Faced with rising hyperinflation -- that's what it is -- Erdogan has repeatedly ordered Turkey's non-independent central bank to cut interest rates, making money cheaper and easier to borrow for everyone, flooding the economy with cheap cash, contributing to greater inflation.
Remarkably, Erdogan and his cronies do not think they have made a mistake! They continue to act as if they know better, put on a brave face, reduce rates further, and wait for their idiotic actions somehow to work, as if by magic. Quoting from the OP: "Turkish officials say that their measures will bring inflation down in the coming months."
They're so far off in their understanding of monetary matters, they're not even wrong. And yet, they cannot see it. Their blind obstinacy reminds me of a quote by John Kenneth Galbraith:
"Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof."[a]
Erdogan isn't thinking about what will help the economy. He's thinking about what will enrich his loyal flunkies and goons. A captured national media takes care of the rest.
This is the correct answer. Turkey's ruling elite are converting assets and Turkish lira into EUR, USD, gold, etc., and will be leaving the general population, those without access to foreign currency, holding an empty bag. Turkey recorded a capital and financial account deficit of 7357 USD Million in January of 2022, and I'm certain its much worse now.
Well, the game plan seems to be :
1- Increase fiscal spending
2- Increase wages
3- Give out very cheap credits from governemnt controlled banks at negative rates.
and you will get increase in consumer spending(happy people) and employment which will cause increase trade deficit to explode[1] unless you have some money of unknown origins(the net errors omissions) to pay the bill[2].
If they have a stash of approx. $60 B parked somewhere, which seems they do, they may succeed in 'buying' the elections coming up. Need to take a closer look at the polls in the coming months to gauge voter sentiment, which has started turning in favor recently. This is a crystal clear example of why non-independent central banks and monetary policy is dangerous for democracies, you can basically try to buy the elections...
>Remarkably, Erdogan and his cronies do not think they have made a mistake!
Imagine thinking you are Napoleon and this banker or economist tells you to stop waging war. You will think that you need to silence this busy body for your noble mission.
> Remarkably, Erdogan and his cronies do not think they have made a mistake!
This is not an Erdogan/Turkey problem. See how the BoE panicked and relaunched QE despite 10% inflation in order to rescue the bonuses of pension fund managers.
If Credit Suisse goes insolvent and threatens to take Deutsche Bank with it, I guarantee you'll see the ECB cut rates and put Pan-Eurozone QE on hyperdrive, regardless of prevailing inflation.
This is, as it always is, a human problem. If crisis A hurts everyone, but crisis B hurts your buddies worse, you're going to fix crisis B at the cost of exacerbating crisis A every time. It's how power works, everywhere.
Raising rates and creating a potential recession seems, on its surface, like the absolutely wrong way to handle an economy with inflation. And yet after 5 minutes of an economist explaining it to me, it becomes the obvious right move.
Kind of amazing that world leaders can be so foolish. And yet typing that sentence made me feel foolish.
There was a Planet Money podcast in the spring that went into this in more detail. I don't have all the details on full recollect but I think the gist was that in the past, he grew up where interest rates were too high for small business to grow or access capital. He saw these small business have to raise prices to create capital or shutdown because of no capital and has locked in this perspective. He is all in on easy money for businesses to grow is key to preventing inflation. But obviously he doesn't get the part of too much money chasing limited supply.
>Remarkably, Erdogan and his cronies do not think they have made a mistake! They continue to act as if they know better, put on a brave face, reduce rates further, and wait for their idiotic actions somehow to work, as if by magic.
He knows that worst case scenario means a bailout from the West. Turkey is a nuclear power and a key NATO ally. They will not be allowed to fail.
Interestingly the following article suggests that while there are US nuclear weapons stored in Turkey the Turkish air force hasn't had any capabilities to deliver these weapons for two decades and the US doesn't have any nuclear capable aircraft based there either (although obviously easy to fly them in):
I cant be the only person who wonders if the US quietly moved the 50 remaining bombs somewhere else a long time ago - having a bunch of 60's era nukes in a basement on the boarder with syria seems a) no deterant at all to anyone, b) a massive liability.
