It's impossible to not get affected even if you are paid in foreign currencies. As the economy spirals down, everything gets heavily taxed by the government trying to save itself (and only itself).
So the price increases are MORE than the devaluation of the currency itself, which is extremely devaluated already.
That number will probably be much more than 73% if normalized to actual purchasing power.
For example: I could fill my car's tank ~550₺ (Turkish Lira) around October.
Last month, it was ~1600₺. There are tons of more examples, and without any actual production in the country, I don't see any bright future here.
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." - John Maynard Keynes, The Economic Consequences of the Peace, 1919.
Keynes wrote that to warn about the risk of inflation in Germany and its potential consequences -- years before high rates of inflation led to the failure of the German mark, the collapse of the Weimar republic, the rise of dangerous ideologues (the Nazis), and ultimately, World War II.
If Turkey doesn't get inflation under control, it will implode.
I feel you man. Last week, I was in Turkey and I could fill my dad's car around ~1000₺. Honestly speaking, It has just started. End of 2022 and first quarter of 2023 will be terrible.
The %73 is the official number, which is absurdly obscured. This research group is more accurate: https://enagrup.org/?hl=en which states that the yearly inflation is %160.
Turkish person. We’ve founded a startup in November, local and global developments making me a bit worried. Since then everything is almost 2-3x expensive. Most visible and absurd thing to see is that People drive their cars noticably slowly so that they consume less. People dont go out as they used to. Driving in summer vacation and spending a few days would cost a signifcant sum. Even if earning foreign currency, everything feels very expensive.
I'm not Turkish, but I fled here from Russia due to a war. And rent certainly got super expensive in Antalya due to number of people like me, not inflation.
I noticed that only some prices are so badly expensive for person earning USD and it's mostly electronics. Though Turkey has 35% tax when buying from Amazon so yeah it's due to taxation and local regulation.
Can you please share some examples of what's got specifically expensive in last couple of years?
AFAICT in modern times with modern government surveillance and weapons, instead of uprisings and coups, what we see instead are the quiet evacuation of the best and brightest, which then spirals a country into further decay over the course of a few years.
> in modern times with modern government surveillance and weapons, instead of uprisings and coups
None of that helped in Afghanistan — where the locals defeated the US via persistent warfare.
Such tactics will work even better when insurrectionists can directly attack US production facilities, ambush data centers and technical staff, assassinate politicians, and attack solder’s families.
And that’s before considering whether some portions of the military would side with an uprising.
They’re getting a large part of the brain drain from Russia. I’m not sure if those people are planning on staying and starting businesses or looking to continue on to EU for higher salaries
Many years ago in my South American country, I had to deal with 2000% inflation in 1 year. It is absolutely devastating for most people, but the top 10% in income had easy access to special investment instruments allowing them to lose nothing and even profit from the inflation. Does Turkey have anything like that?
Wouldn't it be as easy as having money invested with a foreign broker? Granted, this won't work if capital controls prevents money from easily flowing across the border, or if your country is sanctioned.
Last time I visited Turkey 25 yesrs ago the Lira was basically counted in millions. I remember exchanging some beer money and getting stacks of freshly printed 10k bills. I assume that was also after a period of massive inflation in the 80s or 90s? Some time after that they must have redefined their currency and dropped a few zeros. Have there been any other similar periods in between or has it been a pretty stable 2 decades? Are the causes similar this time? External shock and some misguided voodoo macroeconomics?
The old lira was retired and the new lira came in 2005 roughly at about 1.30 to the dollar.
It's now 16 to the dollar, up from 8 to the dollar a year ago.
The old Lira was 15 to the dollar in 1975, by 1985 it was 500 to the dollar (devaluing 42% a year), 1995 was 43,000 to the dollar (56% a year), and by 2001 it reached 1.3 million to the dollar (77% a year)
From 2001 to 2005 it was relatively stable, and the new lira came in and only lost half its value from 2005 to 2015. Things have been getting worse since 2015 though.
