Turkish lira collapse — rate cuts into inflation
Between August 2018 and early 2026, the Turkish lira has fallen from about 5 to the U.S. dollar to over 40 — a roughly 87 percent depreciation over seven years. Turkish consumer-price inflation has run at 20 to 85 percent annually over the same period. The unusual feature of the Turkish episode is that President Erdoğan has repeatedly forced the central bank to cut interest rates into rising inflation, arguing that high rates cause inflation rather than controlling it. The resulting policy is the clearest ongoing real-world experiment in deliberately debasing a currency while publicly defending the policy on theoretical grounds.
Erdoğan has replaced four central-bank governors since 2019 over disagreements about rate policy. His argument — that low rates cure inflation — is at odds with roughly 100 years of monetary economics. The Turkish experience is being closely studied as a natural experiment in whether political control of monetary policy can override standard central-banking consensus.
07 · Stealth Printing
In November 2008, the Federal Reserve launched Quantitative Easing — the purchase of long-dated Treasury and mortgage securities with newly-created reserves. It was, mechanically, money-printing. Politically, it was called 'unconventional monetary policy.' The innovation was not the printing; central banks had been doing that for three centuries. The innovation was that the printing became invisible to most people — the new money entered the financial system through bond purchases rather than fiscal deficits, and its effects showed up in asset prices rather than in consumer goods. Alongside QE, central banks have developed a toolkit of yield-curve control, reverse repo operations, currency swap lines, and measurement adjustments to the inflation indices themselves. The era's thesis: debasement still happens; it's just harder to see.
Read the full era →- Nov 25, 2008Federal Reserve launches QE1
- Sep 21, 2011Operation Twist — maturity manipulation
- Apr 4, 2013Bank of Japan launches QQE
- Jan 29, 2016BOJ introduces Yield Curve Control
- Mar 23, 2020Fed announces 'unlimited' QE for COVID
- 1996 — 2023CPI hedonic adjustments and substitution
- Sep 23 — Oct 14, 2022UK gilt market crisis
- 2023 — 2025Central Bank Digital Currency pilots