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Brazil is worth studying!

With all the excitement about the growth of China and the outsourcing to India, there is little US press and public attention to other areas. I’d suggest that Brazil is a country definitely worth paying attention to and studying. I clued into this through a set of programs on NPR.

Today for instance, on their travel program, they explained that Brazil is now one of the ten largest economies in the world and is growing rapidly. And with so many new natural resources (oil for instance), there’s every reason to think that it’s fastest growth is ahead of us.

The story that really caught my interest was the NPR story on how four friends in grad school tricked the entire country of Brazil into adopting a stable currency.

Here’s the background. Brazil from the 80s on has suffered from ongoing extreme inflation. Extreme inflation means 80% inflation per month. What this means is that on a daily basis, a sticker man would walk around each store repricing everything and so people tried spend their money immediately before the prices went up.

Governments would come in promising to free prices and stop printing money. But this always failed and government after government fell. Soon people became convinced that the government was helpless to stop inflation and the inflation was in place for apparently forever.

I won’t try to paraphrase the whole broadcast but I would strongly urge everyone with an interest in economics and a high school student ready to learn such things, to learn to this story.

On a related note, a family might study why such an interesting story was not covered in the mainstream US press at all. We hear a lot about natural disasters. And we hear about the Chinese economy a lot. The country seems fascinated and terrified by the idea that the Chinese economy is about to become bigger than ours. Guess what, the European Common Market is already a bigger economy than the American one and it’s made no particular difference to our way of life. When the Chinese one surpasses ours, it won’t make much difference either. But to return to the initial point, how does one, who wants to be well-informed about the world, get the news and analysis. I listen to the BBC and NPR. What do you do?

One Response to Brazil is worth studying!

  1. webmaster says:

    I’ve now read the comments about the Brazil story and I should add that the gist of them is that the story is at least an oversimplification if not totally misleading.

    The key points (from the comments) is that this was one of a number of factors. Secondly, that this is far from a unique situation. Usually, the dollar or another external stable currency is used as the stabilizing accounting unit. And third, the comment has attracted all the ire of people who feel that the economy policies of the US have been wrong and immoral etc since we the 1920s.