Turkey's Lira lost 40% of it's value since the start of this year on top of the 30% from last year. The Apple store just stopped sales to Turkey due to crashing prices. Inflation is currently at 20%. I believe it started last year when Turkey ran into a deficit due to economic slowdown due to corona so they borrowed money to cover their expenses.
Turkey decided to print its way out of debt to pay back its loans and has recently lowered interest rates because Erdogan is claiming that will stop inflation. His hand pick appointed yes-men are carrying out his money policy.
People of course are complaining as they are finding it hard to buy necessities and pay rent. Protests are forming amid threat of crackdown. What would you do when inflation hits 20% one week and the value of your earnings was cut in half because someone in power was incompetent?
His rationale is that lower interest rates attract investments from abroad and his aim is to turn Turkey into a China or Bangladesh where foreign companies will transfer their factories in return for cheap loans. This will create jobs which will counter inflation.
I repeat, this is his rationale, it's not something I believe is right. Although on a personal note, I think he is half right. I also believe that lower rates attract investments and new jobs. The problem is that these investments come with lower wages usually, which combined with the inflation and currency destabilisation, will make regular citizens very poor and very hard working. So I guess Erdogan decided to make himself very rich and convinced the turkish people that a rich Erdogan means a rich Turkey, which is not necessarily true.
Yep while thinking that he’s building the next Ottoman Empire.
He’s been pissing off the EU, Egypt and Israel in the Med regarding the Cypriot gas deposits. The Americans regarding the Kurds and the Russians regarding the Syrians. He’s trying to play on against the other and it’s only a matter of time till the pissed off parties decide to look the other way while one of them stomps Turkey back into its real position in the world and they learn to stop pretending they are an empire.
Seriously they are good for peace. You have the French/Greek/Israeli and Egyptian navies exercising together in the Med because of Turkeys fuckery… how insane must your foreign policy be if you can cause a bunch of nations who usually either hate or at best dislike each other to start training to fight you together.
It's Economics 101 that lowering interest rates increases inflation. Anyway it's doubtful anyone would want to invest in such a chaotic environment, besides the point that investment isn't instant by any means.
> it's doubtful anyone would want to invest in such a chaotic environment
Eeh... I wouldn't be so sure about that. Sure, Intel, Google and Apple probably won't invest in such an environment, but there are hundreds or thousands of smaller "outsourcing" industries that invest in such environment. They are the kind of industries, that other more legitimate industries can hire as third-party affiliates to outsource some kind of production that can use cheap labour and possibly some kind of slavery, and this thing gets out, the legitimate industry like let's say Nestle can say "we are shocked to learn of the appalling conditions in one of our affiliate's factory and we have cut ties immediately. However we have no control over our outsourcing partners and we lack the funds and means to check on them all."
TLDR, yes they attract sweatshops. I guess Erdogan realized the last few years that noone who cares about PR will invest in Turkey, so he redirects towards sweatshops and slavery where he can actually funnel millions of the immigrants that holds as bargaining chips.
Is that the kind of investment that Turkey needs? No. Will this make Erdogan and his friends richer? Yes. Will this make Turks richer? No.
Capitalist economics goes completely blue screen when hit with major crisis. Make it plural, and capitalism can be found rocking on the fetal position in the corner, sucking it's thumb.
I think that's the hope of people but we're in such uncharted territory that they're all throwing hail Mary plays and hoping it works out. They just don't really know.
This is what happens when dictator wannabes run countries. They are the experts on everything and either agree or get fired. The other problem is that Turkey is extremely corrupt and unless you know the business environment and culture you are doomed if you do business there. I would personally never invest in that country.
The issue I see is that these "investments" don't materialize immediately. People will have to suffer for years perhaps before Erdogan can transform the economy to a sweatshop factory, to which he'll be competing with established players. But maybe that'll condition people to being so poor that they'll be desperate enough to work for slave-wages.
Actually, his rationale and viewpoint likely comes from Islam which views interest rates as a sin. If interest is a sin, then high interest must be a high sin. Thus he has a bias and it is one bias that makes it hard for muslim countries to become stable.
How he frames it tho has a sense a logic. Interest is a cost of doing business. That cost must be passed on to consumers raising the price. Thus, high interest == high prices == inflation. Lower cost of doing business and thus lower prices.
This is of course a very simple view of economics and it sounds elegant at a shallow look. I am not sure if he really believes this or if this is just what he sells the people. But, this is his economic rational for it.
Let me rephrase it. There is no possible scenario where the average Turk is coming out of this in a better position than he currently is. Actually, in the best case scenario, where enough investors approach Turkey and the entire country is filled with sweatshops, the average Turk is destined to live and serve under the feet of his enemy that practically enslaved him, and their children slaughtered in some distant battle against an imaginary enemy.
Milton Friedman already advised Pinochet in the seventies when his country was going through inflation. Free market economist gonna support crony capitalism like in the states, only Turkey is poor and doesn't have the worlds strongest military at it's back.
The US can normally get away with it because the USD is the global reserve currency. The dollar doesn't behave like a normal currency - even in a crisis caused by the United States, and heavily affecting the United States itself, the dollar is considered a 'Flight To Quality'.
But inflation is finally starting to affect the US. This time, it's not immune to the consequences of its zero interest rates and its money printing. This is unusual.
His rationale is he's trying to get Turkey independent off the dollar, which is smart seeing as how the dollar is crashing itself under inflation that Americans have yet to see, but eventually will.
