Brazil entered the 1990s with much less confidence about its economic future than it once had. The economic stagnation and uncertainty of the 1980s had exacted a high toll, and per capita income in 1990 was no higher than it was in 1980. Inflation, at monthly rates, was over 30 percent, unprecedented even by Brazilian standards. It is reasonable therefore to ask what has been learned from the experience of the 1980s and what are the prospects for an economic future brighter than the recent past.
As an object lesson, the economic experience of the 1980s made a contribution. Government is much less likely to be seen as a solution, and many more Brazilians see the public sector as the problem. The rather tiresome debate between the monetarists and the structuralists that dominated discussions of inflation in the1970s has been superseded by a recognition that money supply growth does indeed have a close relation to inflation, but that the underlying problem is the fiscal deficit that drives the money supply process. Although the monetization of deficits may be postponed, as was sometimes done in the 1980s, the inflationary consequences of public-sector financial imbalance cannot be avoided indefinitely. A part of the economic disorder of the 1980s was the consequence of populist attempts to ignore this point.