Quite a few people locally are suggesting that both Şimşek and Hafize Erkan (the Central Bank Governor appointed by Recep in March) will both be toast after the local elections next year. They think that if the Lira is stabilised and maybe starts to recover against the dollar it'll be enough to get the AKP elected/re-elected in a lot of areas and once that is done they'll both be sacked and he'll appoint people to do things his way.
Not a good time to be a Türk. Not too bad if your income is sourced from elsewhere.
Potter wrote: ↑Thu Sep 21, 2023 1:47 pm
Even if I could get through to them on the phone they are not capable of understanding, if they were then the UK wouldn't be in such a shocking fiscal mess.
"Fiscal" means government revenue/taxes.
Oh come on, don't make me continually have to explain everything to you.
Do you think that the current fiscal mess is entirely separate to the monetary policy mess and that this move wasn't politically motivated?
I don't know why you comment when you've never been able to keep up with the conversation since the thread started years ago.
Yeah, nobody knows as much as you, do they? Despite previously dissing it you've obviously been on Google genning up on monetary theory!
"Truth does not change because it is, or is not, believed by a majority of the people." - Giordano Bruno
Quite a few people locally are suggesting that both Şimşek and Hafize Erkan (the Central Bank Governor appointed by Recep in March) will both be toast after the local elections next year. They think that if the Lira is stabilised and maybe starts to recover against the dollar it'll be enough to get the AKP elected/re-elected in a lot of areas and once that is done they'll both be sacked and he'll appoint people to do things his way.
Not a good time to be a Türk. Not too bad if your income is sourced from elsewhere.
Sums it up. You can bugger up an economy as much as you like as long as you do enough in time to get re-elected then you can bugger it up all over again until just before the next one*. Ah, 'democracy', ain't it marvellous?
* But make sure you, your family and friends profit as much as possible from it each time.
Doubt is not a pleasant condition.
But certainty is an absurd one.
Voltaire
At the same time as money velocity has dropped like a stone the Bank of England is still keeping interest rates high apparently to reduce current inflation in spite of the well known lag between interest rate changes and their effect on the economy. The BoE continuing this policy at the same time as the UK is entering a recession is a recipe for deflation ...
"Truth does not change because it is, or is not, believed by a majority of the people." - Giordano Bruno
irie wrote: ↑Tue Feb 20, 2024 9:10 am
At the same time as money velocity has dropped like a stone the Bank of England is still keeping interest rates high apparently to reduce current inflation in spite of the well known lag between interest rate changes and their effect on the economy. The BoE continuing this policy at the same time as the UK is entering a recession is a recipe for deflation ...
Do you have a solution you'd prefer ? Or at the least, an opinion ?
irie wrote: ↑Tue Feb 20, 2024 9:10 am
At the same time as money velocity has dropped like a stone the Bank of England is still keeping interest rates high apparently to reduce current inflation in spite of the well known lag between interest rate changes and their effect on the economy. The BoE continuing this policy at the same time as the UK is entering a recession is a recipe for deflation ...
Do you have a solution you'd prefer ? Or at the least, an opinion ?
Immediately reduce interest rates.
"Truth does not change because it is, or is not, believed by a majority of the people." - Giordano Bruno
Given the time and the inclination I could probably build a case that suggests a bout of deflation might be good medicine after the recent atypical inflation. After a bout of high inflation reduced prices may not lead to reduced spending but increased consumption. The main issue with deflation usually is prices drop and so does spending/consumption so manufacturers cut production and the economy spirals downwards.
In the current scenario a lot of people would go back to buying what they did before without spending more money.
Unfortunately, a lot of that is stuff in the supermarket that has been imported. (Or indeed stuff on Amazon etc that's been imported). Then again, when money is tight people buy cheaper stuff anyway and the UK doesn't produce cheap stuff.
Doubt is not a pleasant condition.
But certainty is an absurd one.
Voltaire
Count Steer wrote: ↑Wed Feb 21, 2024 12:36 pm
Given the time and the inclination I could probably build a case that suggests a bout of deflation might be good medicine after the recent atypical inflation. After a bout of high inflation reduced prices may not lead to reduced spending but increased consumption. The main issue with deflation usually is prices drop and so does spending/consumption so manufacturers cut production and the economy spirals downwards.
In the current scenario a lot of people would go back to buying what they did before without spending more money.
Unfortunately, a lot of that is stuff in the supermarket that has been imported. (Or indeed stuff on Amazon etc that's been imported). Then again, when money is tight people buy cheaper stuff anyway and the UK doesn't produce cheap stuff.
The main risk with deflation is that purchases will be put off in the expectation that prices will drop, thus creating a deflationary doom loop. I can not see how that would be "good medicine".
"Truth does not change because it is, or is not, believed by a majority of the people." - Giordano Bruno
Count Steer wrote: ↑Wed Feb 21, 2024 12:36 pm
Given the time and the inclination I could probably build a case that suggests a bout of deflation might be good medicine after the recent atypical inflation. After a bout of high inflation reduced prices may not lead to reduced spending but increased consumption. The main issue with deflation usually is prices drop and so does spending/consumption so manufacturers cut production and the economy spirals downwards.