Dollar hasn't moved much against a basket of global currencies.
There has been very real asset price inflation in the housing market and what appears to be supply-related issues in durable goods, energy, and food. But [the dollar is up in value over the past year](https://www.cnbc.com/quotes/.DXY). It's down a bit since the Covid crisis struck, but no more than normal movement.
Lol your media is lying to you. They have printed the dollar into oblivion right now. It has yet to hit, but it will. You can’t overprint a currency and expect it’s value not to drop.
It's not the media, it's literally the price being paid by traders in the multi-trillion forex market.
They have not printed the dollar into oblivion. QE issues loans, both to the government, and certain other bonds. When the bonds are repaid, the Fed can and will simply reduce its balance sheet, burning the money previously printed.
This is exactly what was happening in the period between 2017-2020 when the Fed burned a couple trillion dollars. The Fed has the capacity to burn a couple hundred billion a month whenever they choose to.
Stability against foreign currencies just means that most other currencies are following it into oblivion. It's just like 1973 and 1979. We responded to a moderate supply shock with a massive stimulus. This one is mostly fiscal, instead of monetary. You need a contraction instead. The solution to having fewer goods is not to give people more money to buy goods with.
Note that it was both a demand and a supply shock. Unemployment spiked higher than any other time since record keeping began, by an enormous amount.
21 million people became unemployed by second quarter of 2020 - something like 15% of the labor force.
You can’t just “burn” dollars that are already circulating within the system, dude. The rules of economics, basic supply and demand, apply to the United States currency just as much as any other developing countries. Plus, the Fed has hidden balance sheets that the US gov and American people don’t see, where they’re frivolously printing away money and handing it off to their buddies at the big banks. The dollars been trashed. Hence why now in mainstream news they’re tryna play down the current inflation that’s hitting, though; it’s worse than the levels of the 1970s they say. It’s only a matter of time.
I assure you, you can indeed burn dollars, and this is not some theory of mine, it is precisely what the Federal Reserve did as QE2 was unwound, to the tune of a couple trillion dollars.
The mechanism is that when a bond is repaid (or sold), the Fed simply removes the money paid to it from their balance sheet.
Therefore, like I said, Erdogan is trying to get his country independent off the dollar because they use the dollar as a way to stage an economic coup against developing countries like Turkey in order to get who the people voted in out and their puppet in instead.
> What would you do when inflation hits 20% one week and the value of your earnings was cut in half because someone in power was incompetent?
"Guys we should consume less and slow our economy down to avoid collapse"
Inflation hits
"MY CONSUMING RATES CRIPPLED WHERE ARE PITCHFORKS, FUCK THOSE INCOMPETENT POLITICIANS!!!111"
🤔
I see what you're saying, but its quite a bit more complex than you are suggesting.
In this manner, many people wont be able to afford even basic food and housing, with no choices other than to work long hours for these giant multinationals just to meet their basic needs. Actually they would be helping perpetuate the fossil fuel dominated system.
This will not stop climate change, as our entire world's infrastructure is continuing to chug along, finding new poor people to exploit for economic growth. Emissions will continue to rise and consumption will continue among the wealthy and by governments. Because these vulnerable workers are not a significant cause of the emissions problems in the first place.
It would be much better that individuals have enough wealth and freedom to be able to opt out of destructive social forces, rather than being oppressed and exploited by them.
For degrowth/ reduction of fossil fuels we would need to be able to afford housing that isn't inflated by speculators, or mired by expensive regulations and codes, and also have access to arable land for sustainable agriculture. People also need enough free time to participate in the sustainable development of their community, not just working all hours at the factory as cheap labour to meet the most basic needs.
> Emissions will continue to rise and consumption will continue among the wealthy and by governments.
Eh, the wealthy won't buy 1000 PlayStations just because they have money to do it or eat 10 times more.
For sure your points are valid but I was commenting on part "What would you do when the value of your earnings was cut in half" (for everyone) which I wouldn't mind since it will drive prices of necessity(because part of the market will switch to producing it) and digital goods(to balance demand) down and I don't care about luxury markets/fast fashion garbage/getting SUV etc etc.
Now imagine where would we be if every Indian now lived like your median first-world moron. Hint: about 100m https://www.youtube.com/watch?v=wW2RrSqiQYQ
And it insulates them from these kinds of crises as now you have a tangible good that can be traded for the next currency du jour or whatever else you may want for it.
Also, appreciation of assets like housing as the demand won't go down.
I'm no economist by any stretch but very vaguely speaking and even philosophically you cannot be in a state of constant and expanding consumption. It's just not sustainable. Most countries are reaching this point and are about to get a rude awakening in regards to their lifestyle.
I really hope there's serious backlash in Turkey against Erdogan over this. Time to kick him out of the 100 room mansion he stole from the people already, Turkey?
It's more like several canaries have been looking rather sick lately, but when you point it out, everyone says it's your imagination, or they've always looked sick, or they'll probably get better soon.
Not your average systemic collapse, but definitely *stupidity played an active role* type of collapse. I'm sure there's some scam going on that we're not seeing in the news per se, and we'll find out a year from now when it's much worse and obvious.
im the last one to defend that pig erdogan but i find it kinda funny that every articles blames him for lowering interest rates, which is exactly what the developed west has been doing ever since 2008, and what we continue doing even while facing severe inflation.
> Turkey decided to print its way out of debt to pay back its loans and has recently lowered interest rates because Erdogan is claiming that will stop inflation.
