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The Turkish Lira experienced runaway inflation in the period 1990-2005; in 1990, one USD = 2500 TL. In 2005, one USD = 1,350,000 TL. A loaf of bread cost 200,00

The Turkish Lira experienced runaway inflation in the period 1990-2005; in 1990, one USD = 2500 TL. In 2005, one USD = 1,350,000 TL. A loaf of bread cost 200,000 TL or so. Erdogan became PM in 2003; in 2005 the Turkish government introduced the "new Turkish Lira" ("YTL") by dividing the currency by 1,000,000. Around the same time, Erdogan invested heavily in infrastructure projects, boosting the lira. IMO, this is how he largely rose to populist power -- the economy grew for a short while, and he solidified his base early on. But since then he's continually blocked the central bank from adjusting rates, presumably to maintain the appearance of a strong economy. This once again caused an inflationary economy. Now those chickens are coming home to roost. The Turkish lira has been falling steadily against the dollar, and this seems like a move on Erdogan's part to continue the farce and maintain appearances of a strong economy. He's very scared of the economy being weak, because that was his original source of power with the populace. This is only an armchair analysis. Take it with a grain of salt.

nurettin 6y ago
It is only armchair analysis. But my arm chair has better overall texture and victorian motives and comes with a tea table carrying a huge pile of salt. If you take a look at GDP graphs of eastern europe, russia and the middle east, you will see that every GDP in the region rose dramatically over the period of a few years in the early 2000s. This increase in GDP in the region was not caused by turkey's investment in infrastructure, it was caused by foreign investors (mainly by the US and major players in Europe) trying to bolster their own economy by supporting emerging markets. And it worked. Turkey's istanbul stock market went from 20K to 70K points and foreign investors made a lot of money. There was a period where USD and EUR were on par with the YTL. When the hot credit finished, Turkey started experiencing inflation again, because not enough of the money was spent on infrastructure. It was partially spent on better healthcare and education, which won the popular vote for a second time. At this point, government was running on fumes, domestic debt went rampant. Authoritarianism, nepotism, militarism, conservatism, religiosity, nationalism and xenophobia worked part of the way to support this sort of economy. Seeing success in its ways, and still having some popular support, the government parted ways with its next leader and changed the law to get its leader elected a third time. At this point there were enough dissenting voices that the mayorship of istanbul was lost in an election. Government forced another election and lost again. Where are we now? We are at a point where whoever wins, the whole population will lose. Not that different than the 90s, but at least we've got iphones and macbooks.
- bkanber 6y ago
  > you will see that every GDP in the region rose dramatically over the period of a few years in the early 2000s. This increase in GDP in the region was not caused by turkey's investment in infrastructure, it was caused by foreign investors Fair enough. I was not paying attention to macroeconomics at that time. Still, Erdogan used the growing economy to win the secular base, while using religion and nationalism to win the non-secular base. And now his face is a mural on every other building you see. SMH.
  - nurettin 6y ago
    > Erdogan used the growing economy to win the secular base There was a brief moment back in 2007-2008 where they used the brilliant neo-liberal ideas to impose the ottoman narrative of "ataturk did bad" and it worked! Rich liberals swallowed up the new narrative like flies on feces. This was the time of the kurdish initiative where there was a cease-fire and liberal artists and leaders who supported the government went over to the kurdish side asking them about their motives while armed resistance grew by at least 5-fold. This quickly ended in the government bombing resistance forces and the neo-liberal agenda died right there and then. Very sad times.
- wcoenen 6y ago
  > started experiencing inflation again, because not enough of the money was spent on infrastructure I don't get it. Why would more infrastructure spending protect against inflation?
  - nurettin 6y ago
    I meant infrastructure as in production infrastructure. We have an economic narrative around here which amounts to - more production means more exports which means people will want to pay you in your currency, which increases the value of your currency which acts against inflation.
  - bkanber 6y ago
    Investing in an economy increases production. If productivity increases, but currency circulation remains the same (or at least doesn't outpace productivity), the value of the currency will increase. This is only one of the various modes of inflation, but that's the idea w.r.t infrastructure spending.

nurettin 6y ago

It is only armchair analysis. But my arm chair has better overall texture and victorian motives and comes with a tea table carrying a huge pile of salt. If you take a look at GDP graphs of eastern europe, russia and the middle east, you will see that every GDP in the region rose dramatically over the period of a few years in the early 2000s. This increase in GDP in the region was not caused by turkey's investment in infrastructure, it was caused by foreign investors (mainly by the US and major players in Europe) trying to bolster their own economy by supporting emerging markets. And it worked. Turkey's istanbul stock market went from 20K to 70K points and foreign investors made a lot of money. There was a period where USD and EUR were on par with the YTL. When the hot credit finished, Turkey started experiencing inflation again, because not enough of the money was spent on infrastructure. It was partially spent on better healthcare and education, which won the popular vote for a second time. At this point, government was running on fumes, domestic debt went rampant. Authoritarianism, nepotism, militarism, conservatism, religiosity, nationalism and xenophobia worked part of the way to support this sort of economy. Seeing success in its ways, and still having some popular support, the government parted ways with its next leader and changed the law to get its leader elected a third time. At this point there were enough dissenting voices that the mayorship of istanbul was lost in an election. Government forced another election and lost again. Where are we now? We are at a point where whoever wins, the whole population will lose. Not that different than the 90s, but at least we've got iphones and macbooks.

bkanber 6y ago
> you will see that every GDP in the region rose dramatically over the period of a few years in the early 2000s. This increase in GDP in the region was not caused by turkey's investment in infrastructure, it was caused by foreign investors Fair enough. I was not paying attention to macroeconomics at that time. Still, Erdogan used the growing economy to win the secular base, while using religion and nationalism to win the non-secular base. And now his face is a mural on every other building you see. SMH.
- nurettin 6y ago
  > Erdogan used the growing economy to win the secular base There was a brief moment back in 2007-2008 where they used the brilliant neo-liberal ideas to impose the ottoman narrative of "ataturk did bad" and it worked! Rich liberals swallowed up the new narrative like flies on feces. This was the time of the kurdish initiative where there was a cease-fire and liberal artists and leaders who supported the government went over to the kurdish side asking them about their motives while armed resistance grew by at least 5-fold. This quickly ended in the government bombing resistance forces and the neo-liberal agenda died right there and then. Very sad times.
wcoenen 6y ago
> started experiencing inflation again, because not enough of the money was spent on infrastructure I don't get it. Why would more infrastructure spending protect against inflation?
- nurettin 6y ago
  I meant infrastructure as in production infrastructure. We have an economic narrative around here which amounts to - more production means more exports which means people will want to pay you in your currency, which increases the value of your currency which acts against inflation.
- bkanber 6y ago
  Investing in an economy increases production. If productivity increases, but currency circulation remains the same (or at least doesn't outpace productivity), the value of the currency will increase. This is only one of the various modes of inflation, but that's the idea w.r.t infrastructure spending.