Hi, friends! Sorry we're late! You know we do this out of love, right?
On this episode we talk about Ouija boards, the creation of the Brazilian Real, and how all money is stupid. We also recorded this before the U.S. results came out, so bare with us.
As always, we'd like to thank Uoster Zielinski for the graphic design, and all essential workers out there, keeping us safe.
So, quick and painless. The Real was the 6th economic plan in 10 years, and rather than just change the currency and freeze inflation, it re-structured the economy in several ways:
1. control over public finances, including involving the Legislative in the approval of the yearly budget
2. no more direct access of the Executive to a single bank account (to be fair, both these steps had been happening since 88)
3. renegotiation of debt
4. anchoring the currency and prices to the U.S. dollar, rather inflation
5. increased interest rates to attract investments and create a dollar reserve and ensure near-parity between the new currency and the dollar
6. last, but not least, the creation of the Real Unit Value (URV, in Portuguese), a variable rate between the not-yet released Real and the existing currency, the Cruzeiro Real; it was adjusted and increased every day, so while something would cost more in CR$ it didn't in URV
7. no more printing money
8. taxes increase
9. cut in credit
10. cut in spending.
In 1 March 1994, 1 URV = CR$ 647,50
In 30 June 1994, the day before the release of the Real: 1 URV = CR$ 2.750,00
These are the three presidents that have their names attached to the Real somehow: Itamar Franco, the one who didn't get the credit for it and was super bitter about it, FHC, who got way too much credit for it, and Lula, who rode the wave of economic stability and growth.
This is a legit 22-minute interview with then Finance minister FHC explaining the URV over and over and over again on Sílvio Santos, the second largest Sunday viewership in the country.
Before these guys, we got José Sarney, who was Tancredo Neves's widow and Fernando Collor, who resigned before being impeached and was replaced by Franco. Sarney was the guy who froze prices and had citizens wearing buttons and fulfilling their patriotic duty of tattling on stores that increased prices. Collor definitely won because he was good-looking.
Right now, the Real is through the roof, there is no stability, and inflation is high, but nowhere near the 6.800% a year of 1990. R$100,00 back in 1994 had the purchasing power of about R$624,00 today. Things are being exported and we are having trouble finding them, because it's better to sell them overseas. People having been using credit cards and saving, rather than spending paper-money, which is the reason stated by the Brazilian Central Bank for the release of a new note, worth R$200,00.
Lastly, a Ouija board is a silly game you can buy at Amazon: