I collected several articles this week that exemplify the incorrect reasoning that is endemic in the Brazilian news when it comes to how the economy works and/or what it needs. This bad math/logic is what is killing the economy. The trick is to learn how it is killing the economy and bet timely against it to win…
Who is this for? The rich. If you read the article you notice that they think this was something important to pass now. I would think so too, they are destroying the currency, it is damn well important if you are rich to get your wealth out of the Real! The poor, on the other hand, well, they are just going to have to deal with the “temporary” inflation caused by the curiously bad economic policies. Surely there cannot be more important things to be worked on now during the pandemic and depression… That’s not saying there are not good things on the project, I’m sure a century old legislation can benefit from an update, but you don’t hear “Oh I can’t make a foreign exchange” ever be mentioned as someone’s #1 problem…Besides, why would you do that when your money is losing value? To make the situation worse?? Why not wait until your currency is doing well??
The biggest worry here is where the money would come from. They created this fake/imaginary ceiling for the government’s expenses and now they don’t know what to do. The ceiling is an arbitrary number that has no meaning, and yet if we cross it all hell breaks loose… Practically the only good idea the government has right now is bound by this nonsense. Never mind that this type of expense was the mid and high classes’ hatred of the PT government, and one of the main reasons people wanted Dilma out and voted for Bolsonaro… Another ridiculous aspect of this is that they are thinking of funding it with money taken from other expenses, or from the economy itself… That makes no sense…If you are trying to add money to the economy by taking money from the economy, you are very bad at math and/or logic… That’s not how stimulus works! Anyways, if there is no new money going into the economy, this won’t help at all, so don’t place any bets on this increasing GDP…
These two guys are responsible for 100% of Brazilian’s pains. 100% of it. They should be tried for mass murder. Its plain criminal. I get Guedes, he comes from money, he knows he is screwing the people on behalf of his buddies, but Maia? What are his reasons for screwing everyone? Is he making money from the bad exchange rate? I suspect he is trying to undermine Bolsonaro to try to run for president on next election, but this is such an evil way to do it. Killing the people for it… This one quote from the article is the magic excuse for all the bad things they do: “Stabilization of the debt surely will be asked for by the long term INVESTORS“. The magical investors, the ruler of all things Brazil, the owners of all, the wise men, the ones who know what’s up… They are like the old men in tribes sacrificing young people into the volcano, they don’t know what the hell is happening, but people look up to them, and the story is good, so let’s sacrifice millions of Brazilians to appease the almighty INVESTORS! These guy were supposed to show up years ago, when does the lie get called? The real investors know what is happening, bet against the Brazilian currency, and are laughing all the way to the bank. They are the banks, currency traders, exporters, etc. Anyone that makes money from an increase in financial transactions or a devaluation of the Real!
So, lets take away the government’s power, give it to technocrats that follow an outdated faith in how the economy works, and while they are destroying everything let’s make it really easy to take our money our of the currency we are destroying. Oh, who needs this cushion of dollars that saves us from currency runs? If we get rid of that our dollar holdings will go up in value!!
Magic and lots of prayer!
Now this is interesting. The IMF used to just tell everyone to murder their population through austerity so the INVESTORS would be happy. They reformulated their Koolaid and now they changed their minds, they don’t want to kill so many people anymore. Yet, the economists who used to follow the IMF’s bad guidance religiously have drank the old Koolaid so much they are rejecting the new formula and keeping to the old useless traditions because, well, they are very convenient!
Sometimes someone understands how fiscal policy may help us…
And there goes our inflation with all the wealthy taking their money out, and the destruction of supply creating constraints:
And here is how confident the INVESTORS are in our future, with the interest rate curve clearly showing high rates in the future since no one thinks things are going very well: