 2023 @01:08AM
(#38021819)
Contrived example:
US Produces 1,000 pounds of butter, sells at $1/unit
China Produces 1,300 pounds of butter, sells at $0.7/unit
Nominal: The US economy is bigger, because they produce more US dollars.
PPP: The Chinese economy is bigger, because they produce more goods.
It's obvious to me that PPP is the more accurate metric.
PPP is the real metric of GDP. Nominal is the metric you get after you adjust for the market price in dollars.
If the US dollar lost half of its value internationally, yet the US economy still produced the same quantity and quality of goods, did the US economy shrink by half? I think not.
US Produces 1,000 pounds of butter, sells at $1/unit China Produces 1,300 pounds of butter, sells at $0.7/unit
Nominal: The US economy is bigger, because they produce more US dollars. PPP: The Chinese economy is bigger, because they produce more goods.
It's obvious to me that PPP is the more accurate metric.
PPP is the real metric of GDP. Nominal is the metric you get after you adjust for the market price in dollars.
If the US dollar lost half of its value internationally, yet the US economy still produced the same quantity and quality of goods, did the US economy shrink by half? I think not.