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Gold Turned Upside Down

By Jeffrey P. Snider

After having been subjected to the serious temper of the "dollar" for much of the past few years, with requisite calm periods interspersed, the Brazilian economy is finally reaching the epic inevitability of it all. "Inflation" in January broke out of the "band" set by Banco do Brasil's policy target to the highest level, in the IPCA series, since 2011 (when, not coincidentally, most of this trouble all started).

To slow price increases, policy makers have raised the benchmark rate three straight times since Rousseff won re-election to 12.25 percent, the highest level in more than three years. Economists surveyed by the central bank Jan. 30 forecast the bank will raise the Selic another quarter-point by year-end as economic growth is set to slow to 0.03 percent. Some economists, including Itau Unibanco SA's Ilan Goldfajn, are predicting recession.

Brazil has been in no-growth for most of… Read More …