I know this is remedial for you econ guys but here goes . . . If you know gdp is going to go up, but ppp is going to go down, would you want to buy or short that currency? Bonus question: Hypothetically, if I were expecting the US economy to completely collapse over the next 8 years, and china to go up by around 30 percent. What would be the best way to profit from that?
Two valleys are situated on either side of a mountain ridge. In one valley, the farmers are highly mechanized, and have been for years, and have harvested a rich crop for years. In the other valley, the farmers are just learning about rotation, efficient fertilizer deployment, no-till plantings, etc -- but they are far below the other valley's output. With which valley should you trade? It's immaterial. There are floods that threaten either valley that, if unpredictable, still occur with sufficient regularity to be foreseeable. There are storms. There are conflicts internal and external. There may too be unforeseen boons to either or both towns. The thing of it is, there is much more at play within and between the two valleys than native GDP, and although we can see stuff out there, we can't say *in*the*least*, which way things might go. The thing *I* might consider is, putting a 5-and-dime on the mountain pass between 'em.