Brazil and the Big Lie

The Big Lie is that governments with monetary sovereignty depend on loans and on tax revenue, when in reality they create their domestic spending money out of thin air. The Big Lie is the basis for the gratuitous austerity plague has raged worldwide since mid-2010.

When gratuitous austerity causes a recession, the right-wing solution is to increase the austerity. When increased austerity worsens the recession, the right-wing solution is to again increase austerity…and so on. This is true in all nations.

The purpose of these engineered recessions is to…

[1] Recessions widen the gap between the rich and the rest. Rodger Mitchell says that rich people do not depend on government spending as much as average people do. I disagree. Weapons makers, for instance, totally depend on government spending, as do banks that need government bailouts. Therefore austerity is only imposed on social programs that help average people. Meanwhile military spending continues to explode in volume. Austerity involves cuts in social programs and / or increases in taxes impose on the lower classes.

[2] Recessions reduce average people to debt slaves. When there is not enough money in general circulation, the scarcity forces average people to seek loans from banks, or from payday loan sharks, and so on. This causes money to flow upward faster. Thus, austerity juices the financial economy at the expense of the real economy. It juices Wall Street at the expense of Main Street.

[3] Recessions create a pretext for governments to privatize their operations and assets. That is, to give public assets to rich insiders, or sell public assets to them for a tiny fraction of the assets’ value.

It all hinges on average people’s belief that their government cannot create its spending money out of thin air, even though they know it can. This neurosis is global, and it is the engine of inequality.

Today we’ll see how the neurosis operates in Brazil, which is in a severe recession.

To explain what’s happening, I must comment on Brazil’s history.

After World War II, Brazil became vibrant and exciting. It was a prosperous and progressive nation whose government did not work for the rich alone. Inequality was not extreme. Average people were happy. The capital was Rio de Janeiro, but in the late 1950s the government built a new capital (Brasilia) in the west of Brazil. Everything in the new capital was clean, modern, efficient, and “futuristic.” The construction of Brasilia began in 1956, six months after the opening of the first “Tomorrowland” at Disneyland California.

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The USA regarded Brazil’s happiness and prosperity as a “communist threat,” (i.e. a bad example for other nations). Therefore in 1964, Washington helped Brazil’s oligarchs stage a military coup that gave all power to rich oligarchs. The military, in service to the oligarchs, subjected countless dissidents to torture methods taught to them by the U.S. and U.K. Corporate media outlets, owned by the oligarchs, depicted the 1964 coup as a noble defeat of the “communist threat.”

The Brazilian oligarchs regarded the new military dictatorship as protection against the poor and against non-whites. (From the 1800s to the 1800s, over two thirds of all slaves from Africa were sent to Brazil alone. Slavery was not outlawed until 1888.)

Brazil is 62% White (i.e. European), 21% Black (African), and 17% Native American.

The oligarchs changed Brazil’s economy so that it relied on exporting “primary products” (i.e. natural resources such as metal ore, poultry, timber, sugar, soybeans, and so on). The oligarchs did this because it allowed them to get richer faster. Populist programs of building cities don’t expand the fortunes of oligarchs quickly enough — but if you can get ownership of an iron ore mine, you can build a fortune fast, especially if there are foreign buyers of your ore. And when you can reduce politicians to being your puppets, you can increase your wealth exponentially.

This change in Brazil’s economy to an exporter of raw materials made Brazil dependent on imports of crude oil, petroleum products, auto parts, drugs and medicine, electronic components, bituminous coal, potassium chloride (to make crop fertilizer), and so on.

In other words, when your national economy relies mainly on exporting some things, your nation loses self-sufficiency in other things. If there is a strong demand for your exports, then your nation can get foreign currency with which to buy imports.  But if the demand for your exports falls, or if the international price falls, your nation is in trouble. It cannot buy imports.

Everything muddled along for thirty years. The rich got richer and the poor got poorer. In 2003, Luiz Inácio Lula da Silva became president, and launched numerous welfare programs that caused poverty to fall by 27.7% during Lula’s first term. One program, called Bolsa Família, distributes money to about 12 million Brazilian families even today. By February 2011, 26% of the Brazilian population was covered by the program.

