Brazil, the sleeping giant. To our south in the Southern Hemisphere, lies the world's fifth largest country, both by geographical area and by population. Quietly out producing many rival countries. As of 2011 it is the world's sixth largest by nominal GDP and the seventh largest by purchasing power parity. .

Brazil has a mixed economy with abundant natural resources. The Brazilian economy has been predicted to become one of the five largest in the world in the decades to come, the GDP per capita following and growing. Brazilian exports are booming, creating a new generation of tycoons. Major export products include aircraft, electrical equipment, automobiles, ethanol, textiles, footwear, iron ore, steel, coffee, orange juice, soybeans and soon to be oil. Brazil is the third largest exporter of agricultural products in the world. It’s main consumer is China, gobbling up as much as Brazil can produce. The United States is a close second.

Brazil pegged its currency, the real, to the U.S. dollar in 1994. However, after the East Asian financial crisis, the Russian default in 1998 and the series of adverse financial events that followed it, the Central Bank of Brazil temporarily changed its monetary policy to a managed-float scheme while undergoing a currency crisis, until definitively changing the exchange regime to free-float in January 1999.

Brazil received an International Monetary Fund rescue package in mid-2002 of $30 billion, then a record sum. Brazil's economy rapidly bounced back and the central bank paid back the IMF loan in 2005, although it was not due to be repaid until 2006.

One of the issues the Central Bank of Brazil recently dealt with was an excess of speculative short-term capital inflows to the country, which may have contributed to a fall in the value of the U.S. dollar against the real during that period. Nonetheless, foreign direct investment (FDI), related to long-term, less speculative investment in production, is estimated to be $193 billion for 2007. Inflation monitoring and control currently plays a major part in the Central bank's role of setting out short-term interest rates as a monetary policy measure. During the period of U.S. bailouts and the credit crunch that affected much of the world’s economy, Brazil’s economy remained stable.

Brazil’s offshore oil exploration has discovered quantities of oil that could rival middle east production. Brazil is already a world leader in the production of bio-fuels. The fly in the ointment is Brazil’s infrastructure. It has not been able to keep up the pace. Poverty areas have created huge crime rates for locals and tourist. Brazil has made massive efforts to squash this problem by use of its military.

Brazil has not actively participated in a war since the 1800’s, their money has been able to stay in the country and remain productive.

With the United States’ devouring itself from within, its spending on war efforts, and its increasing lack of direction, Brazil could rival the U.S. as a world leader. But, that remains to be seen. ENJOY!!!

The note featured today is the Brazil 100 Reais issued in 2010.