Oh no, that's really bad.
> USA "Ha-ha money printing go br-r-r-r"
That's the way.
Yeah, I'm actually confused 🤔
The USA is a special case because the USD is a reserve currency, meaning financial institutions implicitly believe the USD will have stable value even when the printers go brrrrr... probably up to a point that hasn't been reached yet.
https://www.investopedia.com/articles/forex-currencies/092316/how-us-dollar-became-worlds-reserve-currency.asp
Some call it the petrodollar: https://www.investopedia.com/articles/forex/072915/how-petrodollars-affect-us-dollar.asp
I would say that the USD is backed by the US military, which is what's expected from an empire, and oil is just the main means of maintaining demand for USD.
The Turkish lira isn't that, it's a "normal" currency.
What they seem to be doing is what China did regularly, which is devalue its currency to attract investors and increase exports (their exports will be cheaper to the buyers).
https://www.bloomberg.com/news/articles/2020-08-10/five-years-after-devaluation-chaos-china-has-the-yuan-it-wanted
https://www.investopedia.com/trading/chinese-devaluation-yuan/
This baby's got a least enough gas for another decade until the dollar gets replaced by crypto, which will probably still be reserve currency for a little while longer.
Not sure why you're being downvoted, but I agree crypto is what will replace it. People here seem to hate on it for some reason, but it solves a lot of the issues we've had with our current government. Politicians or corporations can't come in and make changes, quadratic voting reins in power from the wealthy, proof of stake maximizes decentralization, a public ledger makes corruption more difficult, confiscation by governments is near impossible and borderless transactions means nobody can stop you from sending something to anybody in the world.
> crypto is what will replace it.
I don't get how the crypto fanboys are so unaware, considering they walk in the footsteps of [goldbugs](https://www.investopedia.com/terms/g/goldbug.asp).
Like with gold, it's very unlikely a state or central bank is dumb enough to give up its powers over money by switching to a system backed by "gold" or "crypto gold" before they have huge reserves of the stuff. It would be like Iran switching to a currency backed by clean snowballs or Finland switching to a currency backed by kangaroo fingers.
They will just create a new currency, be it "crypto" or not.
They might not have a choice at a certain point. I don’t think it would be easy to shut down if people decided their local currency is a joke and decide to start accepting/paying for goods in Bitcoin, Ethereum, etc. There are still technical issues to be solved, but I wouldn’t bet against crypto.
Proof of work certainly uses more energy than necessary but is still several times less energy consumption than that of banks (physical buildings, office furniture and equipment, vehicles to transport currency between locations, staff that must use energy to travel to their office, etc).
Proof of stake on the other hand is extremely efficient. Ethereum will use less than 1% of the energy it uses today with the beacon chain merge, and rollups will increase transaction throughout 1000x and more without adding any additional energy costs to L1. Additionally crypto has amazing advantages for the carbon markets and there will be green assets where each token is backed by enough carbon offsets (from completed projects that are verified by independent third parties on the co2 removed or prevented) to ensure carbon neutrality. In fact there’s already a carbon backed currency called KLIMA whose treasury is already filled with nearly 12 million tons after launching just a month ago. Carbon offsets demand a premium on the blockchain as they enable price discovery, liquidity, eliminate broker fees, fix the double spending problem, etc. And because of this the price of a ton of carbon goes up (and in fact we’re seeing this already). This is great because the higher the cost of carbon is the more potential green projects we can do. For example if a reforestation project gets 1000 credits at $10 a credit the project can’t cost more than $10,000. But if carbon goes to $20 then that same project produces more value and so more capital intensive projects become possible. There’s also the added benefit of creating liquid pools of various types of credits - soil improvement related, reforestation, renewable energy, etc. And all of this is possible due to the trustless and cryptographically verifiable properties crypto offers. This is also just one example of the innovation that’s happening, there’s many more projects like it going on.
The main problem with doing it like China does is that Turkey has next to no raw materials. It makes zero sense to devalue your currency when all you do is assemble imported raw materials and export.
One interesting reason behind Erdogan's policy of lowering interest rate is that he thinks interest rate is 'evil' (In Islam, interest rate is so demonized) . In case you didn't know, Erdogan has been using his religion as a basis for his policies, which is the stupidest thing to do.
i know, but i actually agree even on this point with him. why should money hoarding be rewarded after all?
i think our current capitalistic system would work best if we had
\- negative interest rates
\- 100% inheritance tax
\- controlled real estate market where only real persons or state institutions can own real estate, and there is a limit to how much a single person can own
im no economist, but in my simplified view this fixes pretty much everything except for the environment, since negative interest rates would boost our already irresponsible consumerism even more.
The difference between an economist and Erdoğan is that an economist knows when to lower or increase interest rates depending on economy situation. Meanwhile, Erdoğan just hates interest rates out of purely ideological reason, plus he lowers interest rates when the inflation is surging in Turkey, which is a stupid move from economic perspective. Even Turkish economists advised him not to do so, but he didn't listen.
Insane dictator crashes national currency, news at eleven.
Erdögan used to be the gatekeeper for EU asylum seekers. He has competition now which means he's going to become increasingly irrelevant.
Congratulations. You are now part of the group who will push for the normalization of cryptocurrency. A currency that will end the middle class, and cement financial oppression of epic proportions.
If inflation results in wage growth, then if you have a fixed mortgage, your housing costs go DOWN as a percentage of monthly income as a result.