My read is they are not there, and havent been there a while.
When two NATO allies, Greece and Turkey, were on the cusp of war in 1974, the United States secretly removed all of NATO’s nuclear weapons from Greece and cut the arming wires of every nuclear weapon stored in Turkey, rendering them inoperable.
“It is U.S. policy to neither confirm nor deny the presence or absence of nuclear weapons at any general or specific location,” said Air Force Lt. Col. Uriah Orland, a Pentagon spokesman. “The U.S. does not discuss the movement of nuclear weapons, the capability to store weapons at U.S. or foreign locations or planning for any of these activities.”
Indeed, might be the bomb casings are there and the pits (or other vital components) long since removed and they are there for purely political reasons.
I'm sorry man. I recently visited turkey as a foreigner, and was shocked how far my overseas dollars went. I spoked to a Turkish taxi driver in the US, who reminisced 2007 where the lira was almost at the USD. Now you can get a full meal for $2.50 USD. I spent a night at a 5 star hotel in Istanbul, for the same price as a capsule hotel in Tel Aviv.
A lot of foreigners will think 'oh boy cheap holiday' seeing this news, but really it should make their stomachs turn. The common people suffer over such a frustratingly avoidable problem.
How much would e.g. an iPhone 14 be in percentage terms of typical middle class income in Turkey? Just to give us an idea of typical electronics that we often take for granted.
Cheapest iPhone 14 (not pro) is 30999 TL. Minimum wage is 5500 TL in Turkey. %48 of workforce in Turkey earns Minimum wage. A junior software engineer mostly earns between 10-30k TL. A teacher earns around 8-9K. But there is too much variation, inequality so numbers may be way off.
If it's 30999 TL there seems to be additional tax added by Turkey. I think that phone is supposed to be cheaper, like maybe half of that. How does this happen - import taxes on foreign goods?
Lowering interest rates will probably make the situation even worse for the Turks. But to be fair, 12% is a high interest rate relatively so the problem is probably note the rate itself, but that the government has set up some innovative method of printing and distributing money to the people.
I really don't understand how these crackpots keep ending up at hyperinflation as a solution to their problems. Even the people who think they are coming out OK through the process are going to be staring at the burned-to-charcoal ruins of an economy. Just stop printing money and let prices settle. Organise food an shelter for anyone in trouble instead of trying to print a path to prosperity.
We know what works. When in doubt copy any of the hugely successful Asian economies. Copy Hong Kong from 20 years ago, or Singapore. We're not short on countries going from poverty to wealth, the path is well-trodden. All else really failing, set up some charter cities and experiment. Entire countries don't need to go down every time a bureaucrat tries out stupid ideas.
"I really don't understand how these crackpots keep ending up at hyperinflation as a solution to their problems."
Two major factors, I think. One, hyperinflation feels better today at the cost of feeling worse in a couple of months. This is true even when the hyperinflation starts hitting hundreds of percent per day... it's still easier to let it go for another day than to do the now Herculean-levels of work necessary to do the right thing. This is very difficult for politicians to pass up. Some others in this conversation have marveled at how bad world leaders can be with the economy, and part of that is even if they did know exactly what the right thing to do is (itself actually a questionable claim, but let's take it at face value for a moment), they're still constrained by politics. A politician who says "Hey, everyone, let's take some pain for the next six months so our next 10 years will be better!" will be right out on their ear in nothing flat. There isn't a single power center they have willing to do that, not "the people", not their generals, not their rich benefactors, not their civil servants, nobody.
Secondly, hyperinflation gives a lot of power to the people in power. Inflation creates a temporal gradient that people usually ignore because it's not that large, but in high inflation environments, the closer you are to the printing press, the richer you are. The printing press prints you fresh new "today" currency. You use it to go out and buy. But a lot of what you're buying is really priced in "yesterday" currency. The act of buying pushes up those prices again, but you got yours. It's everybody else who is dealing in newly-high prices but trying to chase them with yesterday's currency (or worse, last week's currency) who has the problem. (Currency units are not literally labeled like that, of course; they're nominally fungible. But when you have today's print, you've got more to go chase things with.) This works right up until there's nothing left, but then you end up with effectively 100% of that "nothing". I think there's a lot of people in power who find this a very appealing proposition.
