Douglas French
The Circle Bastiat
3/23/2012
Just one visit to Istanbul’s Grand Bazaar tells a visitor how Turks store value. The Turkish monetary authorities have a history of debauching their currency so Turks store their wealth in gold and rugs. There are 373 jewelers and 125 rug stores in the bazaar.
In 1966, one US dollar bought 9 lire. By 2001, a dollar bought 1.65 million lire. Four years later, six zeros were lopped off the lira and a dollar equaled 1.29 new Turkish lire. Today, a dollar can be traded for around 1.80 lire.
The last half-decade of tamer inflation has helped make the Turkish economy one of the strongest. However, Ahmet Akarli, an economist at Goldman Sachs in London, told The Economist last year, “The cyclical picture is looking ugly, imbalances are accumulating and financial vulnerabilities are growing.” Akarli says wages are up 18 percent, domestic demand is increasing 25 percent, and credit growth is 30 to 40 percent.
The Turkish government is facing a current-account deficit and now has its eye on the vast amounts of gold held by private citizens outside the nation’s banking system…
The article continues at The Circle Bastiat
Related: Turkey’s Erdogan, 58, said to have intestinal cancer
…Turkey has been buzzing with rumors over Erdogan’s health in wake of e-mails released by WikiLeaks in late February. The December 2011 e-mails, said to have come from the U.S. intelligence consultancy Stratfor, asserted that Erdogan underwent extensive colon surgery on Nov. 26, 2011…
…Western diplomats said Erdogan was acting with a sense of urgency that he might not be able to work for more than another few months. They said the prime minister was acting as one of them termed “a man on a mission to complete his agenda.”
