>But then, sterilization, per se, has nothing to do with the problem,
>does it? The problem is caused by the twin deficits, no?
Well, yes, if the domestic and foreign investors stopped buying Brazilian debt, there'd be no fiscal or current account deficit. But then you've got to ask what causes those - from fiscal crisis of the state pressures on the budget to deindustrialization (which necessitates more imports) to the overvalued exchange rate (which makes imports cheap and exports expensive).