Turkey's inflation sees biggest jump since August, nears 65% year-on-year

https://www.cnbc.com/2024/02/05/turkey-inflation-sees-biggest-monthly-jump-since-august.html

by belter • 2 years ago

28 10 2 years ago

jncfhnb3• 2 years ago

It’s hard to imagine what this is like. I don’t really get how states function at this level of inflation. Or people. On some level it seems hard to understand how the currency value can stabilize at “only” 65% and not just jump to higher levels due to lack of confidence. Iran is similar.

rightbyte• 2 years ago

If the gov. sells some goods at a fixed price you can probably limit the inflation increase somewhat. I.e. like backing it with gold, but with foo.

You'd have to increase the fixed price to not have a too big disparity though.

softg2• 2 years ago

You get used to it. You get used to seeing a different price tag every time you get groceries. You get used to real estate prices doubling almost every year. You use dollars or other metrics for comparing prices year on year. You might even see some benefits. High inflation is great if you're in debt. Ideally you get a huge raise once a year too. The few months following your raise are the easiest. The minimum wage was raised 60 pc this month which is why the monthly inflation picked up speed.

Right now the interest rate is about 40 percent in Turkey which reins in the inflation a bit. Originally the crisis started b/c the president refused to raise interest rates like the rest of the world. Now that he appears to have returned to his senses things calmed down a bit. There's also municipal elections in a month and the gov't has been generous with public sector wages and the minimum wage to shore up support. Some sort of devaluation against the dollar following the elections is inevitable. The talk here is that the gov't will impose severe austerity measures after the elections since there won't be another one for the next three years. It's possible that the things get really grim after that.

Pesthuf• 2 years ago

I would have expected banks to demand repayment for debt in a more stable currency so inflation can’t help their debtors

s1artibartfast• 2 years ago

Do you know how businesses contracts are managed? Are they simply defined in USD equivalents?

Does it eliminate the manufacture or sale of long lead time items, or are they somehow renegotiated at the time of delivery?

jncfhnb3• 2 years ago

So, question. In the US the middle class thinks about building wealth with investments. Do you instead prioritize purchasing assets with allowable debt that you would struggle to pay without inflation? Like, wealth of reputation rather than account size?

How do banks actually make money if they get these losing loans?

Canada• 2 years ago

I was there a few months ago. There's hardly any physical menus in restaurants, all I saw were QR codes so they can update the prices constantly. The biggest advertiser at the airport in Istanbul is BTC Turk. People are generally well aware of Tether. Looks like the Lira is now worth 17% less than it was when I visited.

SkeuomorphicBee• 2 years ago

I lived thought the Brazilian hi inflation periods of the late 80s and early 90s, and I remember some interesting workarounds that people adopted:

- People kept a mental model of prices in dollar, especially for expensive not day to day items (e.g. electronics, appliances, car, real state), and used those dollar values in informal conversation.

- Monthly supermarket run on payday. As money's value would decrease noticeable throughout the month, people would rush to supermarkets on their payday to get the most value. Every month the 1st of the month rush on supermarkets was like you would expect on a pre holiday.

- People held some savings in dollar paper notes, you would lose a bit with the US inflation, but the safety and flexibility was worth it.

- People relied a bit more on barter for big items (e.g. exchange a house for two flats, or a flat for a car plus the difference, ...). Newspaper classified adds listing what you are selling and what kind of item would be acceptable in barter.

- Financing was a problem, new car purchase often used the "consortium" scheme (rotating savings and credit association, or Savings Clubs, Christmas clubs, sousou or even money circles) where a group of people paid installments into a pool and one member would get a car each month.

jncfhnb3• 2 years ago

Car scheme sounds terrifying to me

Turkey's inflation sees biggest jump since August, nears 65% year-on-year

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