Turkish inflation at highest level since 1998

Last Updated: 5 August 2022

The inflation rate of the Turkish lira rose to 79.6 percent in June. This is the highest rate since 1998.

Inflation Turkey

The figures come from the Turkish statistics office TÜIK. In the Netherlands, it was mainly the energy prices that led to high inflation in recent months. In the Euro-Asian country, food, furniture, and transport are significantly more expensive.

Inflation has everything to do with the country’s monetary policy. The reason is the central bank, but also the long arm of president Erdogan.

Normally, when there is inflation, interest rates are raised. This is what the European Central Bank, the Federal Reserve, and the Bank of England all started doing recently.

Erdogan chooses a less traditional policy. He keeps the interest rate as low as possible thanks to his direct influence on the central bank.

He wants to stimulate the economy: free money means more spending and consumption, which, in turn, should ensure a better economy. In the eyes of the president, high-interest rates are the ‘mother of all evil.’ The Koran cites the charging of interest on debt (usury) as haram (forbidden).

Bitcoin

So all Turks who hold their savings in lira will see their value evaporate. In other words, of the 100 hours they worked a year ago, only 20 are left. Due to inflation, 80% of the work done (saved in money) is lost.

Many people see bitcoin as an alternative in such dire circumstances. In bitcoin, there is no central bank to manipulate interest rates. New money is issued on a fixed, transparent, and predictable schedule.

There are 21 million bitcoin in total, and currently 6.25 BTC per new block, which halves every four years. This gives bitcoin guaranteed scarcity, allowing it to hold its value over the long term. Despite price volatility, bitcoin’s trend has always been upward.

Author

  • Ivan came across the topic of cryptocurrencies in early 2016 and, as an author and enthusiast, has been intensively involved with the topics of cryptocurrencies, blockchain and STOs ever since.

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