Which of these locations would require more working time to purchase a big mac?
Visualized: The Security Features of of American MoneyIn 1739, Benjamin Franklin sought to tackle the issue of counterfeit money in America, using a printing press and leaves to create unique raised patterns on the colonial notes. Show Almost 300 years later, Benjamin Franklin is the face of the U.S. $100 bill, and it is protected by a myriad of security features including secret images, special ink, hidden watermarks, and magnetic signatures, among others. In this visual, we’ve broken down the $100 bill to showcase the anatomy of American currency. The Makeup of American MoneyThere are 6 key features that identify real bills and protect the falsification of American money. ① Serial Numbers & EURion ConstellationThe most basic form of security on an $100 bill is the serial number. Every bill has a unique number to record data on its production and keep track of how many individual bills are in circulation. The EURion constellation is star-like grouping of yellow rings near the serial number. It is only detectable by imaging software. ② Color Changing InkThis ink changes color at different angles thanks to small metallic flakes within the ink itself. The $100 bill, like all other paper bills in the U.S., has its value denoted in color changing ink on the bottom right-hand corner; unlike other bills, it also features a liberty bell image using the ink. ③ MicroprintingMicroprinting allows for verifiable images that cannot be scanned by photocopiers or seen by the naked eye. The $100 bill has phrases like “USA 100” written invisibly in multiple places. ④ Intaglio PrintingRather than regular ink pressed onto the paper, intaglio printing uses magnetic ink and every different bill value has a unique magnetic signature. ⑤ Security Threads & 3D RibbonsThe security thread is a clear, embedded, vertical thread running through the bill. It can only be seen under UV light, contains microprinted text specifying the bill’s value, and on each different bill value it glows a unique color. Additionally, 3D ribbons are placed in the center of $100 bills with a pattern that slightly changes as it moves. ⑥ Paper, Fibers, & WatermarksBecause American money is made of cotton and linen, blue and red cloth fibers are woven into the material as another identifying feature. Finally, watermarks are found on most bills and can only be detected by light passing through the bill. The Relevance of CashHere’s a look at the total number of each paper bill that is physically in circulation in the U.S.:
Interestingly, a number of $500-$10,000 dollar bills are in someone’s pockets. And while they are not issued anymore, the Fed still recognizes the originals of these bills that were legally put into circulation in the past.  A $10,000 Federal Reserve Note (1934) Additionally, there is fake money passing hands in the U.S. economy. Being the most widely-accepted currency in the world, it’s no wonder many try to falsely replicate American money. According to the U.S. Department of Treasury, there are approximately $70 million in counterfeit bills currently circulating in the country. Finally, a natural question arises: how many people still use cash anyways? Well, a study from Pew Research Center found that it while it is a dwindling share of the population, around 58% of people still use cash for some to all of their weekly purchases, down from 70% in 2018 and 75% in 2015.
What Is the Big Mac Index?The Big Mac Index Explained Photo: suedhang / Getty Images Definition The Big Mac Index is an index based on the theory of purchasing power parity (PPP), which states that, in the long run, currency exchange rates should move toward equalizing the price of goods and services in different countries. What Is the Big Mac Index?The Big Mac Index is based on PPP theory, which looks at the idea of an identical basket of goods and services in different countries. A basket of goods and services in the U.S. will often look different from what you can find in other parts of the world. McDonald's has stores in 118 countries, which means its Big Mac sandwich can provide a useful control variable.
In theory, the price of a Big Mac is the result of many local economic factors, such as the price of the ingredients, local wages, or how much it costs to put up billboards and buy TV ads. These variables are what make the Big Mac Index so valuable. Many economists find that the PPP metric you can get from comparing the prices of Big Macs around the world is a reasonable measure of real-world purchasing power. How to Calculate the Big Max IndexTo figure out the Big Mac Index by comparing one country to another, you would divide the cost of a Big Mac in one country by the cost in another country. The answer will give you the PPP between one country and another. How the Big Mac Index WorksA simple calculation reveals how the Big Mac Index works. You divide the price of a Big Mac in one country by the price of a Big Mac in another country. When you use the local currency for each one, you end up with an exchange rate. Then, compare this exchange rate to the official exchange between the two currencies. According to PPP theory, this will show you whether either currency is undervalued or overvalued. For example, suppose that a Big Mac in the U.S. costs $1, and in the eurozone it costs €2. The Big Mac Index valuation for EUR/USD would be 2. You would then compare this to the EUR/USD exchange rate. If the EUR/USD rate were 1.5, you might predict that the euro is undervalued by 0.5 euros per U.S. dollar. This calculation could impact many financial choices you make, such as where to invest your money. NoteThe Big Mac Index was developed in 1986 by The Economist, a publication focusing on economics, business, finance, and science. As an investor, you can use the values to determine whether a currency is overvalued or undervalued relative to others. You can make trades based on comparing that data to the foreign exchange market. You can also measure changes in values over time to show the rate of change in inflation and to compare to official records. Limitations of the Big Mac IndexInvestors in the U.S. might not see much need for the Big Mac Index. There are already many respected price indexes available, such as the Consumer Price Index (CPI), which seeks to include all goods to look at similar metrics. The Big Mac index becomes useful in places where reliable indexes aren't available, perhaps due to manipulated government statistics or a lack of official, published data. In those countries, investors may have trouble comparing consumer inflation to exchange rates. TipThe Big Mac Index is useful, but it is just one tool. Investors should use it along with other ways of analyzing international markets before making any decisions about where to invest. Between 2010 and 2012, many economists believed that Argentina was modifying its official consumer price data to understate its true rate of inflation. The Economist used the Big Mac index to find that the average annual rate of burger inflation was 19%, much higher than the country's official 10% rate of inflation from January 2011. These insights could have helped international investors get a true idea of inflation when trying to value bonds or other securities that respond to inflation. While the CPI is a key measure of inflation, some economists believe that certain goods can provide a more accurate indicator. The CPI, they argue, can be skewed by certain categories or manipulated by some governments. There is a similar drawback to using the Big Mac Index. It only includes a
single item, which means it lacks the diverse data seen in other economic indicators that include many different types of products and services. Key Takeaways
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