{"id":36731,"date":"2018-08-16T09:36:11","date_gmt":"2018-08-16T14:36:11","guid":{"rendered":"http:\/\/olduvai.ca\/?p=36731"},"modified":"2018-08-16T09:36:11","modified_gmt":"2018-08-16T14:36:11","slug":"boiling-a-turkey","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=36731","title":{"rendered":"Boiling A Turkey"},"content":{"rendered":"

Boiling A Turkey<\/a><\/h3>\n
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There is an age old fable describing\u00a0a frog being slowly boiled alive. The premise is that if a frog is put suddenly into boiling water, it will try and save itself. However, if the frog is put in tepid water which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death. The metaphor is often ascribed to the inability, or unwillingness, of people to react to or be aware of threats which arise gradually rather than suddenly.<\/p>\n

This metaphor was brought to mind as I was writing last weekend\u2019s newsletter<\/a> discussing the issue of Turkey and the potential threat posed to the global economy. Specifically, I was intrigued by the following points from Daniel Lacalle<\/em><\/a>:<\/p>\n

\u201cThe collapse of Turkey was an accident waiting to happen and is fully self-inflicted.\u201d<\/strong><\/em><\/p>\n

It is yet another evidence of the train wreck that monetarists cause in economies. Those that say that \u2018a country with monetary sovereignty can issue all the currency it wants without risk of default\u2019 are wrong yet again.<\/strong> Like in Argentina, Brazil, Iran, Venezuela, monetary sovereignty means nothing without strong fundamentals to back the currency.<\/em><\/p>\n

Turkey took all the actions that MMT lovers applaud.\u00a0The Erdogan government seized control of the central bank, and decided to print and keep extremely low rates to \u2018boost the economy\u2019 without any measure or control.<\/strong><\/em><\/p>\n

Turkey\u2019s Money Supply tripled in seven years, and rates were brought down massively to 4,5%.<\/em><\/p>\n

However, the lira depreciation was something that was not just accepted by the government but encouraged.\u00a0 Handouts in fresh-printed liras were given to pensioners in order to increase votes for the current government, subsidies in rapidly devaluing lira soared by more than 20% (agriculture, fuel, tourism industry) as the government tried to compensate the loss of tourism revenues due to security concerns with subsidies and grants.<\/strong><\/em><\/p><\/blockquote>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Boiling A Turkey There is an age old fable describing\u00a0a frog being slowly boiled alive. The premise is that if a frog is put suddenly into boiling water, it will try and save itself. However, if the frog is put in tepid water which is then brought to a boil slowly, it will not perceive […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[18389,1976,1732,15470,1908,818,8280,839],"class_list":["post-36731","post","type-post","status-publish","format-standard","hentry","category-economics","tag-boiling-a-frog","tag-currency-crisis","tag-emerging-markets","tag-real-investment-advice","tag-recep-tayyip-erdogan","tag-turkey","tag-turkish-lira","tag-us-dollar"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36731","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=36731"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36731\/revisions"}],"predecessor-version":[{"id":36732,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36731\/revisions\/36732"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=36731"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=36731"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=36731"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}