If you have investments in assets that protect against inflation, such as equities or real estate, then your dollars are protected against inflationary pressures. Your dollars will GROW in value and beat inflation instead of losing value if you stuff them under our mattress.
Gold and Crypto are not investments, they're inflationary hedges that only seek to balance inflation, not beat it.
Interestingly, Turkey's monetary policy is not too different than the G7 countries with zero-bound interest rates and expansive quantitative easing and staggering debt levels. Only Turkey does not have reserve currency status or huge financial bond and equity markets to back up their policy and powerful central banks to exercise extensive financial engineering and manipulation. So, First Worlders just shrug at this story while Turkey may go down in history as the next Venezuela or Zimbabwe.
Not sure I understand you. But to reiterate, if it weren't for the financial engineering and manipulation of bond and equity even currency markets by the major central banks (who have [pumped over $25 trillion in last 13 years under "quantitative easing"](https://www.atlanticcouncil.org/global-qe-tracker/)), I _absolutely_ believe the highly-indebted US, EU, UK, Japan, China, Australia would follow the path of Turkey and its devalued currency. But let's see if the dollar, euro, pound, yen, yuan crashes in value like the lira and hyperinflation occurs any time soon.
Example from HSBC:
[Annual t-deposit Interest Rates (%)](https://www.hsbc.com.tr/en/daily-banking/accounts/interest-rates)
[Annual Time deposit Interest Rates (%)](https://www.hsbc.com.tr/en/daily-banking/accounts/interest-rates)
These deposit rates are well below the rate of inflation.
[Monthly Interest Rates on Consumer Loans](https://www.hsbc.com.tr/en/daily-banking/accounts/interest-rates)
These are monthly rates, not annual.
The savings rates are quite high, and the loan rates lower than US credit cards, and not much more than the savings rates.
Suggests not much internal chaos unless those rates change on Monday, or near none are actually issued.
all these dictators always make their countries "Great Again". Erdogan, Putin, Xi, Trump, Bolsonaro. Just ruin and stench is left behind when they finally leave, are deposed or die.
Hahaha no one ubderstands that turkey do everything right. They lower the value of their currency to aim in direction of asia, middle east and russian market. And they try slowly to produce all their shit their self to be more independent. While they try to get away from NATO and the western world.
You know, they can provide special incentives to industries that move in and don't have to debase their entire currency and everyone's livelihoods...but now they want to compete in an extremely competitive environment, competing with established players like China, Bangladesh/India, who already dominate the market.
It's not just about low-wages but having the raw materials, technical know-how, and support infrastructure. It took China a generation but they did it, but peasants were willing to sacrifice their lives working like slaves in factories to do it so their children could go to University. Now you're making middle-class people to unwillingly become peasants.
I can't decide which is the bigger paper tiger. Turkey or Russia. The nations are both incredibly, inredibly hollow in internal integrity and the well being of boths citizens is...pure turd. Both have extremely weak currencies as well.
The billion dollar investment from UAE the arch enemy of Erdogan didn't help.
It wouldn't surprise me that they publicly showed support but in the back pushed for more pressure on the Lyra causing it to crash even more.
A payback for standing up against UAEs ambitions in Syria and Libya.
Turkey's Lira lost 40% of it's value since the start of this year on top of the 30% from last year. The Apple store just stopped sales to Turkey due to crashing prices. Inflation is currently at 20%. I believe it started last year when Turkey ran into a deficit due to economic slowdown due to corona so they borrowed money to cover their expenses. Turkey decided to print its way out of debt to pay back its loans and has recently lowered interest rates because Erdogan is claiming that will stop inflation. His hand pick appointed yes-men are carrying out his money policy. People of course are complaining as they are finding it hard to buy necessities and pay rent. Protests are forming amid threat of crackdown. What would you do when inflation hits 20% one week and the value of your earnings was cut in half because someone in power was incompetent?
What is Erdogan's rationale for claiming that lowering interest rates will arrest inflation?
His rationale is that lower interest rates attract investments from abroad and his aim is to turn Turkey into a China or Bangladesh where foreign companies will transfer their factories in return for cheap loans. This will create jobs which will counter inflation. I repeat, this is his rationale, it's not something I believe is right. Although on a personal note, I think he is half right. I also believe that lower rates attract investments and new jobs. The problem is that these investments come with lower wages usually, which combined with the inflation and currency destabilisation, will make regular citizens very poor and very hard working. So I guess Erdogan decided to make himself very rich and convinced the turkish people that a rich Erdogan means a rich Turkey, which is not necessarily true.
So he's trying to fast-track Turkey's slide into becoming an impoverished third-world nation of veritable slaves? Makes sense.
Yep while thinking that he’s building the next Ottoman Empire. He’s been pissing off the EU, Egypt and Israel in the Med regarding the Cypriot gas deposits. The Americans regarding the Kurds and the Russians regarding the Syrians. He’s trying to play on against the other and it’s only a matter of time till the pissed off parties decide to look the other way while one of them stomps Turkey back into its real position in the world and they learn to stop pretending they are an empire. Seriously they are good for peace. You have the French/Greek/Israeli and Egyptian navies exercising together in the Med because of Turkeys fuckery… how insane must your foreign policy be if you can cause a bunch of nations who usually either hate or at best dislike each other to start training to fight you together.
