Post on 05-Dec-2014
description
http://www.flickr.com/photos/11118948@N00/173169697/
The Fake Currency That Saved a Nation
Marcelo SomersMedia Product Manager
Sabre Holdings@marcelosomers
why am i here?
that’s actually my cousin...
Fake Money Saved Brazil...
in the late 80s,
Brazil had a bit of a problem
the inflation rate hit 80%...per month!
that means if eggs cost $1, they’ll cost $2 a month later.a year later, they’ll cost $1,000
grocery shopping wasn’t much fun...
• A freezer became your best friend• Prices changed throughout the day• Products would disappear
there were a few perks...
0
750
1500
2250
3000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Cons
umer
Pric
e In
dex
http://www.indexmundi.com/brazil/inflation_rate_(consumer_prices).html
0
750
1500
2250
3000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Cons
umer
Pric
e In
dex
http://www.indexmundi.com/brazil/inflation_rate_(consumer_prices).html
huh?
Attempt #1 - 1986the cruzado plan- General price freeze
- Wage readjustment and freeze
- Readjustment and freeze on rents and mortgage payments
- A ban on indexation
- A freeze on the exchange rate
Attempt #1 - 1986the cruzado plan- General price freeze
- Wage readjustment and freeze
- Readjustment and freeze on rents and mortgage payments
- A ban on indexation
- A freeze on the exchange rate
Failed
Attempt #2 - 1987the bresser plan
Attempt #2 - 1987the bresser planFailed
Attempt #3 - 1989the summer plan
Attempt #3 - 1989the summer planFailed
Attempt #4 - 1990the collor de mello plan
Attempt #4 - 1990the collor de mello planthis one actually sounded pretty good...
- Removed restrictions on free enterprise
- Increased competition
- Privatized public enterprises
- Boosted productivity
Attempt #4 - 1990the collor de mello planthis one actually sounded pretty good...
- Removed restrictions on free enterprise
- Increased competition
- Privatized public enterprises
- Boosted productivity
Failed
lesson learned...you can’t centrally plan an economy
Hurray Free Markets!
http://3.bp.blogspot.com/_x1Xe0kyzOQs/TEZsxx1XYoI/AAAAAAAAAaQ/6qFENwk98FA/s1600/simex3a.jpg
what can a government
control?
what can a government
control?
fiscal policymonetary policy
Quick Economics 101 Reminder...Monetary Policy: the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest to attain a set of objectives oriented towards the growth and stability of the economy.
- Open Market Operations- Discount Rate- Reserve Requirements
Fiscal Policy: the use of government expenditure and revenue collection to influence the economy.
Plano Real4 drinking buddies who created a fake currency and saved an economy.
hardly your average drinking buddies...Gustavo Franco - PhD Economics, HarvardPérsia Arida - MIT EconomicsEdmar Bacha - First Brazilian to receive a PhD in Economics @ HarvardPedro Malan - PhD Berkley
You have to slow down the creation of money. But, just as important, you have to stabilize people's faith in money itself. People have to be tricked into thinking money will hold its value.”
‘‘http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil
Unidade Real de Valor (Real Value Unit)
the fake currency
July 1, 1994
modern-day Brazil
Fernando Henrique CardosoPresident, 1995 - 2003
Privatization of enterprises
http://www.scielo.br/scielo.php?pid=S0034-71402005000200001&script=sci_arttext
‘‘ The results indicate that these companies became more efficient after privatization. In particular there was an increase in profitability and operational efficiency. Apparently, the loss of financial support from the state has a major impact on the financial structure of companies, we observed an increase of current liquidity and a reduction in long-term debt. ”
embraer
modern globality
http://en.wikipedia.org/wiki/File:Lula_-_foto_oficial05012007_edit.jpg
Luiz Inácio Lula da SilvaPresident, 2003 - 2010
Bolsa Familía(family allowance)
provides a monthly allowanceto families whose children are vaccinated and attend school
Bolsa Familía
For families with per-capita income below R$140/month:R$22 ($12) per child attending school (max 3)+ R$68 for families with per-capita income below R$68/month
Bolsa Familía
Poverty27.7% decline during Lula’s first term
Bolsa Familíadoes it really work?
my opinion
...
2010 Elections
vs
Dilma RousseffWorker’s Party (PT)
José SerraBrazilian Social Democracy
The Results
Final thoughts on Brazil...• Censorship• Communism/Marxism• De-Privatizing Companies
Final thoughts on Brazil...• Amazing investment growth• Taxation Meter (increase in taxes 3 months ahead)
Can Brazil continue its amazing success?
One more thing...
the forever recession
questions?
thanks!@marcelosomers
blog.marcelosomers.comslideshare.net/msomers