Turkey’s self-inflicted currency meltdown – Asia Times

In less than a year, the Turkish lira has lost up to 45% of its value against the US dollar. The continued meltdown of the currency is one of the worst economic crises Turkey has ever faced. Yet the government refuses to take a step back from its failing economic policy.

Installed after the 2015 presidential elections, the current economic model is rooted in the idea that low-interest-rate policies are disinflationary – a theory put forth by 20th-century American economist Irving Fisher. This school of thought resonates deeply with President Recep Tayyip Erdogan, who strongly believes that high interest rates are the “mother and father of all evil.”

But his government’s risky strategy runs counter to most conventional thinking on how to tackle the high inflation levels around the world. Many countries have either raised interest rates or plan to do so, but Turkey instead decided to cut them.

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