I’m not really seeing a significant semantic difference between “inflation rose by 73%” and “inflation increases to 73%”
The latter puts the focus in a slightly different place, but they both seem to communicate the same essential fact, so I don’t see why the latter would be more accurate than the former?
What am I missing?
Edit: never mind, I understand now. “By” would be referred to a percent raise in the rate of change of inflation
I spent a few months in Turkey last year. You could tell that there was a risk of mass unrest because there were heavily armed police with armored vehicles prominently parading around.
I thought this was to be expected.
What I thought was interesting was that there was a major deployment with armored vehicles in a well to do neighborhood off the tourist trail. Literally outside the Carrefour Gourmet where I bought overpriced European ingredients, in fact.
IDK if they were extra sensitive coz expats were there, coz they were feeling extra protective of the upper middle classes or even coz they were afraid that the upper middle classes would be the ones to riot.
Ive not seen anything like it elsewhere except in altamira, caracas.
Ever been to Sicily? I counted 3 different types of police and heavily armed military units patrolling the streets on regular basis. That was well before the pandemic. Maybe that's how some places are run
It’s funny, just a few years ago everyone was talking about the Turkey economic miracle- how Erdogan was a business genius and so forth. Turns out, it was just another financial bubble.
Almost all of the modern hyper inflation in countries is due to external debt in foreign currency which is usually USD. This could have been solved if interest rates were raised making the lira expensive.
Same with Zimbabwe with projects done in USD. Sri Lanka had a project boom last 10 years with USD.
This does not apply to US because the debt of US is either internal or USD. I guess partially the reason jpow is dragging his heels on raising interest rates
At this point -- how do one may try to fix such a situation (assuming there's a political will to do so, which judging from Erdogan's actions, may simply not be there).
Cutting public spending? Resetting the currency?
Imagine living in a country with this sort of inflation and running to dollars (with 15% inflation) instead of to bitcoin. It's amazing people can't see the writing on the wall for all printable currencies in 2022.
Bitcoin as a inflation hedge is a meme that takes 5 seconds to see has no basis in reality. During historic inflation in the US, Bitcoin the inflation protector is.. -40% against the USD in the last 6 months.
At least Gold is up 4% on the 6 month so that’s a small hedge.
[+] [-] can16358p|3 years ago|reply
It's impossible to not get affected even if you are paid in foreign currencies. As the economy spirals down, everything gets heavily taxed by the government trying to save itself (and only itself).
So the price increases are MORE than the devaluation of the currency itself, which is extremely devaluated already.
That number will probably be much more than 73% if normalized to actual purchasing power.
For example: I could fill my car's tank ~550₺ (Turkish Lira) around October.
Last month, it was ~1600₺. There are tons of more examples, and without any actual production in the country, I don't see any bright future here.
[+] [-] throwaway894345|3 years ago|reply
[+] [-] dgellow|3 years ago|reply
I’m just a random stranger but wish you the best.
[+] [-] cs702|3 years ago|reply
Keynes wrote that to warn about the risk of inflation in Germany and its potential consequences -- years before high rates of inflation led to the failure of the German mark, the collapse of the Weimar republic, the rise of dangerous ideologues (the Nazis), and ultimately, World War II.
If Turkey doesn't get inflation under control, it will implode.
[+] [-] driverdan|3 years ago|reply
[+] [-] im3w1l|3 years ago|reply
[+] [-] zeroth32|3 years ago|reply
[+] [-] hammock|3 years ago|reply
[+] [-] onesafari|3 years ago|reply
[+] [-] m00dy|3 years ago|reply
[+] [-] TiccyRobby|3 years ago|reply
[+] [-] tnfru|3 years ago|reply
[+] [-] CSDude|3 years ago|reply
[+] [-] SXX|3 years ago|reply
I noticed that only some prices are so badly expensive for person earning USD and it's mostly electronics. Though Turkey has 35% tax when buying from Amazon so yeah it's due to taxation and local regulation.
Can you please share some examples of what's got specifically expensive in last couple of years?
