[Foundation-l] Relocation announcement

[Anthony]

On 9/22/07, Thomas Dalton <thomas.dalton at gmail.com> wrote:
> > > I've just looked up the numbers. So far this year, 26% of donations
> > > have been in something other than USD. In 2006, Salaries and Wages and
> > > Operation, which are the only two things that would change currency
> > > (and not all of them, at that), constituted 20% of total expenditure.
> > > This is not a particularly accurate way of working out how a change of
> > > currency would affect things, but I think it's close enough - the
> > > change in currency would not be a serious issue.
> > Exchange rates alone have their effect over a much longer period of
> > time.  The Euro and US$ were last at par in 2002; now the Euro buys
> > US$1.36.  At the peak in June 2001 the Euro bought US$0.85.  So what
> > would represent 26% of revenues now would have represented 20.3% when
> > the U.S. dollar was at its peak.  That 6% difference may not seem like
> > much, but that's because other country fundraising is still relatively
> > small.  This is a simplified calculation because I have only considered
> > Euros, but similar things would happen with other currencies.
>
> You can't just look at the exchange rate, you have to look at how the
> exchange compares with purchasing power. If the value of a dollar
> drops by 10%, but the price of everything denominated in dollars
> increases by 10%, then it makes absolutely no difference to anyone
> that isn't a currency speculator. Exchange rates and purchasing power
> move separately (the former usually much faster than the latter), but
> they do tend to converge over time.
>
Exactly.

Except for the part about the value of a dollar dropping by 10%
combined with the price of everything denominated in dollars
increasing by 10% not mattering to anyone that isn't a currency
speculator.  It'd matter greatly to everyone who has any asset or
liability denominated in dollars (bank accounts, loans, CDs, accounts
receivable, pensions, unemployment benefits, etc.).  And it'd also
matter greatly to anyone who has to pay taxes, due to the [[tax on the
inflation tax]].  And, it'd also matter to anyone who imports or
exports anything.

Just about all of us are currency speculators in that sense, though
most of us commoners benefit more by the value of the currency going
down (as our dollar-denominated assets like bank accounts are less
than our dollar-denominated liabilities like mortgages and credit card
debt).

But...anyway, that doesn't really matter that much to the foundation
in terms of choosing a place to have an office, as the foundations
assets and liabilities can be moved, and the foundation doesn't have
to pay the [[tax on the inflation tax]].  I guess the export/import
thing could be a problem.  And when hyperinflation causes the
government to collapse that could be problematic, but we've probably
got a few years before that happens in the US...