For most of the 20th century, Brazilian governments tended to favor growth as a means of containing social unrest and mustering resources for the government, even when this meant high inflation. But since inflation tends disproportionately to harm the poor, the already-wide income gap between the oligarchs and the rest of the population only widened. The macroeconomic strategy of the current regime, along with that of a string of governments going back to the early 1990s, is known colloquially as the "real plan" (after Brazil's currency, the real). In essence, the strategy turned Brazil's traditional strategy of seeking high growth despite the inflationary complications on its head. Instead of growth at any cost, the mantra became low inflation at any cost. Subsidies were eliminated wholesale across the economy, working from the understanding that consumption triggered inflation. Credit — whether government or private, domestic or foreign — was greatly restricted, working from the assumption that the Brazilian system could not handle the subsequent growth without stoking inflation. Government spending was greatly reduced and deficit spending largely phased out on the understanding that all forms of stimulus should be minimized so as to avoid inflation. These strict inflation control policies have achieved a high degree of economic stability. Inflation plunged from more than 2,000 percent a year to the single digits. But those gains came at a cost: Between 1980 and 2005, Brazil has shifted from one of the world's fastest growing economies with one of the highest inflation rates to one of the lowest inflation economies with one of the lowest (if somewhat irregular) growth rates.