[+] [-] moneywoes|3 years ago|reply
[+] [-] asah|3 years ago|reply
[+] [-] tyrfing|3 years ago|reply
Fleeing countries has an ancient history, and it's naturally always been easier for higher classes with access to resources.
[+] [-] treis|3 years ago|reply
[+] [-] zmgsabst|3 years ago|reply
None of that helped in Afghanistan — where the locals defeated the US via persistent warfare.
Such tactics will work even better when insurrectionists can directly attack US production facilities, ambush data centers and technical staff, assassinate politicians, and attack solder’s families.
And that’s before considering whether some portions of the military would side with an uprising.
[+] [-] redisman|3 years ago|reply
[+] [-] danielrpa|3 years ago|reply
[+] [-] ajsnigrutin|3 years ago|reply
I live in a part that was already separated back then, but I'm still a billionaire, since I have quite a few >1billion dinar notes at home.
[+] [-] marvin|3 years ago|reply
[+] [-] samstave|3 years ago|reply
[+] [-] moneywoes|3 years ago|reply
[+] [-] alkonaut|3 years ago|reply
[+] [-] iso1210|3 years ago|reply
It's now 16 to the dollar, up from 8 to the dollar a year ago.
The old Lira was 15 to the dollar in 1975, by 1985 it was 500 to the dollar (devaluing 42% a year), 1995 was 43,000 to the dollar (56% a year), and by 2001 it reached 1.3 million to the dollar (77% a year)
From 2001 to 2005 it was relatively stable, and the new lira came in and only lost half its value from 2005 to 2015. Things have been getting worse since 2015 though.
[+] [-] papito|3 years ago|reply
[+] [-] lupire|3 years ago|reply
> Key Points - Turkey’s inflation for the month of May rose by an eye-watering 73.5% year on year,
by should be to, if the headline and rest of article is true.
[+] [-] ncallaway|3 years ago|reply
The latter puts the focus in a slightly different place, but they both seem to communicate the same essential fact, so I don’t see why the latter would be more accurate than the former?
What am I missing?
Edit: never mind, I understand now. “By” would be referred to a percent raise in the rate of change of inflation
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] pydry|3 years ago|reply
I thought this was to be expected.
What I thought was interesting was that there was a major deployment with armored vehicles in a well to do neighborhood off the tourist trail. Literally outside the Carrefour Gourmet where I bought overpriced European ingredients, in fact.
IDK if they were extra sensitive coz expats were there, coz they were feeling extra protective of the upper middle classes or even coz they were afraid that the upper middle classes would be the ones to riot.
Ive not seen anything like it elsewhere except in altamira, caracas.
[+] [-] beebeepka|3 years ago|reply
[+] [-] tyingq|3 years ago|reply
That's not new, and probably isn't related to mass unrest. My guess is it was related to some intelligence about PKK activity.
[+] [-] orhmeh09|3 years ago|reply
[+] [-] fallingfrog|3 years ago|reply
[+] [-] ShivShankaran|3 years ago|reply
Same with Zimbabwe with projects done in USD. Sri Lanka had a project boom last 10 years with USD.
This does not apply to US because the debt of US is either internal or USD. I guess partially the reason jpow is dragging his heels on raising interest rates
[+] [-] brink|3 years ago|reply
[+] [-] lemursage|3 years ago|reply
[+] [-] aaomidi|3 years ago|reply
People think their country is immune to hyper inflation. They're not. You're in for a surprise.
Until we think communally about inflation, this cycle will keep repeating.
[+] [-] unknown|3 years ago|reply
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[+] [-] novateg|3 years ago|reply
[+] [-] mensetmanusman|3 years ago|reply
We were told food prices would skyrocket after border controls were implemented in 2020/1.
Russia definitely screwed the world with the war and energy costs though.
[+] [-] unknown|3 years ago|reply
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[+] [-] awsrocks|3 years ago|reply
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[+] [-] wimwasmw|3 years ago|reply
[+] [-] redisman|3 years ago|reply
At least Gold is up 4% on the 6 month so that’s a small hedge.
[+] [-] timeoperator|3 years ago|reply
[+] [-] unknown|3 years ago|reply
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