This made Lula very popular with the lower classes. The oligarchs tolerated it because the oligarchs were became richer than ever by selling raw materials to China. As the USA moved its factories to China, the demand for Brazilian raw materials took off. Brazil’s GDP grew six-fold, until by 2012 Brazil had the 5th largest number of billionaires in the world. Many more billionaires than in other Latin American countries, and even more than the U.K. and Japan. Extreme poverty had been reduced, but extreme inequality became worse than ever.

Brazil’s exports became so huge that Brazil became a net creditor, meaning Brazil could lend to other nations in Brazil’s own currency.

…and then the bottom fell out.

The plague of austerity mania was released in mid-2010. Within a year it had infected most of the planet, causing the world GDP to fall. (President Lula left office in January 2011.) China’s demand for Brazil’s exports plummeted, causing Brazil to go from being a net creditor to a net debtor. Foreigners who sold to Brazil would no longer accept Brazil’s currency as payment. Brazil had to borrow foreign currencies in order to buy imports.

For average Brazilians, this caused unemployment, plus shortages in consumer goods. The shortages in turn caused inflation. The government responded to the inflation by imposing austerity. The austerity tripled the pain of average Brazilians. (But it widened the Gap between the rich and the rest.)

Brazil fell into a severe recession. Middle and upper class Brazilians, which are almost 100% white, started blaming the recession on lower class Brazilians, which tend to be darker. The whites also blamed the Worker’s Party, which is center-leftist.

White Brazilians began to march in the streets, demanding an end to the Workers’ Party, plus an end to the government’s anti-poverty programs. They are still marching today. As you can see below, they are no non-whites among them, even though non-whites make up half of Brazil’s population.

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When an economy goes into recession, and inequality becomes extreme, middle class whites in Brazil and every other nation display their country’s flag, because for them, “patriotism” means blaming all problems on poor people, and on non-white people. For them, any government program that helps the lower classes is “socialism,” and is therefore evil. Any help for non-white refugees is evil “socialism.”

This is why Wall Street and Tea Party clowns in the USA always display the American flag, and denounce “socialism.” In Europe, the white racists and the refugee-bashers carry their countries’ flags. It is the same everywhere.

Always the real culprits are the rich, their puppet politicians, and average whites who stupidly believe things like “The U.S. government is broke,” and “We must continue using the euro.”

The photo below is emblematic of the race-based and class-based protests in Brazil. Dated 13 March 2016, it shows a white couple with their poodle in Ipanema, one of the wealthiest neighborhoods in Rio de Janeiro. The wealthy white man, Claudio Pracownik, is the finance director of the richest and most popular soccer team in Brazil, the Flamengo. Behind him and his wife, their twin toddlers ride in a stroller pushed by a black nanny. The parents are elitists who hate the Workers’ Party for helping poor people and non-whites. They are on their way to an anti-Workers’ Party demonstrations held by white people, as we saw above. The man and his wife wear yellow and green clothes (the colors of the Brazilian flag) to show their “patriotism” (i.e. their hatred for the poor and for non-whites). The black nanny is dressed in the all-white uniform that rich Brazilians require their domestic servants to wear. The white uniforms identify blacks as inferiors, and as menial laborers.

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THE PETROBRAS SCANDAL

All political parties in Brazil from leftist to rightist are corrupt, and have been implicated in a massive scandal involving the state oil company Petrobras. White Brazilians condemn the Worker’s Party for its corruption, even though the white opposition parties are even more corrupt. The entire political system has been scandalized. Everyone is pointing fingers at each other.

The oligarchs are using the Petrobras scandal to attack the Workers’ Party and its social programs, even though the oligarchs are even more implicated in the scandal. All the corporate media outlets (owned by the rich) are attacking the Workers’ Party and its anti-poverty programs.  They want to impeach President Rousseff. Many whites are calling for another military coup.

(The anti-poverty programs do not cost anyone anything, since the Brazilian government creates the money for those programs out of thin air.)

Corporate media outlets in other nations (e.g. the USA and Europe) are likewise attacking the Workers’ Party and its social programs, even though – as I said – the Brazilian white opposition is even more corrupt. The corporate media outlets falsely portray Brazil’s protests as an entire nation against its president and its government, when in fact it is a race war.

This is a long post, so let’s pause to recap…

[1] After World War II, Brazil became a great country to live in. Average Brazilians were happy. The USA regarded their happiness as a “communist threat.”

