 Hey so short question and I'm sorry if you already covered it during the show because I'm a few shows late so you know it's something you already answered like feel free to go fast answering that question what's going on in Turkey right now that's the question so you know from what I heard like you know they decided to fight inflation by lowering their interest rate which sounds like you know the most irrational monetary policy in living time and you know in this damn time that says a lot actually so are they completely lost their mind or is there more to it that I don't get? No they've lost their mind right they're basically trying to flaunt the laws of physics the laws of economic principle this crisis in Turkey has been going on for a few years now the Turkish lira I think it is collapsed a couple of years ago and now it's collapsing again it's kind of a second round you know and the reason is Turkey borrowed a lot of money in dollars so Turkish companies borrowed a lot of money overseas in dollars and the challenge was that is that you have to repay the money in dollars and at the same time but what they took advantage of was very low interest rates but at the same time the Turkish government went on a spending spree deficit rose and the central bank printed money to basically monetize the deficits which is I think familiar to us these days inflation increased the value of the lira declined dramatically vis-a-vis the dollar and suddenly all these companies that owed money in dollar you know ran to try to convert their liras into dollars so that they could pay back their debt which caused the lira to collapse even further and caused a lot some companies to go bankrupt because they couldn't pay they couldn't they just ran out of liras to convert their dollars they got a little bit of stability you know over the last couple of years from that I'm not sure exactly what I haven't dug into it deeply enough to figure out exactly what they did you know to get but now there's a second round that is I think probably all the stimulus money just like everywhere else Turkey had to issue stimulus during COVID and all that is manifesting in inflation which is resulting in the lira collapsing again I think this time around fewer companies have their debt in dollars but some still do so again they're exacerbating the problem by trying to buy dollars sell lira which makes the lira go down even more you know when three years ago when this happened or two years ago whenever it happened the way they dealt with this was to raise interest rates which is usually what you do in order to increase the value of your currency in order to reduce inflation although that doesn't always work sometimes raising interest rates actually causes inflation to go up even more now why is that because if raising of interest rates causes the government deficits to increase because their interest payments are increasing then the market then anticipates inflation being higher in the future because deficits are higher in the future and you will have to inflate one way or the other to pay off the deficit so as you increase interest rates deficits increase and inflation increases so what argument is in order to reduce inflation it's not enough to increase interest rates you have to do a second thing which is fiscal discipline you have to reduce spending or increase taxes or you have to you have to convince the markets that you will pay the debt back you won't use inflation i.e monetizing the debt to pay your debt back so what so what happened when tokyu raised interest rates is it suffered harsh economic times it didn't do well so they're trying the opposite right that oh i wonder if we can reduce the interest rates and see what happens reducing interest rate never works because it increases the incentive of people to borrow money which increases the amount of money in circulation in the economy it increases the velocity of the money and while it reduces government debt interest rate obligations it doesn't reduce actual government spending so it while reduces government spending a little bit but it doesn't give the markets any signal that government is committed to actually reducing spending or committed to reducing to to eliminating debt in the long run so it's super inflationary so yeah i mean it's it's basically putting a wish above everything else it's it's it's really just just voodoo economics praying you know the islamist maybe goddess on their side i don't know a la might be on their side but but there's zero economic logic behind it oh i think you are not allowed to charge interest in islamic finance so yeah yeah you're not allowed to charge interest in islamic finance and i'm not sure how the government actually does it given that ogre ogre one claims to be an islamist so i'm not sure how he what what kind of borrowing is done there now there are islamic banks that pretend they don't charge interest but they charge something else that's very similar to interest so it very much looks like interest even though it's not called interest but here we know that it's interesting and it's called interest and it behaves like interest i'm not sure what i'm not sure how they get around that that's a really good issue alexis i'm not sure how in tuki they get around the prohibition it's i'll have to look into that me never just in question yeah maybe they're not as islamist as uh as they would like some people to believe all right thank you for listening or watching the iran brook show if you'd like to support the show we make 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