Monday, March 22, 2021

Is The US Headed For A Turkey Moment?

Let me say right off the bat that the title of today's post is intentionally inflammatory and outrageous. How can the US possibly have anything in common with Turkey?  Well... let's for a moment forget the cozy relationship that Presidents Erdogan and Trump enjoyed, and look at monetary policy, instead.

For some time now Turkey has been under severe inflationary pressure and the lira has devalued.  Mr. Erdogan hated high interest rates (very unpopular with homeowners who saw their mortgages soar and with businesses that borrowed in hard currencies), so he kept pressuring the Turkish central bank to keep them low.  

That changed a few months ago when a new governor was appointed and raised rates.  The pressure came off the lira - but it was not to last.  He was summarily fired two days ago when he raised interest rates again - so, the lira plunged again. It is currently flirting with its old lows against the dollar.

What does that have to do with the US? Connect the dots: a fiscal/monetary policy that is seriously - very seriously - loose and a Fed chairman who insists inflation is not a problem, notably a gentleman carried over from the Trump administration which absolutely hated high interest rates.

Obviously, the US is no Turkey.  But I can't help drawing the parallel as a warning of what could ultimately happen.


  1. the US seems to have a movement for everything: save the whales, save the trees, save the poor, there is even something called big-cat-rescue....

    I love you guys so much for it... it is something I could never understand... I am not sure I care about my neighbor the way some people care about dolphins.

    I am wondering though... where is the save the currency movement... You are right hell, I think the printing is driving everyone mad. However, I suspect this is no longer an economic question. It needs to become a political movement.

    The dollar is not cute and fuzzy... but we need to save it too!

    1. Love it! Save Our Dollar, aka SOD it hahahahahaha