== Swiss Franc is most overvalued currency
[1] http://www.economist.com/blogs/graphicdetail/2012/01/daily-c...
The actual explanation is a lot simpler; McDonalds employees are more expensive in Switzerland than in the US. You can see the same effect where I live, in Norway.
Up to transaction costs (inc shipping) and trading restrictions, this really should happen, so it's interesting to explore why it doesn't. Typically the culprits are artificial limitations (e.g. international trade restrictions) or low-value goods where shipping costs are large relative to the cost of the item, or goods which spoil easily and so can't be easily shipped.
If you can't explain the disparity with transaction costs and trade restrictions, then there must be some other reason for CHF being so high relative to the USD. One possibility - CHF is viewed as a hedge for various risks (inflation, market crashes). It is typically anti-correlated with the S&P500, for example, and correlated with market volatility, so it's good to be holding it in a crisis. The same applies to JPY, and the opposite applies to AUD and CAD, which are seen as risk-on currencies.
In my experience as a Norwegian, the parity argument isn't even close to true in the real world. There are lots of non-perishable goods here which are imported but are a lot more expensive than they are in the US. For reference, there is a 25% VAT on everything and there is occasionally an import tariff on the order ot 5%. Also some special taxes on vehicles, tobacco, alcohol and fuel, but I'll keep those separate.
Most goods here are a lot more expensive than abroad. Clothes and shoes are 2-3 times more expensive than in the US. Ditto for furniture and most non-perishable goods you would buy in a store. All food is 2-3 times more expensive, even imported, canned goods. This is in line with the labor required to stock and operate a store. Electronics are usually ~30-40% more expensive than abroad if you get them in the right place, which does more or less match the parity theory. My guess is that this is because buying these goods on the Internet is a viable option (in contrast to groceries, clothes, shoes, food, medicine, furniture etc). Hence these retailers are forced to conform, or go out of business. I am not sure how they are able to do this, whereas a clothing store or a supermarket is not. But this is what I observe. The cheapest electronics retailers are very low on staff and high on automation.
Long story short, locally labor-intensive products are obviously a lot more expensive in expensive countries. But higher salaries also have a very large effect also on the cost of imported goods, because there is a lot of labor involved during the shipping, import and sales process. If you are able to automate away some of this, you have a massive business opportunity. But it's a very obvious opening, so it is not a trivial task.
I understood I was getting 'western' luxuries in an expensive city, but it really drove home the concept of "cost of living" someplace moreso than abstract calculators. :)
1. Automatic drink maker: http://www.youtube.com/watch?v=PgiT5b8Z5UE
2. Automated drive through machine: http://www.youtube.com/watch?v=Nxz6DSwL17s
3. Electronic order terminal: http://www.youtube.com/watch?v=UB4wqyVRn7o
4. Full on vending machine convenience stores: http://www.nytimes.com/2003/11/13/us/vending-machines-don-t-... (Failed, or were reduced to Redbox?)
Some projects take off, some fail. I like the automated order machines, but maybe they confuse too many people.
They probably don't roll all this out super fast, because being as large as they are, there's enormous risk in changing everything over night. I'm not sure, they may have to balance the shiny new methods against the interests against franchisees, who don't want to constantly retrain employees. But probably (hopefully) most of the good ideas are being tried out in some McDonald's somewhere.
They probably don't yet have "the robot that makes 360 gourmet burgers an hour," http://motherboard.vice.com/blog/meet-the-robot-that-makes-3...
But maybe it's easier to experiment with things on the margin at that size, so replacing your entire burger process probably lags a few years behind the technology.
You can say the same for any corporation or institution out there. Why are colleges still teaching the same way since 1850?
So, in terms of this limited real-asset convertability, yes it would be true (see footnote above).