By Joe Martin
The longest- tenured foreign correspondent in Brazil is Mac Margolis for Newsweek, and he says he has seen it all.
He’s ridden the inflation roller coaster through peaks and valleys, changed currencies more times than he can count, and watched the country shift from its rigid dictatorship into the flourishing democracy it carries today. But the biggest question on his mind when he came to the country in the 1980s was, “Can I survive?”
Arriving with little knowledge of the culture, language or region itself, Margolis found himself stuck in the middle of a tumultuous time in Brazil’s economic history.
“What is fairly unique is the chronic and prolonged period of hyperinflation,” said Margolis. At one point, Brazil was seeing 2500% annual inflation.
“There have been episodes of hideous hyperinflation in the world, but I don’t know that there have been many countries that have had triple digit inflation or quadruple digit inflation for a decade or decade and a half.”
The hyperinflation, according to Margolis and other economists, was a result of the attempted price fixing the federal government tried to impose on businesses on all levels. Indexation, which attempted to raise wages as inflation rose, caused trouble for business owners who were losing money for the products they put on the shelf.
In 1994, when the Real, the current currency, took over, the country saw a shift in attitude with the way it handled its fiscal policy.
For Margolis, he noticed three major changes. The government reigned in spending, the Real was backed at one point with the dollar at a 1:1 ratio, and the country did away with indexation for good. In 2013, the Real is trading at just over 2 Reals for every U.S. dollar, but inflation is troubling the country yet again.
As Brazil jumps onto the world stage, with its growing economic status, as well as its developing tourism, Margolis sees the country trying to find its identity. It’s naturally considered a regional power, said Margolis, but “it doesn’t know what kind of power it wants to be.”
Brazil has developed a diplomatic track record, and while generally on par with the United States, isn’t afraid to disagree with the country. Brazil has dealt on its own with Iran in the past, proving it is not a South American puppet for the U.S., but at the same time it has worked with the United States on various energy and drug-trafficking issues.