Tags: Davidson | Brazil | China | America

James Dale Davidson to Moneynews: Brazil Will Be What America Was

By Forrest Jones and Kathleen Walter   |   Monday, 01 Oct 2012 03:24 PM

Brazil is home to an economy growing in both size and complexity and will soon resemble what the United States used to look like, says author, investor and longtime Wall Street observer James Dale Davidson.

Brazil’s economy and citizens are upwardly mobile, while the opposite is true in the waning United States.

“Brazil is going to be in this century what the United States was in the last couple of centuries, where it was a place where people could come from any place in the world, integrate themselves into society and make a good future for themselves,” Davidson, author of “Brazil Is the New America: How Brazil Offers Upward Mobility in a Collapsing World,” told Newsmax.TV in an exclusive interview.

Editor’s note: To order 'Brazil Is the New America' at a great price — Click Here Now.

“But in this century so far, we’ve had downward mobility in the United States,” said Davidson, editor and publisher of Strategic Investment. “The average American today has 8 percent less real income than he had when Obama became president and less real income than he had in 1995.”

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Brazil has been the beneficiary of a commodities boom in recent years, exporting iron ore, agricultural products and other products to Asian and other markets, including the Middle East.

Meanwhile, crops once thought not farmable in Brazil, such as soybeans, are thriving, and the country is home to massive quantities of fresh water, which cushions the effects of droughts.

As a result, the economy has grown and a healthy consumer class has developed, and businesses looking to tap growing markets should consider Brazil’s massive middle class.

“Brazil is a place where people are making money. There are 17 new millionaires every day in Brazil,” said Davidson, a columnist for Newsmax’s Financial Intelligence Report newsletter.

The United States is seeing a completely different trend.

“Last year 353 Americans a day fell from being millionaires to less than millionaires. So we’ve got rapid downward mobility in the United States and upward mobility in Brazil. Forty million Brazilians came out of poverty and into the middle class in the last eight years.”

Brazil does face its own issues, however.

The country is home to a slew of regulations and taxes, though many just choose to ignore them, which keeps growth going.

“What the Brazilians do is they don’t pay any attention to these laws and regulations, or a lot of them don’t,” said Davidson.

The country is also suffering from loose monetary policies in the developed world, from the United States especially.

Since the downturn, the Federal Reserve has pumped trillions of dollars into the U.S. economy by buying assets from banks, a monetary policy tool known as quantitative easing, which floods the U.S. financial system in a way that pushes interest rates down.

The Fed rolled out two rounds of quantitative easing from 2008 through 2011, pumping $2.3 trillion in freshly printed dollars into the global economy on top of other measures.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

An open-ended third round is taking place now, under which the Fed will buy $40 billion worth of mortgage-backed securities from banks to further fuel economic recovery.

A good portion of U.S. liquidity has made its way into emerging markets, disrupting exchange rates in the process, much to the chagrin of countries like Brazil that find themselves having to tighten policy when they don’t need to.

“Quantitative easing in the United States and Europe mean quantitative tightening in the growing countries,” Davidson said.

Meanwhile China continues to cool its growth, which does cause concern for exporters like Brazil.

However, unlike China, Brazil is home to a domestic market of consumers whose demand can keep the economy moving forward.

“Brazil also has something that the Chinese lack, which is it has a vibrant consumer economy,” Davidson said.

“One of the things that happened during this period when China and Brazil were rising very rapidly is that in Brazil, consumer incomes went up as fast as the economy grew. In China, they did not,” Davidson said.

Editor’s note:
To order 'Brazil Is the New America' at a great price — Click Here Now.

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Brazil is home to an economy growing in both size and complexity and will soon resemble what the United States used to look like, says author, investor and longtime Wall Street observer James Dale Davidson.
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