(In fact I would consider this one of the major unsolved problems in practical economics, if not the major unsolved problem: How do you deal with the existence of the power to create money/currency? Historically speaking, those who have it are completely incapable of resisting the temptation to use it to benefit themselves. There is no known solution. Physical standards like gold/silver get creatively adulterated over time, fiat simply has this capability built in, barter is so fantastically unstable that it can't even progress to the point that you can ask this question. A solution may not even exist, at least with humans as we know them now.)
It's very interesting that Turkey is castigated for cutting interest rates.
Yet they never mention the poster child of putting interest rates up.
In Zimbabwe, which has followed the World Bank and IMF process, interest rates are 200% and inflation back at 280%.
There comes a point when we have to accept that interest rates don't really have that much power to control inflation in the real world. It's a religious devotion to a theoretical model.
> In Zimbabwe, which has followed the World Bank and IMF process, interest rates are 200% and inflation back at 280%.
> There comes a point when we have to accept that interest rates don't really have that much power to control inflation in the real world. It's a religious devotion to a theoretical model.
I don't understand how Zimbabwe's experience is a refutation of the 'theoretical model'.
The model says that having nominal interest rates lower than the rate of inflation increases demand for loans, which increases the money supply, which increases inflation. If Zimbabwe's interest rate is 200% while inflation is 280%, then the model says inflation should continue to increase. Which is what it is doing.
Will be, I'm sure, the source of many research papers. But pretty horrible for people living through it: 150%+ yoy increase in prices! That's positively Argentinian.
A strong argument for independent central bankers.
Why would they write anything else in English? We don't write Deutschland or România either, do we?
The only strange thing is that CNBC decided to use the Turkish name of the country, probably from some misunderstanding of the recent official UN name change.
May or may not be much fodder for the research papers. We've done this so many times before that there's really just nothing left to study/learn beyond coloring in the picture of misery with higher resolution.
We've known for at least a century (really, about two) exactly how this works. It's just that people are stupid and they keep asking for it again and again.
> A strong argument for independent central bankers.
It's a weird sort of thing. At one level it's easy, just elect politicians who respect independent central banks. But it's the politicians from whom the central banks are independent, so can they really be independent if their independence depends on the people who they're independent from?
Erdogan started his career with relatively independent central bankers, but since they made decisions he didn't like, he replaced them with cronies. Erdogan was also able to change the constitution to reflect his preferences, so it isn't an argument for entrenched independent central bankers either - a person who can get the constitution changed, but who doesn't get rid of the independence of the central bank is choosing that.
We can go back and say it's an argument for electing politicians who respect the independence of central banks, but it's something like an argument that says we should elect good economic managers: if you could reliably get good economic managers, it doesn't matter if you have independent central banks, and it doesn't matter if you have independent central banks if you have bad economic managers. And on the other hand, most voters just aren't going to consider the independence of central banks when voting.
With Erdogan, it doesn't matter how the economic management is structured: you're going to get low interest rates and high inflation rates and generally spook the market. Your goal has to be not to get Erdogan, over and above any argument for central bank independence.
Really, all we're left with is the political position that good economic management is better with central bank independence - a position Erdogan fundamentally disagrees with.
It's all the same with Pierre Poilievre in Canada (currently leader of the Conservative Party and the Official Opposition), who stated he wanted to fire the chair of the Bank of Canada because he didn't agree with their decisions. Once you do that, you don't have an independent central bank any more. So the only way for Canada to retain central bank independence is not to vote for Poilievre. But in Canada as in Turkiye, the central bank's independence from politicians would be dependent on politicians i.e. there wouldn't actually be central bank independence.
