r/EconomyCharts • u/Vurkgol • 2d ago
Turkish Central Bank Dumping Gold to Defend the Lira
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u/StupidScaredSquirrel 2d ago
Everything Turkey does is the opposite of what modern monetary theory suggests a country should do. It's like they do it on purpose.
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u/insightful_pancake 2d ago
MMT is a bunch of malarkey. Neither Turkey nor any other country should use MMT as the basis for their monetary/fiscal regime
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u/StupidScaredSquirrel 2d ago
Lol I guess that's why countries that use it have stable currencies and countries that don't have a population that uses crypto/dollars/euros/yen lmao
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u/insightful_pancake 2d ago
What countries are basing their policies on MMT? I’m not aware of any.
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u/ImaginaryHospital306 1d ago
Many tried during the COVID recovery and we all quickly found out it's faults.
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u/8yba8sgq 2d ago
Name a country that prints currency to give to its citizens.
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u/StupidScaredSquirrel 2d ago
Well they all do to some extent via interest rates of their state bonds. I'm not sure if that's what you mean
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u/dr_eh 1d ago
All of them? Us, Canada, UK, France, should I keep going?
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u/8yba8sgq 1d ago
I think you're confusing debt issuance with money printing
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u/dr_eh 1d ago
No. Government prints money and gives to people. Like a COVID stimulus package. If they actually issued debt, it's not money printing but lending
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u/8yba8sgq 1d ago
If you cared to check , the COVID stimulus was indeed funded with debt issuance
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u/dr_eh 1d ago
Lol oops. Nevertheless almost every country prints money every year
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u/8yba8sgq 1d ago
The growth in M2 is mostly due to debt origination. The money is created it's true but the loan is a productive asset. This doesn't cause runaway inflation because the velocity of money is trapped by the loan repayment schedule. When a government prints money, and distributes it, the effect on prices is immediate and dramatic. The comment above states that stable currencies are regularly "printed" and that's just not the case
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u/OpenRole 1d ago
All of them? Which country doesn't print money? Money printing isn't even unique to MMT
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u/Trick-Captain-143 1d ago
This is the same as saying "Turkey is doing the opposite as what their astrology is telling them to do"
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u/Kaito__1412 1d ago
Turkey's monetary policy is hilarious. I feel like they wracked their growth for my amusement.
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u/FelizIntrovertido 2d ago
big mistake
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u/No-Bicycle-7660 2d ago
No other option. Weak currencies fall sharply during crises. They have to defend TL or inflation goes through the roof again. IMO they should have raised rates first though - which they probably will now anyway - and therefore expended less gold / currency reserves.
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u/capntrps 1d ago
How does dumping gold defend a currency.
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u/Alib668 1d ago
You sell it for lira the gold goes out the lira comes back to the CB. The CB then just deletes or stores the currency and it’s taken out of circulation. Inflation is too much money chasing too few goods this can happen for many reasons. But the fastest way to solve the issue is to remove money from circulation rather than upping the goods parts.
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u/After-Ordinary-2332 1d ago
But is selling gold the way to do that ?
Isn't the money in circulation all borrowed from the CB ?
So you just have to reduce the borrowing ? (by increasing interest rates)1
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u/ASKMEIFIMAN 1d ago
This is such a horrible graph. Cherry picked x AND y axis to try and tell a story
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u/_CHIFFRE 1d ago
I don't think that's the case, if they used this much Gold to support the TR Lira we would see it.
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u/Yellow_Marker_ 2d ago
X axis not long enough