Inflation has risen 100% in Turkey in the past few months. Or 50%, depending on who is counting. One accurate account recently released is that food prices increased 54% in April compared to the same month a year ago. People have rioted because they cannot afford essentials. The reelection of strongman Tayyip Erdogan is on the line. (These are the most corrupt countries on earth.)
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High inflation has been part of the Turkish economy for nearly five years. Because of debts owned overseas, Turkey has had to “print money” to pay them. As money flows into the system, the value of the lira decreases. Reuters said, “The Turkish lira lost 44% in 2021 and 30% in 2022.”
People in Turkey have no discretionary income, another challenge to the economy. All personal income is taken up by food, fuel and housing. The Reuters report comments that people cannot even afford haircuts.
Translate the Turkey problem to the United States. Even when the consumer price index rose over 8% year over year a few months ago, the economy was threatened enough for the Federal Reserve to raise rates rapidly. However, the U.S. government did not have to print money to cover sovereign debt owed outside the country.
Inflation at 50% in the United States would quickly push gasoline prices above $5 a gallon. The cost of a pizza would rise from $7 to $10. The problem would touch every part of daily life, and the economy would tip into recession almost immediately. If inflation were not contained, it would stay there.
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