At the end of the day, "central bank independence" only exists if major political players in government and opposition agrees to it. Surely they should look at this lesson, and I think the lesson of recent weeks in the UK too. They both tell you that governments are up against limitations in what they can do and that the governments who respect those constraints will govern their countries better than the ones who don't, even when they make stupid decisions.
I think I would be greatly relieved if there was a different phrase, one that tells you what we mean, rather than something that is impossible at the time it is most needed.
What's the theory that says interest rate cuts will _lower_ inflation? There must be something, otherwise they wouldn't do it, no matter how ridiculous it sounds, right?
He literally believes that inflation is caused by high interest rates, because he thinks that the Quran says so. [0] This is a common belief among a certain crazy subset of islamic economics, but to be clear, is not mainstream belief among Muslims.
Does Erdogan believe that the Quran says inflation is caused by high interest rates? That would be fascinating if true.
However, the article you cited does not make that claim. It merely says that Erdogan is opposed to high interest rates because they are considered "usury" and are thus forbidden. This is different from saying that high interest rates cause inflation.
Do you have a different source specifically for the claim that the some people think Quran indicates that high interest rates cause inflation?
this headline is the closest thing in it he says:
'... and they are complaining about cutting the interest rates. Don't expect anything different from me. As a muslim, I'll continue doing what the religion/quran orders me to do. This is the ruling (of the religion).'
That seems to, again, say that Erdogan believes high interest rates are forbidden under Islamic law; but that is different than saying that the Quran says high interest rates cause inflation (as the parent claimed Erdogan believed).
To be clear, I don't hold the position that Erdogan doesn't believe high interest rates cause inflation -- I don't know what he believes. I am just trying to find a source that backs up the parents' claim, if there is one.
Not sure, this came up in a odd lots podcast. You can find it by searching Understanding Turkey’s Bold Plan to Stabilize the Lira.
It was 10 months ago but the basic idea, I think is that they are trying to get Turks to hold lira instead of dollars.
Also its important to keep in mind that the typical central bank and economy dynamics that everyone has in their head typically is theories and dynamics mostly focused on the US and their market and there are axioms there that might not be true in the Turkish economy.
Now I am not saying that what they are doing is going to work or its good. Just reminding everyone that what holds true for the Fed is not necessarily true for every other central bank.
My personal opinion is that their plan is probably not working and they are trying to postpone the recession to after the elections.
According to Erdogan, it is not about economics. He says that is is following Islamic teaching. Technically any interest being charged is haram.
> “What is it? We are lowering interest rates. Don’t expect anything else from me,” Erdogan said Sunday in televised comments from Istanbul. “As a Muslim, I’ll continue to do what is required by nas,” he said, using an Arabic word used in Turkish to refer to Islamic teachings.
> According to Erdogan, it is not about economics.
This is not accurate. He literally believes in economic theory that holds that interest rates cause inflation. The root of this theory is Islamic belief, but it's not that he believes that inflation is a necessary evil to stick to his principles, he believes that increasing interest rates would increase inflation.
He has been very open about this belief for a very long time. The short slogan he's used is, roughly translated, "interest is the cause, inflation is the result".
You may be interested in reading about the history of the quantity theory of money, particularly the disputes about it in the 19th century.
In particular, the British "Banking School" was opposed to the quantity theory of the "Currency School". The Banking School claimed that inflation was cost driven, that interest rates were one of the costs of doing business, so that raising rates would increase costs which would increase prices.
While superficially reasonable, this argument was destroyed Wicksell [1] who provided a more careful economic model which made it clear that rate-driven cost-push inflation was not at all plausible as a sustained cause of inflation.
Prior to the 17th century there was never any interest on sovereign debt. It was the personal debt of the sovereign, imposed upon the ruling class and died with the sovereign.
Paying interest on sovereign debt is a relatively recent invention that came about with the rise of banks.
If you're Islamic then paying interest remains a sin. That is what Erdogan is following.
Having said that paying interest on sovereign debt is, effectively, a basic income for people who have money. Getting rid of it is a tax on rich people with savings.
However if you do that, then you have to set government taxation and spending policies for a Full Liquidity model of an economy, not a Full Funding model of an economy.
