Brazil reduced their foreign debts BUT at the same time issued new debts in local currency that bear a far more interest rate that the rate of the debts they reduced.

Just think of it ! Not very smart !
You could do more.
The financial world loves it and applauds !

A great autogoal !

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Referring to the previous guest post.

Doing this, it will keep the money in Brazil. This is what I call CONCENSUS.

Despite the higher costs, we want to depend less and less on foreign countries and the interest will be paid to Brazilian companies and civilians.(not for 100% of course)

This is will result im more spending and investing by Brazilians.



signed Leizo

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Not necessarily. With government borrowing the money there is less money to lend and that drives up interest rates which in turn reduces spending. There is a limit to the amount of money available and when the government borrows there is less for the economy. When government drives up interest rates by borrowing and thus lowering the supply of available funds, fewer businesses can borrow. If they cannot borrow they cannot expand and if they cannot expand they cannot employ more people. If they do borrow at the higher rates then the prices of their products go up, fewer people can afford them = less spending. Unlike business, government does not add value to what they borrow and so it is simply a drain on the economy when government sucks up the money.
As far as keeping it in the country, how does that work in your favor? Remember where government gets its money to pay these higher interest rates = you, the taxpayer. If it slows down the economy (as discussed above) then the government must increase taxes to pay the higher interest rates which reduces spending and investment. I agree there is some offset in that they interest sum stays in country but that is negated by the harm to the economy. You simply cannot have more spending money when you have to pay higher interest rates.
For example watch countries that lower their taxes and you will see total revenues in taxes actually increase because the economy increases, people have more money, businesses have more money. They add to the economy government takes from the economy.

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You might have a point with your theory. But if you take a look at Brazilian history, you will notice that we have paid huge sum of money in the past (interest). Now the foreign interest are low and Brazil should of course borrow that cheap money.

So what I want to say is that everything is about balance. Brazil should seek the appropriate balance between foreign interest and domestic interest.

I personally think that they should barrow more from domestic markets in spite of the hihger interests. Intersts will the be paid to brazilian companies and civilians.

Take a look at our banks here in Brazil. They will spend a total sum of $21 billion at home. This mean more employement here in Brazil.

this is only one of the many steps Brazil should take to reach its objective.

signed Leizo

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