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  • Rio de Janeiro is a sexy city. Toned bodies, hypnotic sambas, miles of perfect beaches — there's a seductive quality to this place, a sultry rhythm pulsing just out of earshot, behind the constant din of the traffic. So naturally, I've spent my first few days here looking into the sexiest subject I could imagine: serial currency replacement.

    Before I left for South America, my grandmother sent me a five cruzeiro bill, a piece of Brazilian paper money that she'd somehow picked up during the 1950s or 1960s. "Maybe you can use this?" she asked in a note. The bill's in pretty good shape. On its front is a mustachioed nineteenth-century diplomat named José Paranhos; on the reverse is a scene from the conquest of the Amazon. It's a bill that would have been in circulation when Hunter Thompson was based in Brazil. At the time, it was worth approximately one-half of one cent. And it was dropping fast.

    Thompson wrote several National Observer articles from Brazil in 1962 and 1963, and the majority of them deal in some way with the country's toilet-bowl spiral of inflation. In the 1950s, Brazil had financed the construction of its shiny new capital, Brasilia, primarily by printing more money. They then used the same strategy to pay off their foreign debts. When the state-owned railroad started losing money hand-over-fist and the worldwide price of coffee (then Brazil's main export) tanked, how did the government make up for the lost revenue? You guessed it — they simply printed more money.

    At the National Historical Museum in central Rio, you can follow a series of currency exhibits across the ages, starting with a display case filled with the dull-ish, rough-hewn silver coins that filled colonial cash registers in the sixteenth century (some of which were minted in Potosi). Over time, they get a bit more polished and symmetrical, and at some point they're joined by paper money, but it's not until 1942 that all numismatic hell breaks loose. That was the year that the value of a real, Brazil's historic currency, disintegrated to the point that a new one was necessary. Thus the cruzeiro was born, at a value of 1000 réis to one cruzeiro.

    And here begins what Thompson in 1963 called "one of the worst inflationary spirals in the world," a sinkhole that kept deepening for three decades after he left. The cruzeiro hung in there until 1967, at which point the story starts sounding like an Old Testament genealogy passage. The cruzeiro begat the cruzeiro novo, at a rate of 1000 to one. The cruzeiro novo begat the cruzado, at 1000 to one yet again. The cruzado begat the cruzado novo, once more worth 1000 of its predecessor, and the cruzeiro real came after that, its value magnified once again by 1000.

    Then, in 1994, Brazil went back to the real — a new one with a fixed value linked to the dollar (and you can hear the fascinating story of how this came about here, from Planet Money's Chana Joffe-Walt). The new real was valued at 2750 cruzeio réis. Which means that if you fight your way through a ridiculous half-century equation, Brazil's new real was worth 2.75 quintillion of its 1941 self.

    No calculator I have is up to the task of divining the value of that bill from my grandma. But suffice to say that if I had a quadrillion or so of them, I could just about afford a one-way trip on Rio's excellent subway system.

    To me, the modern history of Brazilian currency nicely illustrates the fundamental non-reality of money, the act of pure invention that is ultimately the assigning and reassigning of value. But as Thompson points out, there are real-world consequences to the fluctuation of even imaginary things. He writes of the crisis of confidence in then-president João Goulart, who one year later would be overthrown in a coup, sliding Brazil into an oppressive, twenty-year military dictatorship.

    And then there's how my hostel-mate put it, a guy who shared my subway car en route to the museum. I told him I was going to see the numismatic collection, which I'd heard was fascinating and thorough. He looked at me a skeptically. "Hey man," I said, "There are a lot of people out there who take currency pretty seriously."

    "I guess so," he said, after a pause. "They've been killing each other over it for a pretty long time now."

    To keep up with new stories from the Hunter S. Thompson Trail in South America, follow me on Twitter.
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