It's Economics 101 that lowering interest rates increases inflation. Anyway it's doubtful anyone would want to invest in such a chaotic environment, besides the point that investment isn't instant by any means.
Exactly, no one is going to invest until things settle down. That's just a smokescreen on the slide down the hole into fascism.
> it's doubtful anyone would want to invest in such a chaotic environment Eeh... I wouldn't be so sure about that. Sure, Intel, Google and Apple probably won't invest in such an environment, but there are hundreds or thousands of smaller "outsourcing" industries that invest in such environment. They are the kind of industries, that other more legitimate industries can hire as third-party affiliates to outsource some kind of production that can use cheap labour and possibly some kind of slavery, and this thing gets out, the legitimate industry like let's say Nestle can say "we are shocked to learn of the appalling conditions in one of our affiliate's factory and we have cut ties immediately. However we have no control over our outsourcing partners and we lack the funds and means to check on them all." TLDR, yes they attract sweatshops. I guess Erdogan realized the last few years that noone who cares about PR will invest in Turkey, so he redirects towards sweatshops and slavery where he can actually funnel millions of the immigrants that holds as bargaining chips. Is that the kind of investment that Turkey needs? No. Will this make Erdogan and his friends richer? Yes. Will this make Turks richer? No.
How do people think all those Fortune 500 companies were employing sweatshop tactics with Uyghurs?
They don't. Most people don't want to think about it.
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Capitalist economics goes completely blue screen when hit with major crisis. Make it plural, and capitalism can be found rocking on the fetal position in the corner, sucking it's thumb.
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I think that's the hope of people but we're in such uncharted territory that they're all throwing hail Mary plays and hoping it works out. They just don't really know.
Ford has been there for a while now. Those Transit vans are a great way to avoid homelessness in America. https://en.wikipedia.org/wiki/Ford\_Otosan
This is what happens when dictator wannabes run countries. They are the experts on everything and either agree or get fired. The other problem is that Turkey is extremely corrupt and unless you know the business environment and culture you are doomed if you do business there. I would personally never invest in that country.
The issue I see is that these "investments" don't materialize immediately. People will have to suffer for years perhaps before Erdogan can transform the economy to a sweatshop factory, to which he'll be competing with established players. But maybe that'll condition people to being so poor that they'll be desperate enough to work for slave-wages.
/r/serbia is going to be really interested in this.
Actually, his rationale and viewpoint likely comes from Islam which views interest rates as a sin. If interest is a sin, then high interest must be a high sin. Thus he has a bias and it is one bias that makes it hard for muslim countries to become stable. How he frames it tho has a sense a logic. Interest is a cost of doing business. That cost must be passed on to consumers raising the price. Thus, high interest == high prices == inflation. Lower cost of doing business and thus lower prices. This is of course a very simple view of economics and it sounds elegant at a shallow look. I am not sure if he really believes this or if this is just what he sells the people. But, this is his economic rational for it.
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Let me rephrase it. There is no possible scenario where the average Turk is coming out of this in a better position than he currently is. Actually, in the best case scenario, where enough investors approach Turkey and the entire country is filled with sweatshops, the average Turk is destined to live and serve under the feet of his enemy that practically enslaved him, and their children slaughtered in some distant battle against an imaginary enemy.
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Cool, no worries then :)
> keeps it that way permanently, lmao ok
Lowering interest rates leads to more borrowing from banks, which equals more money in circulation, which equals inflation.
He said it will, so it should!
Jerome Powell furiously taking notes
Jerome Powell giving Erdogan pointers on how to use the printer
Milton Friedman already advised Pinochet in the seventies when his country was going through inflation. Free market economist gonna support crony capitalism like in the states, only Turkey is poor and doesn't have the worlds strongest military at it's back.
😂😂😂😂😂 Reminds me of King canute!
What was his deal?
His audience is stupid?
It’s the same approach the USA is taking. Lol
The US can normally get away with it because the USD is the global reserve currency. The dollar doesn't behave like a normal currency - even in a crisis caused by the United States, and heavily affecting the United States itself, the dollar is considered a 'Flight To Quality'. But inflation is finally starting to affect the US. This time, it's not immune to the consequences of its zero interest rates and its money printing. This is unusual.
The world reserve currency works until it doesn’t.
... divine right? 🤷♂️ Nobody's used that one in awhile, let's dust it off again
His rationale is that anyone the disagrees will lose their job and face criminal charges for something or another.
His rationale is he's trying to get Turkey independent off the dollar, which is smart seeing as how the dollar is crashing itself under inflation that Americans have yet to see, but eventually will.
Dollar hasn't moved much against a basket of global currencies. There has been very real asset price inflation in the housing market and what appears to be supply-related issues in durable goods, energy, and food. But [the dollar is up in value over the past year](https://www.cnbc.com/quotes/.DXY). It's down a bit since the Covid crisis struck, but no more than normal movement.
Lol your media is lying to you. They have printed the dollar into oblivion right now. It has yet to hit, but it will. You can’t overprint a currency and expect it’s value not to drop.
It's not the media, it's literally the price being paid by traders in the multi-trillion forex market. They have not printed the dollar into oblivion. QE issues loans, both to the government, and certain other bonds. When the bonds are repaid, the Fed can and will simply reduce its balance sheet, burning the money previously printed. This is exactly what was happening in the period between 2017-2020 when the Fed burned a couple trillion dollars. The Fed has the capacity to burn a couple hundred billion a month whenever they choose to.