Erdogan has not done that. Other than interest he is still Chicago School from what I can tell. And that way leads to disaster.
> Having said that paying interest on sovereign debt is, effectively, a basic income for people who have money. Getting rid of it is a tax on rich people with savings.
A zero nominal interest rate, while possible, generally requires the central bank to implement a policy of deflation (see [1]). For example, in the US, the long term real interest rate on US treasury securities is 1.74%, so setting the nominal interest rate to 0% would require a deflation at a rate of (1.0174)^-1 per year (~1.71%). While this would eliminate some of the interest earned by "people who have money" it also has the counterbalancing effect of increasing the real value of the money which those people have saved, due to the deflation.
Unfortunately that 'Friedman rule' belief relies upon there being a fixed amount of money and a one-to-one relationship between money and stuff. There isn't a fixed amount of money. There isn't a one-to-one relationship between money and stuff. Money grows and shrinks depending upon the transaction requirements of the real economy.
A Full Liquidity rule, on the other hand, allows the government sector to adjust its taxation and spending positions and reduce the level of taxation required in a full employment environment.
> Unfortunately that 'Friedman rule' belief relies upon there being a fixed amount of money and a one-to-one relationship between money and stuff.
I'm not sure what you mean by this. The Friedman rule does not assume there is a fixed amount of money -- the rule itself recommends in some circumstances that the central bank should increase the supply of money.
The central bank is not in control of the quantity of money. Money is created dynamically by all entities in society as and when it is needed. That's what trade credit is all about, for example.
> Turkish officials say that their measures will bring inflation down in the coming months, but many economists disagree and expect consumer prices to rise and the lira to fall further into next year.
Yeah this is his primary belief tbh. I think the Islamic reasoning of interest rates are haram is more of a false flag reason. He genuinely wants to boost exports and thinks this is the way out. Either way both reasonings are not gonna work out well
When a country’s inflation rate hits 83% I feel like the conventional wisdom of raising interest rates to match or exceed the inflation rate won’t work. They’ve already lost control of the situation.
I think the general meta-argument "if this thing didn't work why would someone do it?" just doesn't really work. It's at best a way to identify curious decisions.
Turkey is not just some “third world economy”. It’s manufacturing exports have been doing great with cheap domestic currency and the tourism sector has remained strong, especially with the influx of involuntary tourists from Russia.
Turkey is also a NATO member and occupies strategic territory. It will not die on the vine and wither away in silence.
Turkey is India in ten years, Argentina 15 years ago, with the advantage of being able to extract some fossil fuels.
They wasted demographic dividends, and they don't have enough natural resources to make up for it (but they have some). They didn't fucked up as much as Liban did, so they have that going for them.
The only non western country to succeed their demographic transitions without abundant natural resources is Cuba, but imho that was thanks to the USSR.
As a Turk, I also see Erdoğan's "fiscal ideas" as "crackpot", but he may be betting on something like "replacing China as a manufacturing engine for Europe", or "staying competitive in slower world economy."
Explanations like "he's an Islamist opposed to interest" does not hold water. It's just something he uses to explain the policy to masses. I'm almost sure that the reason behind high inflation / lower interest rates is intentional. He's intentionally making the population poor. He can't tell this straightly, so he's using religious slogans.
I'm not sure about the real reason, but I don't think he'll lose the next election in 2023, and he knows to calculate the effects of his policies. "To feed up his cronies" is a lazy explanation. He already had that power, why would he risk that opportunity with crazy politics.
Also, most of the savings (>80%) are in USD here. Most of the assets are priced in USD. When you buy/sell a house, you talk the price in USD. Working class with a fixed income is certainly affected direly, but the economy itself is moving. Personally I saw many times he played his cards correctly, despite seemingly unreasonable moves. I'd like him to go, but I doubt the situation will cause him to lose election.
It is all about bad governance and leadership... Look at Argentina with half population and 3x more cultivatable. Don't surprise to see the parity >= 80 TRY / 1 USD in 2 years!
