Saturday, April 25, 2009

Chile: Basic Keynesian Economics at Work

Chile's copper exports were in danger of creating vast inflation in the country, causing declines in other domestic industries. So, what did the government do? It banked the proceeds overseas against the days when copper would fall on the world market. Now, it's got a war chest equal to 30% of GDP stored up--and ready to use now that the world economy has slowed. Andres Velasco is looking like a genius now, because his plan paid off.

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