The peso is the currency of many countries, including the Philippines. You knew that, right? Which country were you referring to? I’m sure you also know what the euro is.
The European Union, whose currency is the euro, had a GDP of almost US$17 trillion in 2007, amounting to 31% of the world’s total. (The US GDP was only 14 trillion). The EU is the largest exporter of goods, the second largest importer, and the biggest trading partner to several countries such as the United States and China. 163 of the top 500 largest corporations measured by revenue (Fortune Global 500) have their headquarters in the EU.
Former Fed Chairman Alan Greenspan said in 2007 that it is “absolutely conceivable that the euro will replace the dollar as (world) reserve currency, or will be traded as an equally important reserve currency.” The recent weakness of the US dollar might encourage various parties to increase their reserves in euro.
Someone who uses the “Mean Reversion” name would surely understand that the dollar can’t lose value against the Euro, gold, oil, etc., while at the same time we wouldn’t experience inflation at home. You should look up “purchasing power parity” as a basic concept.
In the short term, a $3 burger may still be $3 while the Euro, gold, etc. go up in value: But such divergence is unstainable, sooner or later that burger (and cars, clothes, etc.) will cost a lot more than $3. Unless we are drinking the Fed’s Kool Aid, we’ll see that they’re trying to fix the current credit crunch mess by inflating away the value of debts.