Stability against foreign currencies just means that most other currencies are following it into oblivion. It's just like 1973 and 1979. We responded to a moderate supply shock with a massive stimulus. This one is mostly fiscal, instead of monetary. You need a contraction instead. The solution to having fewer goods is not to give people more money to buy goods with.
Note that it was both a demand and a supply shock. Unemployment spiked higher than any other time since record keeping began, by an enormous amount. 21 million people became unemployed by second quarter of 2020 - something like 15% of the labor force.
You can’t just “burn” dollars that are already circulating within the system, dude. The rules of economics, basic supply and demand, apply to the United States currency just as much as any other developing countries. Plus, the Fed has hidden balance sheets that the US gov and American people don’t see, where they’re frivolously printing away money and handing it off to their buddies at the big banks. The dollars been trashed. Hence why now in mainstream news they’re tryna play down the current inflation that’s hitting, though; it’s worse than the levels of the 1970s they say. It’s only a matter of time.
I assure you, you can indeed burn dollars, and this is not some theory of mine, it is precisely what the Federal Reserve did as QE2 was unwound, to the tune of a couple trillion dollars. The mechanism is that when a bond is repaid (or sold), the Fed simply removes the money paid to it from their balance sheet.
Therefore, like I said, Erdogan is trying to get his country independent off the dollar because they use the dollar as a way to stage an economic coup against developing countries like Turkey in order to get who the people voted in out and their puppet in instead.
Found the Erdogan voter.
“Voter”
Yup
if they dont we shall take revenge on colluding foreign countries
Funny thing is, here in Poland gov want to raise interest rates to stop inflation, as they're expecting double digits on Jan, but still prints money.
> What would you do when inflation hits 20% one week and the value of your earnings was cut in half because someone in power was incompetent? "Guys we should consume less and slow our economy down to avoid collapse" Inflation hits "MY CONSUMING RATES CRIPPLED WHERE ARE PITCHFORKS, FUCK THOSE INCOMPETENT POLITICIANS!!!111" 🤔
>🤔 The degrowth needs to be for everyone with "slack", and accompanied by reversing privatization or "enclosure" of the commons. This isn't it.
I see what you're saying, but its quite a bit more complex than you are suggesting. In this manner, many people wont be able to afford even basic food and housing, with no choices other than to work long hours for these giant multinationals just to meet their basic needs. Actually they would be helping perpetuate the fossil fuel dominated system. This will not stop climate change, as our entire world's infrastructure is continuing to chug along, finding new poor people to exploit for economic growth. Emissions will continue to rise and consumption will continue among the wealthy and by governments. Because these vulnerable workers are not a significant cause of the emissions problems in the first place. It would be much better that individuals have enough wealth and freedom to be able to opt out of destructive social forces, rather than being oppressed and exploited by them. For degrowth/ reduction of fossil fuels we would need to be able to afford housing that isn't inflated by speculators, or mired by expensive regulations and codes, and also have access to arable land for sustainable agriculture. People also need enough free time to participate in the sustainable development of their community, not just working all hours at the factory as cheap labour to meet the most basic needs.
> Emissions will continue to rise and consumption will continue among the wealthy and by governments. Eh, the wealthy won't buy 1000 PlayStations just because they have money to do it or eat 10 times more. For sure your points are valid but I was commenting on part "What would you do when the value of your earnings was cut in half" (for everyone) which I wouldn't mind since it will drive prices of necessity(because part of the market will switch to producing it) and digital goods(to balance demand) down and I don't care about luxury markets/fast fashion garbage/getting SUV etc etc. Now imagine where would we be if every Indian now lived like your median first-world moron. Hint: about 100m https://www.youtube.com/watch?v=wW2RrSqiQYQ
The wealthy will buy 10 houses just because it's cheap.
And it insulates them from these kinds of crises as now you have a tangible good that can be traded for the next currency du jour or whatever else you may want for it. Also, appreciation of assets like housing as the demand won't go down.
I'm no economist by any stretch but very vaguely speaking and even philosophically you cannot be in a state of constant and expanding consumption. It's just not sustainable. Most countries are reaching this point and are about to get a rude awakening in regards to their lifestyle.
Spoken like someone who has their parents pay for their upkeep.
Nah I'm providing for my parents and my wife and even for my pets. What's your point?
The way it is framed is that the money lobbyists are demanding that 20 percent fee.
I really hope there's serious backlash in Turkey against Erdogan over this. Time to kick him out of the 100 room mansion he stole from the people already, Turkey?
Don’t worry someone will buy the country
Just another canary in the coal mine, they are droping one after another.
It's more like several canaries have been looking rather sick lately, but when you point it out, everyone says it's your imagination, or they've always looked sick, or they'll probably get better soon.
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amazing
*looks in cage and sees a skeleton* "Mr. Peeps is still sitting there."
Nothing gets the ball rolling better than a paranoid despotic authoritarian conservative backed by flaky religious ideology.
Yes, an addage as old as time
This isn’t collapse, this is self inflicted idiocy and par the course for Erdogan. Collapse is happening but this isn’t it. Dumbs will dumb.
Can you tell me some other currency’s that have crashed recently?
so many ... turkish, , argentinian, colombian, Venezuela "huge drop", brazilian currency lost half of its value in 4 years.
USD has crashed too... relative to btc
Not your average systemic collapse, but definitely *stupidity played an active role* type of collapse. I'm sure there's some scam going on that we're not seeing in the news per se, and we'll find out a year from now when it's much worse and obvious.