[2] In 1964, Brazil’s oligarchs (helped by the UK and USA) staged a military coup that ended Brazil’s happy days, and began 21 years of brutal plutocracy. The government “disappeared” many people, tortured many others, and imprisoned still others.

[3] The oligarchs changed Brazil’s economy so that it relied on exporting raw materials. This made the oligarchs very rich, at the cost of Brazil’s self-sufficiency.

[4] Brazil exported many things, but had to import any other things.  To buy imports, Brazil needed foreign currency.

[5] When the USA moved its factories to China, it caused the Chinese demand for Brazil’s raw materials to shoot upward. Brazil’s GDP shot up with it, although most of the profits went to the rich oligarchs.

[6] The Workers Party in the Brazilian National Congress instituted social programs to ease poverty.

[7] When the global plague of gratuitous austerity caused the world GDP to fall, the demand for Brazil’s raw materials fell with it. Suddenly Brazil could no longer get foreign currency with which to buy imports. This caused shortages in consumer goods, which in turn caused inflation and unemployment.

[8] As the pain of the recession worked its way upward in the social classes, white Brazilians began to falsely blame their pain on the Workers Party and its anti-poverty programs. They blamed poor people and non-whites.  They started repeating the lie that the Brazilian government is “bankrupt” (even though the government can create limitless Brazilian reales out of thin air).  They used this lie to demand austerity (i.e. demand an end to the anti-poverty programs).

[9] The Petrobras scandal gave white Brazilians an excuse to demand the impeachment of President Dilma Rousseff and the end of the Workers Party, even though white politicians are even more implicated in the scandal.

[10] Corporate media outlets in Brazil and abroad (all of them owned by rich oligarchs) falsely portray Brazil’s protests as a nation against its corrupt government, when in fact it is a race war (whites against non-whites) and a class war. Rich oligarchs promote this war in order to keep everyone below them divided.

In an effort to placate the white middle and upper classes, President Dilma Rousseff started implementing austerity, i.e. she started cutting social programs. On 27 Nov 2014 she named Joaquim Levy to be her finance minister.

Levy was trained at the infamous University of Chicago which had brought neo-liberal “reforms to Chile after the savage 1973 coup by Pinochet. On 1 Jan 2015 Levy began a savage program of austerity, using the lie that Brazil needed a balanced budget.

Let me emphasize that. In Brazil, as in every other nation that creates its own currency out of thin air, right-wing politicians call for austerity by using the lie that the government must have a balanced budget.

On 14 Sep 2015 Levy presented an austerity plan that entailed $17 billion in deficit reduction (i.e. austerity) via cuts in social programs, and increased taxes on the lower classes.  Levy’s plan was resisted by the Workers Party in the Brazilian National Congress.

On 2 Oct 2015 President Rousseff (still trying to placate middle and upper class whites who are attacking her) announced more austerity. She said her administration would eliminate eight ministries, 30 secretariats, and 3,000 state-employee positions, in addition to cutting ministers’ salaries by 10 percent. The decision would mean R$200 million (US$50 million) in yearly savings for the Brazilian government – even though the government does not need revenue or savings, since it can create limitless money out of thin air.

Finance Minister Levy admitted that his austerity would worsen the recession and unemployment, but he said that these problems, caused by austerity, could be cured with more austerity. (Always more.) However he was continually opposed by the Workers Party in the National Congress.

On 2 Dec 2015, Finance Minister Levy resigned his post and took a job as the World Bank’s Chief Financial Officer, effective 1 Feb 2016.

Thus, President Rouseff is trying to placate middle and upper class whites by imposing austerity on the lower classes. When this caused her popularity to plummet among the lower classes, Rouseff brought in former President Luiz Inácio Lula da Silva, who had been wildly popular with the lower classes.

The white middle and upper class immediately attacked Lula for alleged corruption (even though white politicians are even more corrupt). Lula tried to placate them by agreeing to more austerity, but the whites smelled blood. They want President Rouseff and the Workers Party gone. They want Lula and his anti-poverty programs gone. Middle class whites mistakenly believe this will make their lives better. They mistakenly believe that the Brazilian government has a limited amount of domestic currency (the real), and that it is all being sucked up by social programs. A favorite saying among middle class whites is Não tem almoço gratis (“There is no free lunch”). (Sound familiar?)

