Аннотация: Turkey, 2022: how to get out of the "crisis"? A note.
Turkey, 2022: how to get out of the "crisis"? A note.
For a long time, the exchange rate of the local currency, the lira, is falling in Turkey.
What does the word "falls" mean?
The bills and coins themselves don't fall anywhere. Turkish lira are not lying on the sidewalks.
The word "falling" means that the ratio of the world's major currencies and the lira is changing. For one US dollar or one hundred US dollars, you can buy more Turkish lira.
A cursory acquaintance with publications on the topic of "crisis" and its overcoming gives the following impressions.
On the one hand, there is a tendency in the media space to present the depreciation of the lira as a kind of catastrophe, as a crisis. The prospects for a crisis with such a picture are the most unfavorable. There are certain groups of the Turkish population - those who have suffered significantly from the fall of the lira.
On the other hand, infrastructure, strategic projects are being actively implemented in Turkey. It seems that there are significant growth indicators - both of the general economic growth and of the sales growth.
If this picture is correct, then what happens? Is inflation accompanied by economic growth? Is the economy really growing with the growing "crisis"? For a citizen of Russia with its wonders, it looks very strange...
However, everyone can get, if not cards (documents) for the receiving of a free food, then a personal account on a digital platform...
So it's time to look into the "secrets" of the fall of the lira.
The publications (which I have met) emphasize that the lira is falling along with the reduction of the discount rate of the Central Bank of Turkey. And why does the Central Bank of Turkey reduce the discount rate? Probably in order to make loans cheaper, more accessible.
But when the discount rate is reduced, the interest on bank deposits - deposits in lira - decreases. Consequently, many "investors" are interested in getting out of the lira, selling the lira and buying the US dollar (or another world currency). With a mass exit from the lira, its rate decreases.
This is how the picture of the "currency crisis" appears in publications.
I personally have not studied this issue specifically, I have not got acquainted with statistics, but for some reason I want to express an alternative opinion about the causes of the "currency crisis". I assume that the lira is falling due to the monetary issue.
And why do they need a lira issue (emission)?
If indeed the emission of the lira takes place, then in this case the issued money supply is used to finance infrastructure projects and other strategic directions.
This concludes my brief description of the "secrets", of "secret springs and mechanisms" of the "currency crisis".
We turn to the "exit" from the "crisis".
If we take as a basis the main version of the causes of the "crisis" (reduction of the discount rate), then how - with this version - does the way out of the "crisis" look like?
Some operational measures are applied by the Turkish authorities. For example, if I understand correctly, depositors are encouraged to transfer money from US dollars to Turkish lira. To stimulate the reverse transition to the lira, special bank accounts have been created, which may compensate for the losses of depositors while increasing inflation. It seems that about one billion dollars have returned to the Turkish lira - thanks to this operational measure.
However, perhaps the main way out of the "crisis" is for world currencies to come to Turkey not in the form of funds that become bank deposits that bring interest, but in the form of capital of highly efficient companies. Rentier is one thing. Another thing is an energetic capitalist. These are different types of money owners.
But where to get high-performance companies? While there are no investments- there are no companies. And while there are no companies, there are no investments.
It is - the very the secret. That's why economic authorities are needed, that's why economic policy is needed. The Turkish authorities, as I understand it, claim that their efforts will yield results, that economic growth will increase.
At the same time, it is reported that the central authorities of Turkey supported the construction industry and the arms industry in the conditions of the falling Turkish lira. So highly efficient firms (in some industries) have not disappeared anywhere.
So, it is necessary to wait a little longer...The reduction of the discount rate will cease to have a negative effect. The situation will change for the better.
(If we take into consideration my hypothesis, my version - with the emission - then the improvement will occur after the completion of the financing of strategic areas using the issue mass, and after new areas (projects) begin to generate profit, income. With (under) this version, the way out of the crisis - it is the completion of financing strategic projects using the issued, emissioned money, the transition from costs to income. With this version, there is a risk that the money will run out before the completion of the projects, but to me this risk seems moderate and controlled.).
But somewhere - briefly, almost between the lines - in publications on the topic of the "currency crisis in Turkey" we can to see another way out of the "crisis".
It seems that the goal is to detach economic growth from bank rates altogether. But then how will the economy work, what will effective economic development look like if the inflow of capital will not be managing by a profit - as it is managed now?
This is the biggest "secret"!
So the example of rapidly developing Turkey is very interesting (both for observations and for practical application).
January 31, 2022 11:28
Translation from Russian into English: January 31, 2022 12:47
Владимир Владимирович Залесский 'Турция, 2022 год: как выйти из 'кризиса'? Заметка'.
{ 2765. Турция, 2022 год: как выйти из 'кризиса'? Заметка.
MMDCCXXXV. Turkey, 2022: how to get out of the "crisis"? A note. }