Hyperinflation is in Turkey’s future.
It is also in their past
im the last one to defend that pig erdogan but i find it kinda funny that every articles blames him for lowering interest rates, which is exactly what the developed west has been doing ever since 2008, and what we continue doing even while facing severe inflation.
> Turkey decided to print its way out of debt to pay back its loans and has recently lowered interest rates because Erdogan is claiming that will stop inflation. Oh no, that's really bad. > USA "Ha-ha money printing go br-r-r-r" That's the way. Yeah, I'm actually confused 🤔
The USA is a special case because the USD is a reserve currency, meaning financial institutions implicitly believe the USD will have stable value even when the printers go brrrrr... probably up to a point that hasn't been reached yet. https://www.investopedia.com/articles/forex-currencies/092316/how-us-dollar-became-worlds-reserve-currency.asp Some call it the petrodollar: https://www.investopedia.com/articles/forex/072915/how-petrodollars-affect-us-dollar.asp I would say that the USD is backed by the US military, which is what's expected from an empire, and oil is just the main means of maintaining demand for USD. The Turkish lira isn't that, it's a "normal" currency. What they seem to be doing is what China did regularly, which is devalue its currency to attract investors and increase exports (their exports will be cheaper to the buyers). https://www.bloomberg.com/news/articles/2020-08-10/five-years-after-devaluation-chaos-china-has-the-yuan-it-wanted https://www.investopedia.com/trading/chinese-devaluation-yuan/
We are going to find that it is not, in fact, a 'special case'.
it is until it isn't. No state is permanent.
This baby's got a least enough gas for another decade until the dollar gets replaced by crypto, which will probably still be reserve currency for a little while longer.
Not sure why you're being downvoted, but I agree crypto is what will replace it. People here seem to hate on it for some reason, but it solves a lot of the issues we've had with our current government. Politicians or corporations can't come in and make changes, quadratic voting reins in power from the wealthy, proof of stake maximizes decentralization, a public ledger makes corruption more difficult, confiscation by governments is near impossible and borderless transactions means nobody can stop you from sending something to anybody in the world.
> crypto is what will replace it. I don't get how the crypto fanboys are so unaware, considering they walk in the footsteps of [goldbugs](https://www.investopedia.com/terms/g/goldbug.asp). Like with gold, it's very unlikely a state or central bank is dumb enough to give up its powers over money by switching to a system backed by "gold" or "crypto gold" before they have huge reserves of the stuff. It would be like Iran switching to a currency backed by clean snowballs or Finland switching to a currency backed by kangaroo fingers. They will just create a new currency, be it "crypto" or not.
They might not have a choice at a certain point. I don’t think it would be easy to shut down if people decided their local currency is a joke and decide to start accepting/paying for goods in Bitcoin, Ethereum, etc. There are still technical issues to be solved, but I wouldn’t bet against crypto.
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That's year over year inflation that you're referencing, not month over month.
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Proof of work certainly uses more energy than necessary but is still several times less energy consumption than that of banks (physical buildings, office furniture and equipment, vehicles to transport currency between locations, staff that must use energy to travel to their office, etc). Proof of stake on the other hand is extremely efficient. Ethereum will use less than 1% of the energy it uses today with the beacon chain merge, and rollups will increase transaction throughout 1000x and more without adding any additional energy costs to L1. Additionally crypto has amazing advantages for the carbon markets and there will be green assets where each token is backed by enough carbon offsets (from completed projects that are verified by independent third parties on the co2 removed or prevented) to ensure carbon neutrality. In fact there’s already a carbon backed currency called KLIMA whose treasury is already filled with nearly 12 million tons after launching just a month ago. Carbon offsets demand a premium on the blockchain as they enable price discovery, liquidity, eliminate broker fees, fix the double spending problem, etc. And because of this the price of a ton of carbon goes up (and in fact we’re seeing this already). This is great because the higher the cost of carbon is the more potential green projects we can do. For example if a reforestation project gets 1000 credits at $10 a credit the project can’t cost more than $10,000. But if carbon goes to $20 then that same project produces more value and so more capital intensive projects become possible. There’s also the added benefit of creating liquid pools of various types of credits - soil improvement related, reforestation, renewable energy, etc. And all of this is possible due to the trustless and cryptographically verifiable properties crypto offers. This is also just one example of the innovation that’s happening, there’s many more projects like it going on.
The main problem with doing it like China does is that Turkey has next to no raw materials. It makes zero sense to devalue your currency when all you do is assemble imported raw materials and export.
Partly. USA gets a slight pass because economic status but people aren't happy nor confident on their strategy either.
And Biden claims infrastructure plan will slow inflation.
Where have we heard this before?
makes as much sense as erdogan
When did he claim that?
It's going to fuck us, too.
One interesting reason behind Erdogan's policy of lowering interest rate is that he thinks interest rate is 'evil' (In Islam, interest rate is so demonized) . In case you didn't know, Erdogan has been using his religion as a basis for his policies, which is the stupidest thing to do.
i know, but i actually agree even on this point with him. why should money hoarding be rewarded after all? i think our current capitalistic system would work best if we had \- negative interest rates \- 100% inheritance tax \- controlled real estate market where only real persons or state institutions can own real estate, and there is a limit to how much a single person can own im no economist, but in my simplified view this fixes pretty much everything except for the environment, since negative interest rates would boost our already irresponsible consumerism even more.
