Sterilization of incoming capital flows

[Enrique Diaz-Alvarez]

Doug Henwood wrote:
> 
> Enrique Diaz-Alvarez wrote:
> 
> >Me too. This may be a stupid question, but where is the money that the
> >Brazilian government got in return for those short-term bonds? Why isn't
> >it available to repay those bonds that can't be rolled over?
> 
> Some went into reserves, some went to finance the budget deficit, and some
> went to finance the giant current account deficit. Without that inflow, the
> deficits (both of them) can't be sustained.
> 
> Doug

But then, sterilization, per se, has nothing to do with the problem,
does it? The problem is caused by the twin deficits, no?
-- 
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