Post-2008 US monetary policy fueled Brazil’s boom via carry trade while deindustrializing its economy

Evidence

After the 2008 financial crisis, the United States government failed to construct a fiscal response (for example, boosting the economy by spending money on things like infrastructure and public services) and instead relied on the Federal Reserve to slash its rates to historic lows. This unleashed a wave of capital into the world (and especially into the tech sector) seeking returns. When it came to Brazil, the “carry trade” strategy—simply take out money with low interest rates and put it in a place with high ones—served to inflate the value of the real. This made it a bit cheaper for normal people to buy foreign goods or travel abroad for the first time; it also meant the deindustrialization of the economy, and it allowed Brazil to become the world’s sixth-largest economy. — Vincent Bevins, If We Burn, 314

Categorization

• SEED: An angle on how US monetary policy decisions ripple through emerging economies via carry trade, deindustrializing the Global South.
• XREF: connects to: Volcker’s US interest-rate hikes triggered the Latin American debt crisis and deindustrialization — Vincent Bevins, If We Burn: The Mass Protest Decade and…, 136; US post-2008 monetary policy deindustrialized Brazil while inflating its currency — Vincent Bevins, If We Burn: The Mass Protest Decade and…, 314

Broader Connections

• US post-2008 monetary policy deindustrialized Brazil while inflating its currency #corroborates (0.97) — Vincent Bevins, If We Burn, 314