In the current scenario a lot of people would go back to buying what they did before without spending more money.
Unfortunately, a lot of that is stuff in the supermarket that has been imported. (Or indeed stuff on Amazon etc that's been imported). Then again, when money is tight people buy cheaper stuff anyway and the UK doesn't produce cheap stuff.
The main risk with deflation is that purchases will be put off in the expectation that prices will drop, thus creating a deflationary doom loop. I can not see how that would be "good medicine".
Most people don't defer buying food and fuel. Yes, there's a risk but deflation is usually seen as a bad thing as part of the typical economic cycle. The last few years have not exactly been typical. Locking in abnormal bounces in inflation has risks too (wage inflation etc which don't get reduced when/if things settle down again). Reducing inflation doesn't reverse it, a bout of deflation might take some of it out.
Yes, I realise it's economic heresy - deflation is bad, growth is good but excessive inflation is bad etc.
Abnormal times and all that.
Doubt is not a pleasant condition.
But certainty is an absurd one.
Voltaire
Count Steer wrote: ↑Wed Feb 21, 2024 12:36 pm
Given the time and the inclination I could probably build a case that suggests a bout of deflation might be good medicine after the recent atypical inflation. After a bout of high inflation reduced prices may not lead to reduced spending but increased consumption. The main issue with deflation usually is prices drop and so does spending/consumption so manufacturers cut production and the economy spirals downwards.
In the current scenario a lot of people would go back to buying what they did before without spending more money.
Unfortunately, a lot of that is stuff in the supermarket that has been imported. (Or indeed stuff on Amazon etc that's been imported). Then again, when money is tight people buy cheaper stuff anyway and the UK doesn't produce cheap stuff.
The main risk with deflation is that purchases will be put off in the expectation that prices will drop, thus creating a deflationary doom loop. I can not see how that would be "good medicine".
Most people don't defer buying food and fuel. Yes, there's a risk but deflation is usually seen as a bad thing as part of the typical economic cycle. The last few years have not exactly been typical. Locking in abnormal bounces in inflation has risks too (wage inflation etc which don't get reduced when/if things settle down again). Reducing inflation doesn't reverse it, a bout of deflation might take some of it out.
Yes, I realise it's economic heresy - deflation is bad, growth is good but excessive inflation is bad etc.
Abnormal times and all that.
Just for starters, deflation is absolutely not part of a "typical economic cycle"!
As for "Locking in abnormal bounces in inflation" and "Reducing inflation doesn't reverse it [inflation], a bout of deflation might take some of it [inflation] out", one can only
"Truth does not change because it is, or is not, believed by a majority of the people." - Giordano Bruno
The main risk with deflation is that purchases will be put off in the expectation that prices will drop, thus creating a deflationary doom loop. I can not see how that would be "good medicine".
Most people don't defer buying food and fuel. Yes, there's a risk but deflation is usually seen as a bad thing as part of the typical economic cycle. The last few years have not exactly been typical. Locking in abnormal bounces in inflation has risks too (wage inflation etc which don't get reduced when/if things settle down again). Reducing inflation doesn't reverse it, a bout of deflation might take some of it out.
Yes, I realise it's economic heresy - deflation is bad, growth is good but excessive inflation is bad etc.
Abnormal times and all that.
Just for starters, deflation is absolutely not part of a "typical economic cycle"!
As for "Locking in abnormal bounces in inflation" and "Reducing inflation doesn't reverse it [inflation], a bout of deflation might take some of it [inflation] out", one can only
Try reading what I wrote, slowly, with your fingers under the words, move your lips if it helps.
Doubt is not a pleasant condition.
But certainty is an absurd one.
Voltaire
Yeah, I wasn't trying to rewrite economic theory. Just thinking eg food prices have soared (something like 31% since Dec 3021). People therefore buy less, buy cheaper and/or demand more £ and/or need more taxpayer support. If prices came down, (deflated) rather than locking the increases in it could be beneficial.
I know deflation isn't a natural part of the 'normal economic cycle' but that's not what I said. However, China is experiencing a second bout in 2 years due to declining domestic demand and falling property prices, so it's not exactly a once in a blue moon phenomenon. I've lived through it too here in the UK.
Maybe it wouldn't be the end of the world if house prices dropped too but for the cosmetics, of it we'll call it a 'correction'.
Doubt is not a pleasant condition.
But certainty is an absurd one.
Voltaire
irie wrote: ↑Tue Feb 20, 2024 9:10 am
At the same time as money velocity has dropped like a stone the Bank of England is still keeping interest rates high apparently to reduce current inflation in spite of the well known lag between interest rate changes and their effect on the economy. The BoE continuing this policy at the same time as the UK is entering a recession is a recipe for deflation ...
Do you have a solution you'd prefer ? Or at the least, an opinion ?
Immediately reduce interest rates.
In spite of inflation dropping like a stone the Bank of England has kept base rate unchanged at 5.25%
Whereas by contrast the Swiss Central Bank has reduced rates, at least they're not behind the curve!
"Truth does not change because it is, or is not, believed by a majority of the people." - Giordano Bruno
