The Cost of Living

In the study of Economics, in which we claim insignificant expertise, the cost of living is mostly either a means by which to compare one location to another or over time a barometer of inflation. The question: is the value of the material commodities we need to live with a certain standard of living less or more, here or there, now or then. A cost of living index is a measurement of purchasing power. Currency seems to be an aptly chosen word as the power of money is most appropriately determined at the moment of use.

The quality of a currency, be it Euros, Dollars, Yen, or Pound Sterling, often has much to do with things we do not control, at least not individually. Why has the Dollar trended down against the Euro over the last few years? And, what is happening to the Pound lately? A more complex question might involve the currency of China, where paper money is thought to have first originated. At the present time, the Renminbi (RMB) has a value stabilized in relation to an index based on the values of other currencies (including all the others mentioned). Lately, the RMB is enjoying a good deal of strength against most other currencies. Said another way, the quality of the RMB has been increasing.

The cost of the Beijing Big Mac is falling against its counterpart in Tokyo!

Bringing this back to our specific and individual relevance, we have the concept of the Big Mac Index popularized by the Economist magazine or more recently created in Australia, the CommSec iPod Index. As you might guess, the iPod is much more of a tradable commodity and is not as influenced by local acquisition, transportation or labor costs. We could also compare a basket of consumer packaged goods (CPGs) from a company like Nestle (Public, VTX:NESN), Unilever (Public, AMS:UNA) or Proctor and Gamble (Public, NYSE:PG) to compare purchasing power, but let's stay with Burgernomics and a sizzling new development...

Could this technology lower the cost of living?!

Last week, we joined the Association of Coupon Professionals. As the Internet has attracted a whole new breed of computer users, digital coupons have the opportunity to become a strong currency related to Internet growth and use. They can be more efficiently and less expensively produced, redeemed and tracked. Digital coupons could provide a new form of politically neutral currency and utility that might help us lower the cost of living in exchange for the valuable promotional tool they provide to the issuer.

Keeping buyers and sellers connected is the key. Something tells us that lower costs on both sides of the transaction are more valuable than any number of views, impressions or clicks. Technology can play a progressively useful role in engaging a self-selected customer audience in long-term relationships that drive sales more efficiently. CPG companies in particular are very interested. We will keep you posted.

The Community is the Computer - a Super Computer. Go Zig!

R&B