Originally Posted by
Koyote
This would be correct -- sort of. Higher inflation for the US$ means a lower exchange rate, which means it'll take more US$ to buy the number of New Taiwan Dollars needed to obtain that bike, or bike frame, or whatever. But in real terms (adjusted for inflation), it's a wash, since each dollar is worth less.
Reverse the logic for inflation of the New Taiwan Dollar, with the same net result in real terms.
In other words, flexible exchange rates should make all of these scenarios moot...As long as a few assumptions are met.
I think the rapidly rising standard of living in countries that produce bike stuff is making the cost of such things higher here. 65-70% of the price your shop charges for a bike is the price they pay the manufacturer. Much of that cost is the actual cost of production. Much of the cost of production is the labor rate in the country of manufacture.