A Way for Turkey’s Erdogan to Have His Cake and Eat It Too

Turkish President Tayyip Erdogan addresses members of parliament from his ruling AK Party during a meeting at the Turkish parliament in Ankara, Turkey, December 1, 2021. (Murat Cetinmuhurdar/PPO/Handout via Reuters)
If Turkey wants to have a chance at stabilizing the lira, it needs a currency board.

NRPLUS MEMBER ARTICLE I t’s no secret that Recep Tayyip Erdogan aspires to become the sultan of Turkey. But there is one huge obstacle that might block Erdogan’s path: the Turkish lira. The lira is one of the world’s junk currencies. Indeed, with each passing day, the lira hits new lows against the U.S. dollar, and with that, inflation in Turkey soars. Today, I measured Turkey’s annual inflation rate at 82.9 percent per year. The lira hangs like the sword of Damocles over Erdogan.

For Erdogan, low interest rates are a fatal attraction. Just what is the source of this attraction? To answer that question,

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Steve H. Hanke is a professor of applied economics at the Johns Hopkins University in Baltimore. He is a senior fellow and the director of the Troubled Currencies Project at the Cato Institute in Washington, D.C.

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