ECONOMIES: Prescribing Shock Therapy

ECONOMIES: Prescribing Shock Therapy

Plagued by hyperinflation, Argentina and Brazil, South America's two largest economies, last week entered different forms of shock treatment to slow runaway wage and price increases. Brazil announced a hold on wage increases until July and an indefinite freeze on prices. Economy Minister Zelia Cardoso de Mello also disclosed plans to dismantle much of the country's elaborate system of indexation, which has been used since the 1960s to offset the effects of inflation. Among the system's inflation-fueling features scheduled to be phased out: so-called overnight bank accounts that pay interest to depositors by the day.

In Argentina, where a free fall...

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