Turkey is #6 in the world for inflation. Behind, Zimbabwe, Lebanon, Syria, Sudan, Venezuela
Not good company for Turkey and their still rising hyperinflation. Erdogan still very popular and likely to win his election next year. Which these financial issues have negatively impacted his popularity.
The thing about having crazy monetary ideas—eventually money will go where it wants, and you are left looking like an idiot. You can make all the claims you want, but an economy is witnessed by everyone, and you can't fool them all.
Sorry but this is ridiculous. In any language, we have different names for places than in those places’ native languages, and that’s perfectly normal. “Türkiye” is impossible for a native English speaker to parse - it isn’t even written in our alphabet. Are we to start writing Sweden as “Sverige”, or Kazakhstan as “ Қазақстан”? Should we start pronouncing “Paris” “Pah-reee”? We don’t do either of those, because we understand that languages have their own names for places, and don’t want to insult native speakers by butchering the pronunciation.
Even more insane is Erdogan is demanding Turkish Airlines rebrand themselves. It’s heartbreaking to see the hard work of everyone at Turkish Airlines wasted by such a strange decision. It’s probably Turkey’s most recognizable brands and extremely well respected internationally.
I could take that complaining seriously if English had single unified spelling system, but as you do each world different anyway, I don't think it is too much to ask to throw some umlauts there and adopt the official spelling.
I have no real problem with writing "Turkiye" if that's what those from the country prefer - but I don't even know how to type an umlaut on my keyboard. So in that sense, yes, it is too much to ask. I'm not going to pull up a virtual keyboard or google "how to type umlaut" to make a passing reference to a country.
Germans have umlauts and they usually put an "e" after the normal character. You can see this with domain names, for instance: https://buero.de/ (not affiliated) for büro
If you're on windows you can press Win + . (Period) to bring up a character selector, which includes emojis along with various accented characters and others from non-english alphabets
I don't think the average literate English reader really knows how to parse an umlaut - I sure don't.
And while the spelling system isn't necessarily consistent I don't see why we should change words that people do know how to pronounce to ones that we don't?
Do you mean to say that a strange character in one word keeps you from tokenizing the sentence? And hence you cannot make sense of the whole sentence because of that one character (syntax parsing → semantics)? Or do you simply mean that you don’t understand what that one single character is supposed to represent (or just sound like)?
I think it's weird that newspapers use it. The UN is a different thing, there are a bunch of official country names that are not colloquially used, but ultimately people will gravitate to call them the same name they ve been using for centuries. It's not a complete name change like Ceylon -> sri lanka
That's not entirely true. Kiev derives from the Russian Ки́ев, whereas Kyiv derives from the Ukrainian Київ--note that the Cyrillic orthography differs between the two languages.
One of the main reasons for the conscious effort to shift spelling is the fact that Russia is trying to invade Ukraine partly on the basis that Ukraine wasn't actually a real country and Ukrainians are just Russians. In that context, using Russian place names over Ukrainian place names for Ukrainian localities can be seen as a tacit endorsement of this claim, and this is why so many entities are consciously making efforts to use translation from Ukrainian, rather than Russia. (Although I, and apparently many others, seem to have to a hard time with "Odesa/Odessa").
That's how languages acquire words for foreign things, though. English also calls a certain plant "tea", because that's how the English heard the people they bought it from call it, even though in China and India they called it "cha" or "chai". English also calls a certain nation "Japan", which is quite distant from its endonymous "Nihon" or "Nippon", because that's what they heard from European explorers.
That Western Europe heard the name of a city from Russians first rather from its inhabitants is no different.
I mean either way it's a transliteration that's still not accurate to either pronunciation in its original form by sound. I don't have a problem with these sorts of political changes, just the way the wind blows, but it is funny to me when someone who doesn't speak either language attempts to correct other English speakers pronunciation when it's still not how a native Ukrainian would say it. Languages bastardize place names universally, there's no right way to say most places in most languages, they're all equally wrong.
Absolutely gutted that you had to witness a non-English-alphabet character on the internet today. I hope you find the inner strength to recover. Thoughts and prayers for you and your family.
