Brazilian currency is called the real, which is the Portuguese word for the homographic English word “real.” Brazilian reals have been in circulation since July 1, 1994. But they were also in use from March 1994 until then — kind of. For those three months, the real was anything but real. It was, rather, pretend — entirely non-existent. The hope was that by creating a monetary system which did not have any currency representing it, they could save the Brazilian economy. And by most measures, it worked. Inflation was running rampant in Brazil in the early 1980s, climbing with no end in sight through the beginning of the decade, as seen by the first graph below. And then, things went from horrible to unimaginable — it spiked to over 6,000% (annualized) in January of 1990, as seen in the second graph, dwarfing the problems of the decade prior. The rate of increase slowed down soon after but was still very high, until July of 1994, when it spiked again. But after that spike, it quickly leveled off, and within a year, inflation was down to rates one would see in a typical, generally economically healthy country. The rampant inflation, in part, was caused by an economic … Continue reading Unreal Money