Real Plan — the currency against the people

Image: Daniel Dan


Even just at the domestic level, currency can also be part of an intricate mechanism for generating and reproducing inequalities

On July 1, 2024, the thirty-year anniversary of the Plano Real was celebrated. For the masses of Brazilians constantly plagued by galloping rates of inflation for more than a decade (eventually configuring a situation of hyperinflation), the new currency provided a very welcome breather.

Today, however, three decades after its launch, the Brazilian currency has lost around 90% of its original purchasing power.[I] However, it would be a mistake to think that the trajectory of real prices is unique in any way. In fact, it is common for the value of fiat currencies to erode over time. Inflation does not represent an exceptional state of affairs: it is chronic and endemic.

This is not a simple, monocausal phenomenon, and can result from quite different factors, often deeper than the ephemeral whims of the financial market reported daily. It is usually the result of structural conditions. An example of this is the banking system that existed in Brazil before the promulgation of Law nº 4.595/64,[II] when there was no Central Bank in the country. At that time, there was an accumulation of the functions of Commercial Bank and Central Bank in the figure of Banco do Brasil, resulting in a monetary control system that was very favorable to credit inflation.

Banco do Brasil multiplied credit inflation by basing its loans on the inflow/deposit ratio, receiving, as deposits, the majority of inflows from commercial banks, and operating with a very low level of inflows. Furthermore, monetary policy at the time was very dependent on the executive power, since all members of Banco do Brasil were dismissible. ad nutum by the President of the Republic himself.[III]

For certain sectors, high inflation rates may even be advantageous. This is the case of large agro-exporters, for example, for whom it is advisable to invest capital in the form of a devalued currency and pocket the return on investment in dollars. Thus, inflation becomes synonymous with profit, and the great economic expressiveness of the agro-export sector in Brazil gives it a certain weight in terms of determining national monetary policy, being able, if desired, to encourage the promotion of inflation to the detriment of the masses of salaried workers in Brazil, whose problems do not end there: basic consumer products, such as rice and beans, for example, suffer price fluctuations not only due to inflation itself, but also due to the relative scarcity generated by the priority that farmers give to foreign market, much more profitable in inflationary circumstances.

Currency is far from being an axiologically neutral technology, a mere intermediary object of exchange. It is difficult to think of a better counterexample to the supposedly apolitical nature of money than the hegemony of the dollar in global finance. We know, of course, that it is not a mere coincidence that inflation in Brazil is usually expressed in terms of the exchange rate of the dollar in reais. This is, evidently, a direct reflection of the economic and political influence of the United States on the international scene, where the dollar is established not only as a unit of measurement and store of value, but also as a geopolitical instrument for projecting power.

Dependence on the dollar directly impacts the monetary policies of other countries, forcing them to align themselves with fluctuations and decisions made by the dollar. Federal Reserve, the US central bank. Furthermore, the dollarization of emerging economies often exacerbates economic inequalities and vulnerabilities, highlighting the complex interdependence between currency, sovereignty and global hegemony.[IV]

Even just at the domestic level, currency can also be part of an intricate mechanism for generating and reproducing inequalities. In fiat currency systems – that is, which have no backing or use value – the costs of issuing money are very low, tending to zero, which makes such issuance irresistible. Inevitably, this results in some degree of wealth redistribution, since the currency does not reach the hands of all economic agents at the same time. The first recipients of newly issued money have the advantage of having it available before its widespread distribution, that is, when current market prices do not yet reflect the emissions.

In other words, the speed of inflation is necessarily less than or equal to the speed of money.[IN] When the currency is effectively used and begins to circulate, its greater availability results in inflation, eroding the purchasing power of late users. The first users of the issued currency receive it directly from the source (the banking system), in the form of loans. Now, those who have the greatest chances of getting loans from banks are the richest, who offer the best guarantees and are better able to pay off their debts. Therefore, in addition to the difference in absolute quantitative income between rich and poor, inflation means that, in practice, the currency used by “owners of big money” is different from that which circulates among the population. Here, the fiduciary system takes on the contours of a very large-scale pyramid scheme: the pyramid of trickle-down economics.[YOU]

Inflation is not blind arbitrariness, something democratic that affects everyone equally, without prejudice: it is known that its preferred victims are the poor. Due to its low issuance costs, it is expected that there will be a constant increase in the supply of circulating currency, and a consequent increase in market prices. Therefore, the tendency for the future is that there will be an increasing economic inequality between the richest and the poorest, since their wealth is different not only in quantitative terms, but also in “qualitative” terms.[VII]

As already explained, this is not a simple static quantitative concentration, ignoring inflation, but a fluctuation in the value of the currency itself over time that benefits those who are able to acquire it first. It is a mechanism deeply integrated into our monetary system, whose very architecture, one could say, conditions it to operate against the people.

It becomes clear that currency is not just an innocent store of value or means of exchange, but something subject to manipulation or mistaken regulation in the context of the market economy. Brazil is a country that has historically had infamous levels of socioeconomic inequality. Even though there is, in absolute terms, a marked maldistribution of income, there are much more subtle mechanisms of wealth concentration.

Of these, perhaps the main one is precisely inflation, a chronic problem whose impacts fall on different social sectors in a deeply unfair way, not only in Brazil, but in the world as a whole. It is an integral feature of contemporary monetary systems, intended above all for the metabolic maintenance of financial capitalism. As for the people, they are left with the remains of this metabolism, like worms eating debris at the dark bottom of the ocean, condemned to never see the light of the sun.

*Eberval Gadelha Figueiredo Jr. holds a bachelor's degree from the Faculty of Law at USP.


[I] Regarding the devaluation of the real in the last thirty years, see:

[II] The full text of Law No. 4.595/64 is available at:

[III] On the dynamics of monetary control in Brazil prior to Law No. 4.595/64, see: GUDIN, Eugenio. Principles of Monetary Economics. 9th ed., Rio de Janeiro: Agir, 1979, p. 279-293.

[IV] On the hegemony of the dollar in global finance, see: Brown, B. A 100 Years of Dollar Hegemony. Atl Econ J 48, 413-419 (2020).

[V] Velocity of money, also called velocity (of circulation) of currency, is the average frequency with which a monetary unit changes hands in a given period of time.

[YOU] Trickle-down economics, which can be translated as “trickle down economics”, is the idea that the spending of the richest “trickle down” society down, benefiting those most in need. Something like this actually happens, but, as we have seen, the “trickle down” wealth is already spent and wasted, in the form of inflated money. For more information, see:

[VII] This “qualitative” difference between the wealth of rich and poor does not only concern the different assets in which the value is stored, but also the inflated nature of the currency that reaches the poorest, in relation to the its original value when issued and pocketed by the rich. The attentive reader will notice that, in fact, this difference is also quantitative (which justifies the use of quotation marks), but it does not concern the total size of the asset, but rather the monetary unit itself, so to speak.

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