Read the full article at: MXN Peso vs. US Dollar or “Saving 19 Cents on a $1000 Debt
Abstract: People around the Web have recently asked about the effects of inflation on life here in Mexico, along with the effects of falling US Dollar values.
In short, yes, inflation has affected food and fuel costs here in Yucatan, but these increased costs have been more than out-stripped by typical Mexican investment gains and MXN peso gains when exchanged for US dollars and US goods (where the Peso has strengthened 4.4% in less than 2 months). Still, people who do not have investments, land, or lots of Mexican pesos, etc. are being squeezed.
This leads to the question of exactly where US dollar values are heading versus the Peso?
When in doubt, it can help to consult the experts. Both a key Chinese rating agency, Dagong, and Standard and Poors are publicly reporting significant long-term US Dollar weakening due to the US President’s and Congress’s refusal to reign-in Public Debt and US Federal deficit spending. Dagong is trusted for non-political currency ratings and their recent downgrading USA’s Treasury bonds from their classic AAA ratings, and even Standard and Poors (a modestly politicized agency) downgrading of future US dollar strength seem to forecast trouble for the US dollar.
This means trouble for people who depend on the dollar, like US ex-pat retirees with USD savings & investments. (If you think Mexico is a risky place to invest, check out the Bolsa’s strength & performance over the past 5 years vs. Wall Street.)
The US dollar will likely continue to slide versus the MXN peso, unless Bernanke, the US Treasury Dept, Obama, and Congress make serious course changes, to keep the US public debt from exceeding US GDP, (US Debt currently @ $14 Trillion – Up an additional $4 trillion under Obama & the Democratic Congress). The much heralded “deal” between Obama and Congress to cut the US Government budget by $40 billion, actually turned out to have only $380 million of real spending cuts. This shows that US politicians do not have the intention or the will to actually reduce the $2 trillion per year of govt. overspending. Cutting $380 million vs. the $2 trillion annual US deficit & $14 trillion of debt, is like reducing $1,000 of growing credit card debt by 19 cents a year.
“Yep, we’re cutting back our $1,000 debt, by spending 19 cents less on cheap toilet paper, every year.”
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Read the full article on Inflation Effects and Peso and US Dollar Values at: (or access under Living in Yucatan (see header) )
MXN Peso vs. US Dollar or “Saving 19 Cents on a $1000 Debt”
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Feel free to copy while giving proper attribution: YucaLandia/Surviving Yucatan.
© Steven M. Fry
Read on, MacDuff.