Hyperinflation Avoidance Advice for Turkish Citizens as Fitch Cuts Ratings

Turkey is on a path towards hyperinflation. Here are the steps Turkish citizens should make ASAP.

Citing stability risks, Fitch Cuts Turkey's Credit Rating to BB, further into junk territory.

  • Risks to macroeconomic stability have intensified owing to the widening in the current account deficit, more challenging global external financing environment, jump in inflation and the impact of the plunge in the exchange rate on the private sector: Fitch
  • Economic policy credibility has deteriorated in recent months and initial policy actions following elections in June have heightened uncertainty, the rating agency said in a statement
  • Fitch expects CAD to widen to 6.1% of GDP in 2018, driven by higher fuel prices, and in 1H, higher household consumption
  • Fitch forecasts annual average inflation to be more than double the current BB range median, at 13% in 2018 and 10.8% in 2019
  • Outlook on the rating is negative

Heading for Hyperinflation

Turkey isn't close to hyperinflation yet. But the path it's on is a guaranteed way to get there.

Turkey on Venezuela's Path

  1. Erdogan jailed political opponents
  2. Parliament effectively made Erdogan prime minister for life
  3. Erdogan took over the press
  4. Erdogan took over the courts
  5. Erdogan took over finance
  6. Erdogan about to take over the central bank

Hyperinflation Nearly Inevitable

Venezuela did not hop straight into hyperinflation and Turkey likely won't either.

However, if Turkey remains on the same path, which seems highly likely, hyperinflation is the inevitable outcome.

Lira

Advice for Turkish Citizens

  • Prepare for hyperinflation
  • Get your money out of Turkish banks ASAP
  • Convert all existing savings into a basket of US dollars, gold and silver.
  • Borrow as much Turkish Lira as you can
  • Invest it in a basket of US dollars, Gold, and Silver

Hyperinflation is complete loss of faith in currency. It's inevitably starts off as a series of political as opposed to monetary events.

Erdogan has Turkey on that path.

For discussion of the Turkey hyperinflation case and comparisons to other historic hyperinflations, please see Hyperinflation and Mass-Migration Crisis Inevitable.

Mike "Mish" Shedlock

Comments (10)
No. 1-10
Six000mileyear
Six000mileyear

Let's add that Turkey and Venezuela both took control of education.

2banana
2banana

And the citizens of these countries keep re-electing these folks. Let them live in the society they desire.

And build that wall.

SweetKenny
SweetKenny

You get the leader you deserve.

Cbb
Cbb

Edogan is elected by a small margin, 52%, the other 48% Hates him,. things may change if the economy detoriates and if a recession hits. 48% doesnt deserve consequences of his mistakes.

Tengen
Tengen

Yep, Turkey still has a large Kemalist contingent that has always disliked Erdogan, especially in the west of the country.

Another problem is that ethnic Turks outside the country (particularly in Germany) are allowed to vote in Turkish elections and have boosted Erdogan. I used to know a lot of Turks who complained about this and as far as I know it's still allowed.

Zardoz
Zardoz

A wall across the Atlantic? Why not let the Space Force handle it?

You’re right though, there are consequences for electing morons.

RobinBanks
RobinBanks

Still, away to go to catch Russia and China up but one day a place at the SCO table awaits. Remember, it was the FSB that tipped Erdogan off about the coup.

lol
lol

switch to the dolla,then u can print 24/7 round the clock and spenddddddd!

Bastiat
Bastiat
(deleted message)

France is governed by a power-crazed financially-illiterate Islamist dictator? Who knew?

Bastiat
Bastiat

I wouldn't advise borrowing in lira unless Erdogan gets his way with much lower rates. The 1y turkish libor is above 20%. It might take much longer than that for hyperinflation to set in.