Istanbul Insanity

Rather than raising rates to fight inflation, Turkish President Erdogan is lowering them in an idiotic effort to drive growth by weakening his currency. It’s already fallen 40% this year, and annual inflation is minimally 20%. A weaker currency helps borrowers who borrow in lira, exporters who need no imported raw materials, and construction, but immiserates everyone else. Erdogan must raise rates dramatically and quickly to reverse this death spiral.