"The U.S. dollar's purchasing power in Brazil had the largest drop in the last eight and half years from seven Latin American countries (see table [to the left]). One of the consequences of the result, for example, is the fact that on December 31, 2002, in Brazil, it was possible to buy a basket* with $ 100.00 and on last Tuesday, five days, the same U.S. $ 100.00 would buy only a quarter of the basket."
--------------------------
*A basic "basket":
". . . is defined as a set of products that an average family of four persons (two adults and two children) usually needs for a month, the Cesta Básica is designed to meet the basic nutritional requirements of the country's long-estabilished diet which starts with rice and beans and almost anything else is extra."Here's a list of what is in one version. [They vary a bit by region. A kilo = about 2.2 pounds.]
"10 kilos of Rice
5 Kilos of Beans
5 Kilos of Sugar
4 Cans of Oil [basic vegetable cooking oil]
2 Kilos Flour
1 Kilo Corn Flour
1 Kilo Manioc Flour
2 Cans of Sardine
1 Can of Instant Milk Powder
1 Kilo Spaghetti Noodles
1 Tomato Paste
1 Can of Peas
2 Kilos of Salt
1 Kilo Coffee
1 Package of BOMBRIL [steel wool]
250 Grams of Margarine
1 Can of Guava Paste [like jam]
5 Bars of Washing soap
1 Dish Detergent"
2 comments:
And the Real has been able to remain more valuable against the dollar after floating. The politics on the ground remain in doubt, but it seems the basic policies in play in Brazil offer good evidence of the value of sound monetary policy.
.
Good comment. And it's interesting that even basket case Mexico has a currency that has gained over the dollar.
Brazil keeps the value of its currency high by super-high interest rates that attract foreign investment and so they have a big stash of dollars to dump in the market if need be. Though there hasn't been much need of that lately with the U.S. self-destructive economic policies.
The Brazilian economy is growing despite government employment benefit mandates and the near impossibility of letting an employee go without having to pay substantial penalties.
Part of that growth is due to the fact that Brazil is eager to use its natural resources (e.g., oil) and part is due to the entrepreneurial spirit of many of its people.
Post a Comment