I have to work 10% harder this year

The man who destroyed my previous employer (or at least he spearheaded the destruction) invented this illusion of 10% earnings growth every year. That kind of corporate BS is NOT what I’m talking about here. In my case, it’s a plain and simple truth: if I want to have about equal income every year that I’m in Peru, I have to work a good bit harder every year.

The reason is that most of my work as a contract pilot or consultant is paid in US dollars, but my groceries are paid in Peruvian Nuevos Soles.

And here’s how the US dollar has been fairing against the Nuevo Sol this year:

US$ vs Peruvian Nuevo Sol - 1 year chart

US$ vs Peruvian Nuevo Sol - 1 year chart

And 5 years:

US$ vs Peruvian Nuevo Sol - 5 year chart

US$ vs Peruvian Nuevo Sol - 5 year chart

View charts at XE.com.

Here’s an article about Peru’s central bank as well as the central banks of other so-called developing economies taking measures to prevent their currencies from rising too much:

And here are Peru’s foreign currency reserves over the past 10 years, standing at around $40 billion at this moment. Chart shamelessly robbed from IKN:

Peru foreign currency reserves

Peru foreign currency reserves

Now foreign currency rate swings are nothing new and I am not predicting the demise of the US dollar or the end of the world here. But it should come as no surprise that consistent near-zero interest rates and monetary easing (printing money) in the US will erode its currency’s value.

When I was a young boy in the early 1980s and Belgium developed large budget deficits and high unemployment, I could not understand why the government just didn’t put all the unemployed people to work printing more money, kill 2 birds with 1 stone.

No matter what the guys in stuffed suits tell you, how they saved the world and you owe them eternal gratitude all that, the fact remains that some future generation in the US (mostly) will have to deliver $40 billion of goods and services to future generations of Peruvians.

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3 thoughts on “I have to work 10% harder this year

  1. Nice Article,
    The things I learned in the recession are that you should have your money in three things:
    1. Education (they can’t take it from you unless they cut off your head)
    2. Land (it’s always going to be worth something…no matter if they’re trading in Dollars, Euros, or Ameros)
    3. Gold (get some bars and hide them under your pillow.

    I think escaping to Peru has already put you ahead of the game. The charts don’t lie. Buy some property in Peru right now, I hear the land in Mancora is still cheap!

  2. I agree that land in Peru still seems like a good long-term investment. With the average population so young and the economy doing reasonably well, I would expect the demand for housing and infrastructure to stay high. It’s not like in the US where everyone was “flipping” properties to make money, over here there’s a practical need for more and better housing.

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