Kids love cars. So was I, 30 years ago. Wow, 30 years ago! My first love was VW type 2. I just fell in love with the car when I first saw her. I think I was 5 or 6. Then I liked the cars like Camaro, Transam and Firebird. Also, my favorites were pike cars by NISSAN. Cars like Be-1, S-cargo, Pao and Figaro.
I would draw VW type 2 if I got bored when I was in school or home. What kids draw now might be different from what we drew back then. But, Kids still love cars. I bought a Mini-4WD as a gift to my friend’s son. It looks like a Chevy pick up truck. It is good to see the kids and their parents share same toys at same age. The boy will be 8 this year. 30 years ago, we would gather around with Mini-4WD in our hands and go to a shop. The shop had a racing course for Mini-4WD and we did racing.
As far as I remember, the price was about 600 to 800 yen. Dollar yen rate back then is apprx. 143 yen/USD which means about 5 bucks then. 30 years later, I paid 800 yen this time. Current rate is apprx. 110 yen/USD. which means about 7 bucks now. The price in Yen is almost same as the one of 30 years ago, but in USD, it has gotten 140 % over the 30 years. Yen gains 30 % against USD. Of course, it means that USD weakens 30% against Yen.
Then, take a look at Core Consumer Price Index of both country. CCPI excludes food and energy price.
OECD (2010), “Main Economic Indicators – complete database”, Main Economic Indicators (database),http://dx.doi.org/10.1787/data-00052-en(Accessed on date)
Organization for Economic Co-operation and Development, Consumer Price Index of All Items in Japan© [JPNCPIALLMINMEI], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/JPNCPIALLMINMEI, April 16, 2017.
The CPI of Japan in Oct.2016 is 104.01 and 89.1 in Oct.1986 with 2010 index of 100. The CPI of US is in Oct. 2016 is 1.109 and 0.505 in Oct. 1986 with 2010 index of 1.0. It indicates 16.7% increase over the 30 years in Japan. What do yo think? Do you feel current 800 yen is then of 934 yen? On the other hand, they got 219% over the 30 years in US. A little more than double. If you have 5 bucks now and go back to the year 1986, you could have bought 10 bucks then of consumer products. Both currency lost purchasing power over the 30 years, but Dollar has lost it much more. Bic Mac might tell you something as well. The price of Bic Mac was sold in US at USD5.06 in 2016. How about in 1986? It was USD1.60 back then. More than Triple. In Japan, Bic Mac was sold at USD3.26 in 2016 and USD2.40 in 1986. It is 35% price increase. Bic Mac was 370 yen in Japan and USD5.06 in the states in 2016. Bic Mac was supposed to be same which means same value all over the world. It means USD5.06 = 370 yen.
What makes a difference? It is FX rate. This case, 1 dollar equals 73 yen to have a same value on Bic Mac in both countries. Actual FX rate in 2016 was 108.79 yen per US dollar average. We can see USD is 47 % stronger than yen compared to the Bic Mac price in two country. What is the 47 % difference. This is the price point where people want to sell and buy.
What effects people’s mind? Cause, effect, and result? What do you think? What would you do?
