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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 371.65

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To: Elroy Jetson who wrote (35000)	8/1/2008 10:21:05 PM
From: elmatador	Read Replies (2) of 217832

The Nobel Committee really needs to give a prize for monetary policy; from the above survey of mild or extreme inflation-producing sloppiness there can be no question that Brazil would win it and deservedly so. Finally Brazil, which in the past has indulged in the typical Latin American follies of excessive government spending, wild borrowing sprees, hopelessly sloppy monetary policy leading to hyperinflation and inadequate protection of property rights, particularly foreign property rights. Now things are different. Foreign debt has halved as a percentage of GDP since 2002, while the government's finances are in only modest deficit. Foreign investment is encouraged and its rights protected. Most impressive, while inflation is around 6%, because of high commodity prices, the benchmark Selic interest rate has just been raised to 13%. At that level, inflation will be squeezed out of the system and excessive borrowing will be discouraged. Thus when the commodities boom from which Brazil has benefited deflates, Brazil will be able to lower interest rates and continue domestic expansion without fear of running out of money. The Nobel Committee really needs to give a prize for monetary policy; from the above survey of mild or extreme inflation-producing sloppiness there can be no question that Brazil would win it and deservedly so. It is unclear why Brazil has since 2002 deviated from the usual Latin American track, exemplified by the basket-cases of Argentina, Venezuela and Bolivia. One can speculate that the honor of being termed a BRIC super growth market - quite undeservedly so, in 2003 - caused Brazil to attempt to live up to its new billing - like the wayward teenager who is straightened out by a teacher who values his achievements. atimes.com

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