Post
Topic
Board Economics
Re: Bitcoin or Gold? What would you pick?
by
deisik
on 20/06/2015, 13:24:52 UTC
But I think GBP, EUR, and CHF have the higher value than USD. How could you said that the value of the currencies has lost? And I think GBP is the most stable currency in the world. CMIIW

And the one-to-one banknote exchange rates doesn't matter much. For example, the Latvian Lats is having an exchange rate of 1 LVL = $1.61. But you can't say that the Latvian Lats is a stronger currency when compared to the USD. Because the market cap of LVL can be measured in a few hundred million USD, while that of USD is in trillions of $$$.

Market cap doesn't seem to be an appropriate metric to be used for comparing between currencies since how can you count precisely the market cap of the Latvian Lat in US dollars if not by using its exchange rate? The task of finding the market cap of the US dollar itself seems to be even more daunting. What are you going to count it in, in the same US dollars? I think a proper metric that accurately reflects the strength of a currency is the share of the world GDP (that should be correctly called GWP) which is denominated in that currency (i.e. total volume of goods and services produced by the country which emits that currency)...