5 ms·

> The fact it worked doesn't make it something more than just yet another inflationary government currency. Calm down, Michael Saylor. Not only we are talking

> The fact it worked doesn't make it something more than just yet another inflationary government currency. Calm down, Michael Saylor. Not only we are talking about the 90's here in a country that barely had dial-up internet at the time, you are also confusing monetary policy with economic policy. > I'm not sure what it means to "de-index" the economy. Because of inflation, most people would only agree to long term contracts (like salaries, rent, utilities) and investments if the prices were adjusted to a previously defined index. Eg., property owners could have in the contract that the rent would increase monthly by 30%, and that this would be revised every 6 months (or year, or whatever). Because of high inflation, renters would take that without even batting an eye. They would also have their salaries indexed as such, so all prices would increase all the time. Basically, inflationary inertia. This inertia would also affect government contracts, public sector employees and even your tax returns. The government couldn't simply just say "ok, we are not printing any more money", because they had obligations done in the past. So, it was with URV where they could say "Make all the contracts with prices denominated in URV and forget the cruzeiro-indexed readjustments". This is what means to "de-index" the economy. > To me it sounds like the government just forced it on everyone until they got used to thinking in terms of real prices. Well, yes to an extent. But the alternative was much worse: the government was schizophrenically forcing price controls and putting preset price indexes on some sectors. Price controls brought nothing but empty shelves in the supermarkets (because producers would rather not make something than being forced to make it at a loss) and the indexation was only good for the rich people who could invest. > Just yet another stupid problem created by governments irresponsibly printing money. Again, you are confusing monetary and economic policy. Like you said, the US is printing money like crazy; but no sane person worries about them getting into hyperinflation. The Eurozone is the same, Japan's has now almost 10 years of Abenomics and still does not even get close to 2% annual inflation. Take it from someone who is so into crypto and DeFI that I am actually having problems with my accountant to file my taxes this year: It's very easy to try to reduce all complex problems into one single variable, but "governments are stupid because they print money" is not a smart take.

matheusmoreira 6y ago
> This is what means to "de-index" the economy. I see, thanks. > Well, yes to an extent. Then we agree. > Like you said, the US is printing money like crazy; but no sane person worries about them getting into hyperinflation. It probably won't reach insane numbers such as 1000% but it'll certainly become worse than what it was before. > "governments are stupid because they print money" is not a smart take Are you saying the article we are commenting on is wrong? Here's what it says: > The problem went back to the 1950s, when the government printed money to build a new capital in Brasilia. > By the 1980s, the inflation pattern was in place. Am I not supposed to conclude that government money printing was the root cause of all this hardship?
- rglullis 6y ago
  > It probably won't reach insane numbers such as 1000% but it'll certainly become worse than what it was before. Worse by what metric? You can not look only at inflation when establishing economic policy. An inflation of 25%/year and full employment and economic growth is certainly better than 3%/year with 10% unemployment and zero growth. Sure we'd like inflation to be as low as possible, but at the same time this should not come at the expense of everything else. > Am I not supposed to conclude that government money printing was the root cause of all this hardship? The problem is not in the "money printing" (monetary policy), but in taking whatever resources the government had and deciding to put them into building a city like Brasilia in the middle of nowhere (economic policy). It wouldn't matter if JK had the resources already and Brasil was flush with resources, or if he managed to convince people to borrow him the money at low interest rates: Brasilia was and is a bad idea. Just like Brazil's eternal dependency on commodity exports and lack of basic infrastructure investment, or its centralization around SP-Rio for economic development, or not doing reforms to get rid of the über-privileged public sector employees, or politician's constant use of the state-owned companies as a way to distribute power to those that stay aligned with them. Just like so many other million things that happen in Brazil and that leads to this mismanagement. So, to sum up: this "conclusion" you are getting to is a leap of logic. You can not conclude that all and any money printing will lead to eventual catastrophe and rampant inflation. Catastrophes happen when bad economic policies are in place.

matheusmoreira 6y ago

> This is what means to "de-index" the economy. I see, thanks. > Well, yes to an extent. Then we agree. > Like you said, the US is printing money like crazy; but no sane person worries about them getting into hyperinflation. It probably won't reach insane numbers such as 1000% but it'll certainly become worse than what it was before. > "governments are stupid because they print money" is not a smart take Are you saying the article we are commenting on is wrong? Here's what it says: > The problem went back to the 1950s, when the government printed money to build a new capital in Brasilia. > By the 1980s, the inflation pattern was in place. Am I not supposed to conclude that government money printing was the root cause of all this hardship?

rglullis 6y ago
> It probably won't reach insane numbers such as 1000% but it'll certainly become worse than what it was before. Worse by what metric? You can not look only at inflation when establishing economic policy. An inflation of 25%/year and full employment and economic growth is certainly better than 3%/year with 10% unemployment and zero growth. Sure we'd like inflation to be as low as possible, but at the same time this should not come at the expense of everything else. > Am I not supposed to conclude that government money printing was the root cause of all this hardship? The problem is not in the "money printing" (monetary policy), but in taking whatever resources the government had and deciding to put them into building a city like Brasilia in the middle of nowhere (economic policy). It wouldn't matter if JK had the resources already and Brasil was flush with resources, or if he managed to convince people to borrow him the money at low interest rates: Brasilia was and is a bad idea. Just like Brazil's eternal dependency on commodity exports and lack of basic infrastructure investment, or its centralization around SP-Rio for economic development, or not doing reforms to get rid of the über-privileged public sector employees, or politician's constant use of the state-owned companies as a way to distribute power to those that stay aligned with them. Just like so many other million things that happen in Brazil and that leads to this mismanagement. So, to sum up: this "conclusion" you are getting to is a leap of logic. You can not conclude that all and any money printing will lead to eventual catastrophe and rampant inflation. Catastrophes happen when bad economic policies are in place.