How Fake Money Saved Brazil

[bethers]

NPR's Planet Money recently did an interesting story on how Brazil kicked its
high inflation.

http://www.npr.org/blogs/money/2010/10/ ... ved-brazil

[MediumTex]

Bloomberg has Brazilian one year government bonds yielding 11.27%.

If an 11.27% yield on a one year note reflects current inflation, I would hate to have seen the inflation before they "kicked it." 

[craigr]

The cruzeiro currency went away and they are now on the Real after some other currency hiccups in between. When I was down there several years back inflation was well below 10% but I didn't think it would last.

The only way to fix currency problems and build trust is to issue money that can't be debased. Unfortunately for Brazil, they have a propensity for corruption and printing money much more than other countries.

[Pkg Man]

I think some of this is relative.  Currently inflation in Brazil is running less than 5% and is not forecast to rise much above that.
http://www.bloomberg.com/news/2010-10-1 ... 4-92-.html

While this would be fairly rapid for the US, I don't think it is for Brazil.  The big problem with inflation is not necessarily the absolute rate, but rather whether it is rising or not. 

While one never knows what a future government will do, I was encouraged that Lula, the left-wing President during the past eight years, practiced moderate economic policies.  Maybe they can keep it going for a while.