A professor at Johns Hopkins University in the United States has recently written several economic analyzes of Turkey and made a rude offer to Erdogan.
According to Pak Sahafat News Agency International Group, although the dollar has fallen in Turkey, economic analysts still have little hope for economic recovery. Turkey is entering 2022 as, in addition to domestic analysts and experts, many global economic figures are zooming in on the inflation rate in the Turkish economy and watching the lira in an unfavorable position. One such figure is Steve Hanke, a professor of applied economics at Johns Hopkins University in the United States.
An overview of Hanke’s Twitter account shows that he specifically zoomed in on Turkey and in a short time, in addition to posting a few Twitter messages, wrote a few notes about the ups and downs of the Turkish financial markets.
In his latest analysis, he said that Turkey’s inflation is much higher than the figure announced by official sources in Ankara. In addition to announcing the exact number of inflation, Hanke has made a strong offer to Erdogan.
Hanke wrote a while ago: Erdogan has destroyed not only the value of the Turkish lira, but also freedom of expression, preventing economic analysts from providing clear information about their currency forecasts, and any author who disagrees with the approach of the government and the bank’s economic team. Now he has offered new ideas for the recovery of the Turkish economy and published a text in the National Review that includes a project for Turkey’s transition from the currency crisis.
Of course, Steve Hanke has many statements and economic analyzes about other countries in the world from India and Afghanistan to Iran and more. He recently announced that Maduro’s planned trip to Tehran is reminiscent of the dove-to-open dove proverb, and that the incident shows that the sanctions imposed are a set of failed policies.
To show that he is also interested in some of Turkey’s political and historical issues, Steve Hanke tweeted a photo of Mustafa Kemal Atatürk saying: Civilization is nothing but culture itself.
A strange and unique inflation in Turkey
In his new analysis of Erdogan and the Turkish economy, Hanke writes: “It is no secret that Recep Tayyip Erdogan aspires to become the king of Turkey. But there is a major obstacle that could block Erdogan. An obstacle called the continuous devaluation of the Turkish lira.
The lira is one of the world’s currencies that no one wants and does not want. In fact, with each passing day, the lira reaches its lowest level against the US dollar, and as a result, inflation in Turkey is rising. Today, I measured Turkey’s annual inflation rate at 82.9% per year. The lira hangs over Erdogan like a Damocles sword.
Read more: Did the Erdogan government increase the price of the dollar?: https://www.paksahafat.com/en/?p=17133
Hanke writes: “Turkey can look at an example and a currency success story that is not far away and is its own neighbor. We do not need to go back to the depths of history. I want to talk about 1997. The year that Turkey’s neighbor, Bulgaria, plunged into economic crisis and plunged into sharp inflation. The Bulgarian national currency, the leu, had fallen and the monthly inflation rate had risen to 242%. As an adviser to the president, I proposed a currency board. The board was installed on July 1. The delegation went on to simulate the German mark. Inflation was suppressed immediately. Interest rates fell, and interest rates in the money market reached 2.43% by the end of 1998, just 18 months after the board was set up. Most importantly, severe budget constraints were imposed on Bulgarian financial officials and the economy prospered. The financial deficits have been tightly controlled since the board took office. Bulgaria’s financial discipline and debt reduction have made it a star in the European Union.
Hanke’s bold offer to Erdogan
Finally, the American economist advised Erdogan to declare that Turkey adheres to the “currency board” policy in order to save the Turkish lira and perhaps maintain its position. He then boldly asked Erdogan to read a book. But with a reluctant goal, he has included the name of the book in his English article in Istanbul Turkish. Why?
The answer is clear. The book that Hanke introduced to Erdogan is his own writing! This book is called “Monetary Boards for the Economics of Developing Countries”. The American economist has included the name of the Turkish translation of the book in his article and linked it to the book seller site in Ankara and Istanbul!
Hanke wrote this book together with Kurt Kohler and in 2019, its Istanbul Turkish translation was published. (The Research Center of the Islamic Consultative Assembly, earlier than Turkey in 1397, translated this book into Persian as an internal report and criticized Hanke’s views.)
Monetary Board is a monetary system in which a small institution called the Monetary Board, instead of the Central Bank, is responsible for issuing banknotes and coins in the country. The most important and only task of the monetary board is to issue local currency in such a way that it maintains at least one hundred percent of the monetary base, equivalent reserves, commodities such as gold or foreign currency, such as dollars or euros, and one-to-one or any other relationship between the local currency and the reserve currency or commodity so that all local banknotes and coins can be converted into reserve currency and vice versa.
However, whenever countries face severe inflation or currency and monetary crises, usually one of the sub-arguments pursued by monetary authority claimants is to move away from turmoil or tighten budget constraints and reduce inflation and eliminate speculation. It is a game of money and the establishment of such an institution.
An institution that, of course, is not usually favored in current political regimes and economic circles, so that the generation of monetary boards, which until a few decades ago numbered more than a dozen boards, is now almost extinct.
Of course, Hanke’s theory has many critics. But he himself claims that the policy has been implemented in several countries and positive results have been achieved. But critics say such a program would effectively cripple the economy and, with very strict oversight and tight control, take the momentum out of the engine of the economy. Nevertheless, Hanke confidently advised Erdogan to read his book and follow its advice.
He even went a step further and said: “If Erdogan wants to replace Ataturk’s legacy and become sultan, there is only one solution, and that is to create a currency board. Because with the currency board, the Turkish lira becomes an international currency that maintains its purchasing power over time.