Long the suffering basket case, Brazil world export and import trade has pinned its progress on the back of Brazil agricultural production.

Since I am actively farming in Brazil, I see this explosion of agriculture with Brazil world export and Brazil economic growth intimately woven together. Without the farmers, Brazil has meager growth potential. With the farmers, Brazil world-wide dependence on this agricultural sleeping giant will only grow, along with the millions of hectares of arable land as yet to see any production.

Where I farm, there has been almost no development. Compared to Bahia, where huge farms send Brazil produce world-wide including exports of soy beans, cotton, corn, beef, fruits and vegetables of all kinds, and even farmed fish.

Despite Brazil world exports of agricultural products, Brazil’s economic growth depends on rising beyond commodities to high value add products in the high-tech arena. Education will be Brazil’s challenge to joining world powerhouses such as Japan, China, Korea, and Germany, or the former greatness of the U.S.

Brazil World Economic Trade with U.S. 2009

Unfortunately, as difficult as the U.S. can be with its new “socialism 4.9 – Turbo” political climate, Brazil can be even more challenging. Bribes still work, even if they should not. Brazil world influence is growing despite the openly corrupt bureacracy, such as the government in Tocantins that was recently thrown out over corruption.

The key then to Brazil world growth and surpremacy in agriculture, will be Embrapa pushing new technology and butting Monsanto out of the fields along with their ilk, getting Brazilians educated in engineering and science, and keeping the bankers in check. If these tricks can happen, Brazil world influence and economic success will make it the star it has always aspired to be. Brazil is closer to the promise of being the next great country than it has ever been.

The Brazilians see the bright future, but are held back by excessive taxes, government bureaucracy, corruption, and lack of science education. Clearing away these burdens will unleash a land that can feed the world – or 10 worlds with no worries about population or anything of the kind.

In Brazil, there is no reason for anyone to go hungry. With Brazil world influence growing, agricultural production growing, government intervention reduced, and knowledge developed for increasing arable land, there will be no reason why the rest of the world cannot be fed by Brazil as well.

Much like the U.S. was the bread basket of the world, so too will Brazil feed the world.

Get an agricultural ETF, a Brazil ETF, and a Bovespa long fund going, after the next washout in the market. Grow your portfolio along with Brazil…

Where it not for lousy trading charges tagged onto the minor currencies,  I prefer trading the exotic currencies. Singapore offers a strong currency that can be considered in many ways like buying Chinese Yuan.   Much more commonly traded though are the regulars – GBP, Swiss, Canadian, Yen, etc.

While the moves have been good in the majors, they are more challenging to predict because the manipulations from central banks come in huge waves. The minor currencies are less likely to experience such a coordinated attack and tend to prewarn much more.

The best trade against the USD though has been gold. We cannot get the leverage – that makes forex trading like cocaine addiction – when going into a gold/USD swap.  My early Forex trades employed 50:1 leverage.  Insanely stupid at the time -even while I did have some seriously profitable trades, I have dialed back to 10-20x leverage in my Forex trades and much prefer Options on ETF’s with only 2:1 margin. The trend is much more predictable while the time line of the trade is much longer, risks are reduced.

Right now I am setting up a few Forex trades. I went long Canadian and already banked good profits. Long Brazilian Real which does not follow the Yen line at all on moves against the dollar. The Real moves to it’s own tune, but the trend is probably to correct an over valued position then rocket higher shortly.  Lastly, the Aussie central bank is putting the interest rate screws to the system and leaving the Fed stuck in the starting block.

Borrow USD and buy almost anything else for an easy 3% guaranteed profit. Juice this with 20:1 leverage and the former Yen carry trade has been supplanted by three other letters: USD carry trade.

Viva la financial engineering!!

Deflation – decrease in the supply of money and credit relative to the amount of goods, services, and investments available. Usually results in prices falling as measured in the currency unit.

Inflation – increase in the supply of money and credit relative to the amount of goods, services, and investments available. Usually results in prices rising as measured in the currency unit.

Since 1913, the date the criminal Federal Reserve act was passed birthing the dictatorship of currency now enjoyed by the Federal Reserve crime syndicate, the value of the dollar has collapsed 95%. We have suffered a steady diet of inflation. One brief exception occurred during the 1929-1932 beginning of the Great Depression. Dollars bought more stuff during that time, by almost a factor of 10. Imagine buying a car tomorrow for $3000 that would have cost you $30,000 a week earlier. Sign me up for the $8000 Porsche Cayenne, and maybe throw in a Cayman as well!

While I foresee more inflation directly ahead, we could then get a shock of money supply collapse from credit defaults across the board. Combat this deflation factor, is the potential collapse in value of the U.S. dollar. Since all currencies are valued against each other, there is no firm measuring stick. It is all relative. Relatively – the dollar is dropping below long-time support at 78 and moving toward the danger line of 72 on the USDX. We could see fireworks in the commodity markets especially gold and silver if the dollar crosses below 72 for a few days.

My opinion is that we will have inflation first, followed by a snap reaction from the fed, precipitating credit defaults across many markets, then a wage of deflation. Very little will be left standing financially. Gold will be among the strongest instruments along with some Asian currencies.

Gird for stormy weather directly ahead.

The Fed’s primary purpose is profit for it’s owners. They profit in resources collected and funds stolen. That may have run it’s course, or maybe they do not want to let the dollar fall yet. Perhaps they have another plan ready to enact it. Or maybe they have all the resources they want. If they are willing to collapse the currency, then hyperinflation is in store. If they want to preserve their power, then deflation is our curse.

In either case, gold plays a role, as does agricultural investing. Then currency and bonds will be a backstop.