Middle class whites falsely blame the recession on President Rousseff, and they want her to be impeached. On 17 March 2016, members of the lower house of Congress approved the creation of a 65-member committee to mount an impeachment. The committee will examine the issue over the next few weeks and make a recommendation on whether President Rousseff should or not be impeached. The final decision will be taken by the Senate.

At least half of the members of this impeachment panel are themselves under criminal investigation for corruption.

When President Rousseff brought in former President Lula to shore up Rousseff’s support from the lower classes, white elitists responded by preparing criminal corruption charges against Lula.

President Rousseff responded by making Lula her chief of staff, which will protect Lula from prosecution by Judge Sergio Moro, who is a white elitist. (As chief of staff, Lula can only be impeached by the Brazilian senate.)

On 17 March 2010 Judge Sergio Moro declared that President Rousseff could not do this because it would hinder his investigation of attack on Lula. The Rousseff administration has appealed Judge Moro’s decision.

Former President Lula has realized that his initial support for austerity did not placate the middle and upper class whites that hate Lula and hate his anti-poverty programs. On the contrary, middle and upper class whites only hated him more. And it caused Lula’s popularity to fall among the lower class. So now Lula opposes austerity.

FOREIGN VS DOMESTIC CURRENCY

One way that right wing elitists support the Big Lie is to falsely conflate foreign with domestic currency. If there are problems obtaining foreign currency, then the elitists falsely claim that the country needs austerity in the domestic currency. (This does not apply to the USA, which does all its business, foreign and domestic, in US dollars.)

When the demand was raging for Brazil’s raw materials, Brazil’s GDP became so strong that foreigners started accepting Brazilian reales for their sales to Brazil. Thus, Brazil did not need foreign currency with which to buy imports.

When the demand fell, and the world GDP with it, Brazil fell into a recession. Brazil must now borrow foreign currency in order to buy imports.

One way the Brazilian government borrows foreign currency is to sell sovereign bonds. In Oct 2015, as part of the elitist attack on the Workers Party in Brazil, the corrupt ratings agencies (Moodys, Fitch, and Standard & Poor) downgraded the Brazilian government’s sovereign bonds to junk status.  This forces the Brazilian government to pay a higher interest rate on the bonds it sells.

In other words it is an attack by the money masters, who downgrade the bonds of any government they think is too leftist and too populist.

The financial pundits use this attack to falsely claim that Brazil needs austerity (i.e. deficit reduction) in Brazilian currency, even though the Brazilian government can create an infinite amount of Brazilian currency. The pundits say that the only way to restore growth is via austerity (which kills growth) and via the mass privatization of public assets.

Foreign investors love austerity, since it gives them a chance to by public assets in Brazil (for example) for a tiny fraction of their value.

The government reduces the amount of money it creates out of thin air, and tells everyone that “there is no money.” Then the government says that public assets must be privatized in order to get money.

That’s where we are at the moment. Brazil is in a severe recession, caused by a fall in foreign demand for Brazil’s raw materials. Because Brazil has difficulty getting foreign currency, Brazil has difficulty buying imports. This causes shortages in consumer gods. The shortages cause inflation. Middle and upper class whites, plus the corporate media outlets, falsely blame the recession and the inflation on blacks and poor people, and on the Workers Party.

Now whites are using the Petrobras scandal to attack the Workers Party and its anti-poverty programs, even though the Petrobras scandal involves everyone on all sides.

And through it all runs the pretense that the Brazilian government is “bankrupt,” and cannot create its own currency out of thin air.

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5 Responses to Brazil and the Big Lie

  1. Steve says:

    Great info, thanks E.

    Like

  2. Narco-Capitalist says:

    Throughout Latin America whites are, on average, more affluent than people of other races. I can guarantee that many of Mexico’s elites (who are more than likely white) agreed with every single word that Donald Trump said when he launched his presidential campaign.

    Like

    • Trump’s words do not apply to Mexico’s elitists. They go wherever they want, whenever they want. I personally saw this when I was in Mexico. Borders and frontiers are only for average people, not the rich.

      Like

  3. Narco-Capitalist says:

    Mrs. Harris, how do you think we can take the power away from the rich? How do we make the government work for the most vulnerable? Or was George Carlin right when he said that the situation will never get better and we just have to accept it and be happy with what we have?

    Like

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