Troubled Turkey

To spur growth, the Turkish Central Bank slashed rates and banks made cheap loans. The rate cut caused the lira to depreciate. To arrest that, the Central Bank sold $65 billion dollars and bought lira. But, simultaneously, households flush with cheap borrowed money bought imports, thus severely depleting the Bank’s dollar supply. A lira is worth a record low 0.125 dollars, two years ago .250 dollars. Solution, massively raise rates!