Didn't stop a massive effort to change the English spelling and pronunciation of Kiev to the difficult to pronounce (for English speakers) Kyiv to pretend like it stuck it to Putin somehow. Along those lines next time Germany invades its neighbors we might as well adopt the Czech name for it (Nemecko, or land of the mutes) as an insult to stick it to the Krauts. Or if Hungary acts up we can use an archaic Czech name for Hungary that also means land of the pimples (Uhersko). I get the feeling Czechs didn't like their neighbors much.
Gosh, sounds like the Turkish lira is a poor store of value!
Right on the threshold of being a useless unit of account as well.
Shortly thereafter, it becomes a bad unit of exchange, unless you like taking wheelbarrows to the grocery store.
Turkey is a country of 85 million people. Y'all may scream until blue in face about cyberponzies, but do try to save some breath to explain how else citizens of this country might preserve their liquid wealth as things go pear shaped.
For extra credit, let's hear how this could never happen to an economic union that's a whole four or five times larger! I'm all ears and have definitely never heard "we're different" before, and if I have heard it, they were always correct.
Edit: worth it. I draw strength from your petulance.
>else citizens of this country might preserve their liquid wealth as things go pear shaped.
To buy cryptocurrencies they need to transfer their money to someone in exchange for crypto. They can transfer that money into another fiat currency or some other financial instrument. None of which would easily let you buy food. Of course, if you tried doing this at scale the government would find a reason to arrest everyone for it and then confiscate their wealth.
I've always looked at cryptocurrencies more as good alternatives to awful fiat currencies and unlikely to supplant good fiat currencies so long as those currencies are generally well-managed. You generally cite the Euro but don't forget that Bitcoin just lost like 70% of its value this summer (in addition to other cryptocurrencies losing much of their value as well), neither are immune to volatility. In this case in particular it's jaw-dropping to see just how supreme the USD is. Rising interest rates in the US to combat inflation are basically wrecking major currencies, including cryptocurrencies.
Personally I think long-term that the fiat monetary system will dissolve or be relegated to just a few countries (US for example assuming it doesn't collapse at the hands of the Republican party) and many countries (if they continue to even exist and depending on what amount of State is left over) will resort to bartering, a mix of USD and various cryptocurrencies, gold, and trading labor for commodities.
If (and you did) you had your choice at the start of the pandemic (pre or post crash, take your choice), between the dollar, BTC, euro, or the lira, which was the best choice?
Probably the one that's up 2x pre-crash and 4x just after, rather than the ones which are visibly eroding.
The dollar is of course the tentpole. Such a great basket to put all the eggs, innit.
Why limit your choices to only these specific assets from a "currency" class? Why not include other cryptocurrencies and fiat? And of what value is hindsight here anyway?
The other mistake that's typically made though and I could have expanded on this earlier in my post is in comparison of different "currencies" whereas each have different attributes. BTC for example as you note appears to be deflationary with respect to fiat currencies which are inflationary by design and policy. On the other hand I can't buy groceries with BTC so I would have died during the pandemic and Dollar and Euro would have been superior choices.
Indeed, the Fed Open Market Committee, which is the arbiter of interest rates in the United States is a 12-member body, so it would take at least seven people to do something this destructive here. (Of course, the FOMC members change over time partly via Presidential appointment, so to persist in such a bad idea for many years would take potentially hundreds of people to at least not interfere)
With the acquiescence of another 251 (218 representatives and 33 Senators), as well as (theoretically) the Vice President and 8 members of the cabinet.
Remarkably, Erdogan and his cronies do not think they have made a mistake! They continue to act as if they know better, put on a brave face, reduce rates further, and wait for their idiotic actions somehow to work, as if by magic. Quoting from the OP: "Turkish officials say that their measures will bring inflation down in the coming months."
They're so far off in their understanding of monetary matters, they're not even wrong. And yet, they cannot see it. Their blind obstinacy reminds me of a quote by John Kenneth Galbraith:
"Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof."[a]
--
[a] https://www.brainyquote.com/quotes/john_kenneth_galbraith_10...