Meirelles: “there is no risk of inflation in this situation”.
On Wednesday (8), Henrique Meirelles, São Paulo’s Secretary of Finance and Planning, said that it is time for the federal government to start “printing money” to rebuild the economy during the crisis caused by the new coronavirus.
In an interview with BBC News Brasil, Meirelles stated that the economic downturn will be brutal and that, therefore, there is no risk of inflation if the Central Bank “prints money”.
“The Central Bank has great scope for expanding the monetary base, that is, printing money, in the most popular language, and, with that, restoring the economy. There is no risk of inflation in this situation, ”he said.
Despite being an advocate for controlling public spending, Henrique Meirelles says the quarantine will not work if people are in the dilemma between staying at home and not eating. “We need to get money to people.”
Still in an interview with the BBC when asked about the increase in public debt Meirelles replied:
“Look, the lesser of evils. What is the alternative [ao aumento de dívida]? The alternative is an economic collapse, which is worse, because then we will have further increases in debt. Because even then, GDP falls, and debt as a percentage of GDP already increases mathematically. Apart from the question of unemployment and the ability of the economy to generate jobs and income in the future and, of course, public revenue. ”
Whoever speaks in the same tone as Meirelles is the president of the Chamber of Deputies, Rodrigo Maia, who said last week that Parliament is available to change laws that hamper solutions for the government, but stressed that everything depends on the initiative and agility of the Executive, something that, in his opinion, has not yet occurred.
In an online meeting Maia said:
“Liberals are embarrassed to spend, but we are in a time of war,” he said, referring to the crisis caused by the pandemic of the new coronavirus.
For Maia, Brazil may have missed a big package along the lines of what the President of the United States, Donald Trump, did.
Federal Reserve (FED), the American central bank, is printing trillions of dollars
The Fed alone is stimulating the US economy with $ 6.2 trillion, and President Donald Trump is openly supporting this measure:
“The beauty of our country is that we can deal with it easily because of who we are, what we are. It is our money; it is our currency “.
In addition to this printing of money that amounts to trillions of new dollars on the market, the FED has also reduced its interest rates. This was the first time the Federal Reserve had cut interest rates by half a percentage point since the 2008 financial crisis.