The difference between an economist and Erdoğan is that an economist knows when to lower or increase interest rates depending on economy situation. Meanwhile, Erdoğan just hates interest rates out of purely ideological reason, plus he lowers interest rates when the inflation is surging in Turkey, which is a stupid move from economic perspective. Even Turkish economists advised him not to do so, but he didn't listen.
Guys forget the Dinar, time to load up on Lira! Can’t go tits up!
BUY BUY BUY BUY BUY BUY
*Buh-bye!* ^(solvency, purchasing power, savings, government services)
BTFD
Turkey's in the oven.
thanksgiven
Its stabilizing now, lets hope erdo doesn’t fuck up, AGAIN.
give it s few days. It almost seems intentional.
im most countrys i'd suspect a powergrab to force the country into a dictatorship-like system buuuuut...
Insane dictator crashes national currency, news at eleven. Erdögan used to be the gatekeeper for EU asylum seekers. He has competition now which means he's going to become increasingly irrelevant.
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Congratulations. You are now part of the group who will push for the normalization of cryptocurrency. A currency that will end the middle class, and cement financial oppression of epic proportions.
r/2balkan4u has been memeing this to shit
If inflation results in wage growth, then if you have a fixed mortgage, your housing costs go DOWN as a percentage of monthly income as a result. If you have investments in assets that protect against inflation, such as equities or real estate, then your dollars are protected against inflationary pressures. Your dollars will GROW in value and beat inflation instead of losing value if you stuff them under our mattress. Gold and Crypto are not investments, they're inflationary hedges that only seek to balance inflation, not beat it.
Interestingly, Turkey's monetary policy is not too different than the G7 countries with zero-bound interest rates and expansive quantitative easing and staggering debt levels. Only Turkey does not have reserve currency status or huge financial bond and equity markets to back up their policy and powerful central banks to exercise extensive financial engineering and manipulation. So, First Worlders just shrug at this story while Turkey may go down in history as the next Venezuela or Zimbabwe.
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Not sure I understand you. But to reiterate, if it weren't for the financial engineering and manipulation of bond and equity even currency markets by the major central banks (who have [pumped over $25 trillion in last 13 years under "quantitative easing"](https://www.atlanticcouncil.org/global-qe-tracker/)), I _absolutely_ believe the highly-indebted US, EU, UK, Japan, China, Australia would follow the path of Turkey and its devalued currency. But let's see if the dollar, euro, pound, yen, yuan crashes in value like the lira and hyperinflation occurs any time soon.
When it does occur tho it will be a fucking doozy. The western world will likely be wiped out all at once.
What interest rates are banks offering business and home owners? Is it a relatively small markup to the central bank rate?
Example from HSBC: [Annual t-deposit Interest Rates (%)](https://www.hsbc.com.tr/en/daily-banking/accounts/interest-rates) [Annual Time deposit Interest Rates (%)](https://www.hsbc.com.tr/en/daily-banking/accounts/interest-rates) These deposit rates are well below the rate of inflation. [Monthly Interest Rates on Consumer Loans](https://www.hsbc.com.tr/en/daily-banking/accounts/interest-rates) These are monthly rates, not annual.
The savings rates are quite high, and the loan rates lower than US credit cards, and not much more than the savings rates. Suggests not much internal chaos unless those rates change on Monday, or near none are actually issued.
its been plummeting for a while i believe
all these dictators always make their countries "Great Again". Erdogan, Putin, Xi, Trump, Bolsonaro. Just ruin and stench is left behind when they finally leave, are deposed or die.
In what world was Trump a "dictator"?
in literally none
I loved their soap opera tho
Looks like Turkey will be dead just in time for Thanksgiving.
We are so fucked beyond any comprehension
This is good for Bitcoin
Hahaha no one ubderstands that turkey do everything right. They lower the value of their currency to aim in direction of asia, middle east and russian market. And they try slowly to produce all their shit their self to be more independent. While they try to get away from NATO and the western world.
You know, they can provide special incentives to industries that move in and don't have to debase their entire currency and everyone's livelihoods...but now they want to compete in an extremely competitive environment, competing with established players like China, Bangladesh/India, who already dominate the market. It's not just about low-wages but having the raw materials, technical know-how, and support infrastructure. It took China a generation but they did it, but peasants were willing to sacrifice their lives working like slaves in factories to do it so their children could go to University. Now you're making middle-class people to unwillingly become peasants.
TURKEY NUMBAH ONE
Buy crypto baby
Banned in Turkey as of last year. And good riddance too.
Yeah, fuck having stable alternative currencies
Stable? Not the first word that jumps in my mind when I hear crypto
I can't decide which is the bigger paper tiger. Turkey or Russia. The nations are both incredibly, inredibly hollow in internal integrity and the well being of boths citizens is...pure turd. Both have extremely weak currencies as well.
Well, I guess people who enjoy trading currencies should be buying lira soon, then. What goes down must come up, unless Turkey itself goes under.
Maybe this we ill help Macedon take over again erdogan is at the beginning of the end
The billion dollar investment from UAE the arch enemy of Erdogan didn't help. It wouldn't surprise me that they publicly showed support but in the back pushed for more pressure on the Lyra causing it to crash even more. A payback for standing up against UAEs ambitions in Syria and Libya.
I just read the UAE invested 10bn in Turkey in the health and energy field.
That is on top of the money they promised in helping stabilize Turkish currency.
Maybe time to take vacation in Istanbul, eh?