So Turkey just announced they're raising their interest rates to 30% What's going on? Well, for that, we have to go back Way back into May 2023 when President Erdogan was selected for his third consecutive term as the President of Turkey On the eve of the election, Turkey had 40% inflation, which sounds like a lot, but compared to 2022 where they had 80% inflation, things weren't that bad. But the problem is that inflation is right in in August Turkey went back to 60% inflation. So inflation is creeping back up and the real numbers out of Turkey are probably a lot higher than the official government release we're getting right now now. Erdogan's refusal to raise interest rates for months and months and months on is well documented, and for a while, his refusal to raise rates worked just fine.

The economy was great, money was cheap, money was plentiful, but at some point when you print so much money, you have to pay the price. And the price for Turkey was the absolute destruction of its Turkish L. The Turkish L used to be 85 cents on a dollar in 2014. this went down to 50 cents.

Now 3.7 cents of the US dollar can get you one Turkish L Essentially, what we have here is that wages in Turkey no longer cover the cost of living. Plus, Turkey went through a massive earthquake that cost about a hundred billion dollar to the Turkish economy. So what we have here is bad policies combined with massive earthquakes that equals economic hell. Now the problem is that this is not the first rodeo for President Erdogan.

He used to be called Prime Minister Erdogan. In fact, he's the def. Factor ruler of Turkey for the past 21 years. since 2002, President Erdan or Prime Minister Erdan is the guy in charge charge and now we have a problem of chronic inflation in Turkey that he has to fix.

The problem is that this policy of not raising rates worked for him in the past when he was the Prime Minister In 2002. About 20 years ago he kept rates low and until 2014 it worked to Perfection. His first decade of rule was great. Turkey was getting about 5% GDP Every single year foreign direct investments into Turkey were out of this world.

Infrastructure Investments by the government were massive. Real estate market was doing great, but keeping money cheap and keeping money plentiful. They value the currency because if you're not the United States you don't produce the world's money. Which means you're the money consumer and if you buy so much of it, eventually it's going to take its toll.

But why does it even matter? Why? Is it bad why having a devalued currency is so bad? Well, first of all, Turkey is an importer country. They're not an exporter like China China was a net exporter. They intentionally devalued their currency to become the world's Factory But even that strategy is kind of in question. Now, given what's going on in China which is a video in its own right, the problem is that Turkey isn't China Turkey is a net importer.

Now their Imports become expensive which makes inflation even worse. Think of it of a double whammy. Inflation is causing currency devaluation which is now raising the cost of goods to manufacture things which raises inflation more. In fact, companies that borrowed in US dollars or in Euros Turkish companies that is now have to pay more in order to service their debt.

Investing confidence in Turkey is going down the drain. FDI foreign direct Investments are going down and if you had Savings in the Turkish ler not in the US dollar, you're absolutely destroyed. It's savings. Carnage So for an import Nation Like Turkey, it's not a good idea to devalue your currency.

and obviously this was not 100% self-inflation icted all prices went up. and for Turkey which is the massive importer of energy that actually made things more expensive. we had high Us interest rates which draw of Investments away from Turkey but the main issue was and is and Remains the low interest rates for months and months and years and years and massive money supply for cheap and the refusal of the Turkish government to raise rates. Now Erdogan has his reasons of why he refused to do so.

Some of it is political bribery or El economy whatever you want to call it. For example, giving 700,000 public officials a 45% raise on the eve of the elections in May 2023. That actually did happen. While some of it was actually self- admittedly more theological, his religion prevents him for raising rates.

so that pushed Turkey to the brink of economic collapse and may was the way out for Turkey. But nobody else got reelected in Turkey and Erdogan ended up in the throne again and tried solving the problem without raising rates by buying the Turkish L with the foreign Reserve currencies of Turkey and with help from the Saudis and Russia which made things worse when you spend your foreign reserves and you borrow in dollars to buy the devalue Turkish L Surprise, surprise. you get absolutely slammed now. Russia has its own problems right now.

the Saudis are tired of being the world sucker hint, hint lucid and the money supply for Turkey absolutely dried up. The election economy made it worse, so Erdogan had to. Pivot This is what we're seeing right now. This is the guy who literally said that the interest rates are the mother of all evil.

He literally said that interest on loans is the mother of all evil and he would never raise interest rates. But once he got elected, he finally did it. He raised interest rates from 8% to 15% within a month. That didn't help.

Now he raised it again a month later in August so 17.5% that did not help. He then raised it in September to 20% That didn't help. And now he raised it from 20% to 30% within a single month. That probably will help.

No need to save face anymore for El Dictator the mother of all evils is no longer evil because at this point the problems of Turkey are so severe that raising rates is actually the acceptable solution despite all of the things that made him. Absolutely keep the interest rates so low. So the question is, will this help Turkey? The good news are if you're a fan of Turkey, that yes, Turkey has a terrific economy that should have never been in the toilet. It has great demographics Diversified Economies absolutely massive growth Good Market High Demographics absolutely insanely great Economy The pole position for Success.

If the Turkish government had any sort of Common Sense and employed somewhat reasonable, sensible monetary policy, Turkey would not have been in this situation. Its economy is much, much better than 90% of the developing markets out there, so it is Sol knowledgeable. It's good, but the problem is when you neglect the problem and you start working from the bottom, it's going to be very, very painful. The price is going to be much more expensive.

You're talking about the soft Landing in the US The Landing in Turkey is going to be very, very harsh. Eventually, prices will drop and the economy will recover in Turkey. But the price that the Turkish people will have to pay for the hubris of their leader is going to absolutely insane. And by the way, part of the research for this video led me down the rabbit Hall of YouTube and I found a clip from a film called the Turkish Rambo I Really wanted to watch the film but it was geographically blocked on my Netflix so I asked my friends at Surf Shark to give me a subscription and I downloaded it I installed it on my computer and now I was able to access anywhere in the world virtually on my Netflix account.

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