It’s hard to miss the high price of everything when you see it in grocery shopAnd Eid gifts, and the tab in fuel pump. Inflation is not just an American problem, either with rising prices around the world or, more precisely, a decrease in the purchasing power of the currencies of many countries. An important example is found in Turkey, where people flock to spend or exchange their lira-denominated salaries in the country before it loses more value. At a time when officials want Take out standalone cryptocurrencies even Get rid of anonymous criticismIt’s a shocking warning of the danger of giving governments free rein to manipulate our money.
“The rapid decline of the Turkish lira – 13% in one day this month and about 38% since the beginning of the year – has led to a wave of Turks exchanging their lira for dollars, euros and other currency.” The Wall Street Journal mentioned last week.
The value of a currency is not just a curiosity for foreign exchange traders. It represents the purchasing power of people’s paychecks, the money shopkeepers receive for their sales, and the payments businesses receive for their goods and services.
“I have never experienced such a miserable life before. I go to sleep, I wake up and the prices go up. I bought a 5 liter can of oil (for cooking), it was 40 liras. I came back, it was 80 liras. A widow and mother of two children He told the Associated Press In November. “We don’t deserve this as a nation.”
Officially, the inflation rate in Turkey is about 20 percent, although independent economists say so more than double this number. As a result, while the lira can be used for purchases, it no longer serves as a store of value. Saving cash on a rainy day means watching it deteriorate into toilet paper. This is not the first round of Turks with unreliable money, which is why they have long developed the habit of keeping part of their savings in other, more stable currencies.
“About 59% of retail bank deposits are now in foreign currencies, up from about 57% in the previous week,” The Wall Street Journal added.
The dollar and the euro are not the only alternatives to the lira.
“The Turks have traditionally used gold as savings and there may be as much as 5,000 tons of it ‘under the mattress’, with more being added after the recent buying spree.” mentioned Last year even before the currency lost much of its value.
Frankly, although Turkish banks accept deposits both in gold and in foreign currencies, many people avoid them for fear that the government will seize private money to save itself.
“Smart Turks keep their savings at home, whether in gold or foreign currency,” national interest pointed earlier this year.
Many people are looking for a safe haven, and they are also turning to cryptocurrencies. While the volatile standalone cryptocurrency seems like a better bet than the lira which is losing value day by day. Bitcoin and its competitors can also be transferred over long distances and across national borders.
“The recent economic turmoil has led to an increase in cryptocurrency trading in the country, as investors hope to benefit from the recent rally of Bitcoin and shelter from inflation.” mentioned Watchman in April.
Turkish government Banned immediately The use of cryptocurrency in payments for goods and services, although trading continues.
The reason for the depreciation of the lira is no secret. Unlike nearly every economist on the planet, Turkish President Recep Tayyip Erdogan insists that low interest rates and cheap money fuel a thriving economy that fights inflation. His allegations – dubbedcrazy“In some quarters – he didn’t seem to have done much for the value of the coin. However, he stuck to his policy and fire officials which differs.
Rather, what Erdogan she has Already done is a Height Money supply This weakens the value of the lira and drives Turks to despair. Of course, Turkey is not alone in this matter. While Britain, the eurozone, and the United States have not increased the amount of money in circulation as quickly as Turkey, similar “stimulus” efforts since the start of the pandemic have increased dramatically. dollarAnd euro, And pounds or pounds for weight In circulation (measurements in m2 since the US Reclassified M1 last year). With the increase in the money supply in circulation, Economists have warned that inflation will be the result.
“This growth in the money supply is much faster than anything we’ve seen,” Desmond Lachman, resident fellow at the American Enterprise Institute, said. to caution Reuters in June. “It’s hard for me to see how you don’t get inflation.”
To be sure, the IMF notes in October. Global Economic Prospects “Headline inflation has risen rapidly in advanced, emerging market and developing economies since the beginning of 2021,” although he hopes for an improvement next year.
Pointing to Turkey and other countries that use printing presses to pay their bills, The Economist warned Last month: “As policymakers in rich and poor countries alike grapple with the massive economic and budgetary costs of COVID-19, some may be tempted to shy away from the norms of monetary and fiscal policy. The result, in some unhappy places, can You’re swelling too hot to handle.”
Fortunately, the Turks have managed to preserve some of their wealth in gold, cryptocurrencies, and less stable foreign currencies. These alternative stores of value provide a safe haven from irresponsible government policies that make the lira unreliable. But, as evidenced by the Turkish government’s restrictions on cryptocurrency, officials don’t like it when people flee their control and put their wealth out of their reach. Governments around the world are talking about replacing bitcoin with Government controlled cryptocurrencyeven Elimination of cash and traditional currencies To put economies under more centralized control and management.
Abolishing government-controlled alternatives to currency has always been a dreaded idea for anyone who cares about freedom and privacy. The plight of savers, shoppers, and businesses in Turkey shows that such a move, if implemented successfully, can bring us all down.