(10-29-14) It appears that global deflation is coming right on schedule as commodity prices including Coffee and Cocoa got hit as soon as this Brazilian president Dilma Roussef got re-elected.
We knew right away that it would hit the ‘trops’ (tropical commodities) and they did since she was up against Social Democrat Aecio Neves, who represented business and industry.
In her last four year term, Roussef had done well for the Brazilian economy in the first two years because she had done what South of the Border Socialists always do. She had weakened the currency, the Brazilian Real, in order to increase Brazilian exports.
The only problem is that you can get away with doing that for only maybe two years at the most – and she knew that. After that it creates inflation.
That's why South of the Border countries have this perennial problem with inflation. It exists because of their own management since they create it by cheapening their currencies on purpose by exerting pressure, for example on whatever the cross-rate is, in this case the Brazilian Real -- US Dollar cross-rate.