A professor of applied economics says Turky’s inflation rate has risen by an incredible 100% this year, up 29% this month.
Steve Hanke of Johns Hopkins University, who served for a year at Ronald Reagan’s Council of Economic Advisers, said that the official calculation of inflation through a basket of goods works when inflation rates are normal, but when inflation is very high it should be measured against the dollar by calculating changes in purchasing power parity.
The price of Turkish Lira (TRY) against the dollar has dived recently by 50% or more, while during the past decade it has effectively crashed.
The Turkish Lira was at near dollar parity in 2008, but since then it has plunged as high as 7x at the recent low, with 1 dollar now worth 6.35 TRY.
That recent crash with some speed may explain a recent near doubling of the official inflation rate to now 18%, up from 10% in April.
An inflation rate that is considerably higher than the 2% you’d ordinarily expect, with Turkey not being a stranger to such high inflation.
In the 70s, for example, Turkey’s inflation rate dropped to -4%. A decade later, in the 80s, it jumped to an eye-watering 180%.
Inflation primarily moves due to the increase or decrease of money supply or its velocity. In the most basic form, supply and demand dictates that if 100 dollars are chasing something, then its price would be lower, thus lower inflation, than if 1,000 dollars are chasing the same thing.
Whether it is 100 or 1,000 dollars, however, is determined in the current financial system by unelected and unaccountable bureaucrats sitting next to physical or digital money printers.
Usually these “bureaucrats” have commercial banks as “shareholders.” Commercial banks would of course like to lend (print) more and more as the interest they charge makes it very lucrative. For the rest, any money lent (printed) devalues their purchasing power which they all abstract under the word inflation.
Within our lifetime this con has become comically obvious with Venezuelans right now effectively chucking out their Bolivar as they chuck ordinary trash.
Within the current fiat system there is no anchor as to just how much money can be printed either by central banks or commercial banks. Which means we have to trust them they won’t print too much, either intentionally or unintentionally.
That trust has often been abused, arguably even as recently as 2008 when the FED maestros kept increasing interest rates 17 times within two years in endless greed for commercial bankers to profit from ever rising interest demands on debt lent at far lower rates, until all mortgage owners went under and banks crashed.
No proper enquiry was undertaken to find out what happened, what lesson has been learned, what needs to change. There was no Royal Commission inquiry in Britain, or its equivalent in US, unless one counts the voters’ rebellion in Brexit and Trump as an equivalent. No one went to prison for the loss of trillions.
Public blockchain based cryptocurrencies, in contrast, have a supply level determined by the people, the nodes. That can change if all those who download and run the node software as well as all the other complex components agree that it should change.
So providing an alternative to bureaucrats with legal printers who do not even have their deliberations in public, rather deciding in secrecy and behind closed doors just how much our money should be devalued by their endless legal counterfeiting, or indeed just how much we should pay for debt taken long before.