Does a Starbucks Latte Cost the Same Everywhere?

Calling an accountant a "bean counter" might be considered pejorative, but what if coffee beans were actually a great way to understand the power of currencies around the world? Such is a theory proposed by The Wall Street Journal, partly for fun and partly as fact. The newspaper's "Latte Index" compares the average cost of a tall Starbucks latte in various place around the globe in order to get an accurate idea of currency valuation. Using the price of the drink at a New York City Starbucks as its benchmark -- $3.45 USD -- the paper suggested that the Canadian dollar appears undervalued, since the same latte can be obtained in Toronto for the equivalent of $2.94 USD, or 14.8 percent less than an NYC Starbucks latte. In terms of potentially overvalued currencies, a tall latte costs $4.24 USD in Singapore and a whopping $5.76 USD in Zurich. On the other hand, a latte in Mexico City will only set you back $2.19 USD, while in Cairo the same drink costs just $1.53 USD. Although The Wall Street Journal stressed that the index was meant to be taken somewhat lightly, its accuracy was comparable to other common barometers of world currency valuation.

Printing and minting money in America:

  • The U.S. Federal Reserve can't account for the location of about two-thirds of the $100 bills in circulation; most are thought to be held overseas.

  • A $1 bill "survives" in the market for 18 months, on average, while $50 and $100 bills stick around for approximately nine years.

  • It costs the U.S. government about 1.7 cents to mint a penny.

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More Info: World Economic Forum

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Post 1

That's how income around the countries has been calculated, based on purchasing power parity in US dollars. It considered the price of common commodities and services including price of a hamburger or a haircut. Nothing new.

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