So we don’t have to use Venezuela then

We’ve another example of how modern monetary theory works. Turkey.

Turkey’s runaway inflation has hit close to 80 per cent on the back of a collapsing currency, falling interest rates and a slowing economy.

Consumer prices rose to 79.6 per cent in July compared to the same period last year, marking the 14th consecutive jump in inflation to its highest rate since 1998. It rose 2.4 per cent between June and July.

Amazing how this works out, isn’t it? Give the politicians control over taxes, spending, money creation and interest rates, all four together, and disaster follows. Maybe we shouldn’t give politicians that control over all four then?

15 thoughts on “So we don’t have to use Venezuela then”

  1. Can you index my income and savings now?

    Are individual Turks just as immune to inflation as Mary Daly, because their savings are indexed?

  2. Can you steelman me now?

    Didn’t Israel prove indexation works for decades? And only changed course in the 1980s for reasons obviated by today’s technology which can automate full indexation seamlessly and transparently?

    What about maintaining your real purchasing power do you not like?

  3. “Consumer prices rose to 79.6 per cent”

    to 79.6 percent? 79.6 percent of what? Shirley they mean rose *BY* 79.6 percent.

  4. Quote: “What about maintaining your real purchasing power do you not like?”

    The bit about it not being possible for everyone. If the economy shrinks, eg loss of grain supply, a loss of energy supply, a global disruption to economic activity, then maintaining real incomes won’t work. Any attempt to do so will result in either inflation or unemployment (a dramatic loss of real purchasing power for the unemployed)or both.

  5. What about maintaining your real purchasing power do you not like?

    I don’t have room for that many wheelbarrows.

  6. My daughter, just back from a family holiday in Turkey, told me the traders don’t want Euros or Turkish Lira, but Pound notes. She was told they hang on to them till the end of the season, when the exchange rate will be even more advantageous, before exchanging them.

  7. rsm
    Inflation buggers up RELATIVE prices, you fool.
    An emergency plumber can adjust his income day by day. An employee might have to wait a year for a pay review. A pensioner’s annuity does not change with the price level. A supermarket would have to spend enormous amounts of time and money relabelling the prices. A long term capital investment incurs additional risk, both for contractor and client. And so on throughout the economy.

  8. Dennis, Inconveniently Noting Reality

    Didn’t Israel prove indexation works for decades? And only changed course in the 1980s for reasons obviated by today’s technology which can automate full indexation seamlessly and transparently?

    Please explain how the experience of the Israeli economy some 50 odd years ago relates to the British – or U.S. – economies of the 2020s.

    Just because Grandpa’s brain surgery 10 years ago was a 100% successful doesn’t mean your brain surgery tomorrow will have the same results.

  9. Israel & Israelis 50 years ago (early 70s) are not Turks now. But you’d need to know a great deal of the history of Israel to understand why.

  10. Its touching that you think the BoE is independent. The experience of the last decade or more has shown that when the politicians say ‘Print money!’ the BoE says ‘How much boss?’. And the result is the inflation rate we see today that is miles above its statutory target, and yet it does SFA to reduce it, because it would gain the wrath of the pols if it did, so it doesn’t. the BoE is independent in name only, in reality it does what its told, when the chips are down.

  11. Spoke to someone at PRA who says morale is in the toilet as pay rises are out of the question (to show the Bank is serious about inflation) and at 10% lots of people were talking about leaving. Trouble is the smart ones go and the dross is left behind along with those so old their index linked DB pension is a huge part of their compensation.

    The state says ‘2%’ and the state screws it up. If the state tightens its belt I’m happy but the parasites will want their extra pound of flesh from those of us in the private sector

  12. Jim. I can only refer you to some comments I made a couple days ago. The people at the BoE are individuals. Like everyone else. They are doing what is best for them. They will sacrifice the country for their continuing salary & accumulating pension entitlement. A gong would go well received as well.

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