The most common question I’ve come across on over 20 social media platforms including Tinder, Gryndr, Xerfon, and Mephistafoles is, “Hocaaaaam, you say the economy will crash for 10 years, why hasn’t it failed?” The most common comment that I have come across is “Hoca ya, you, you are a member of Crypto-AKP, you are Erdoganista”. I wish those who made these contrasting comments would get together and drink some bitter coffee. By the way, you may not have heard of the generic Xerfon and Mephistapholes media platforms. To become a member, you must first have an American Express Zirconium Optima Super-Card, and they sent one to me and one to Jeff Bezos.
Yes, I confess, I could not bring down Turkey’s economy. Actually the easiest way for a lazy, treacherous and lazy “media economist” like me “Come on honey, do you still trust TUIK data? Listen to my truth ”, that some data is really festive for homes. But with a gram of Ar left by my late grandmother, I admit that the level of activity in the economy has been at a rate beyond TUIK’s pumping.
How can I know? For example, industrial production is foolproof. For example, I trust MUSIAD-SAMEKS, which I have graphed below, more than the ISO-Markit Manufacturing PMI, which shows that economic activity is in the direction of growth in March, albeit slowly. For example, it is difficult to deceive the core and total imports that I have presented below; both should have contracted.
The March cash budget announced last night yielded a surplus of TL40 billion, which may be a trap, but if there is Yigit who will throw TL40 billion bragging, he will kiss him, I will (to Greece) Then, or there is savings in the budget (if there were not, domestic demand would have been reduced) or tax revenues are at a high rate (then there is also consumption).
Oh, so my growth is not like that. According to Betam’s nowcast model, quarter-to-quarter GDP will grow only 0.7% in 1Q2021. But, if you had asked me, I would have said “At least 2% shrinkage”. Why didn’t it happen? The first response is a phenomenon that is observed around the world: humanity has adapted to the ongoing pandemic and has found a way to maintain its workforce despite social restrictions and prohibitions, with its sharp intelligence that defeated in others. living things at the top of the evolutionary tree.
My second explanation is a theory. But it is worth considering and discussing because it is in harmony with the “observed empirical data.” I’m writing, my left brain laughs. Who will argue? Should retired admirals issue a statement or not? Why not publish it? Isn’t freedom of expression a universal right guaranteed by the constitution? “The moment was significant.” Tell me what moment is not significant in this country, Odin Aşkı. One more small detail: since the fall of Sultan Abdülhamit Han, when have the Naval Forces struck? Coups d’état and memoranda are the competence of the Land Forces.
Anyway, let’s get back to the point. As you know, the CPI inflation measured by TUIK was 16.2% annually in March. ASSUME now (all Nobelist theories start with wild assumptions) REAL inflation is above what TUIK measures. So how does the data change?
But first, the assumption should be reasonable, albeit a little: if you set a model that says, “Suppose our president Erdogan is the most democratic leader in the world,” the monkeys laugh their ears. Do I have reasonable evidence that actual inflation may be higher than the TUIK measure? Ofcourse my horse. Here are two photos for you:
The first is the alternative CPI index of the ENA Group, headed by my dear professor Prof Veysel Ulusoy:
Second, Özer Sencar’s Metropoll Research Company March Kitchen Inflation Survey:
Now … Assuming inflation is 30%, not 16%, “a can of worm opens the lid,” as the Americans call it. Because GDP is calculated in the following way. First, it measures the FINAL value of all goods and services sold within a period of time, then divides it into a price index that is more or less similar to the CPI, which we call a deflator, to “remove it from inflation” and reach actual sizes. Real GDP is also overestimated if the deflator has a lower value than the real one.
But the problem does not end there. All nominal turnover rates are correct, but the actual increases are high.
But I won’t bring the word here either. I guess TUIK is right, our nation has shrunk slightly, feeling more inflation than the long Covid. It doesn’t matter, what if, in the public mind, inflation is 30%, interest on deposits and loans is 18% and 22%, respectively? Both are negative like REEL. That is to say, the citizen thinks that he has lost the purchasing power in the TL deposits and that he is stealing money from the bank’s pocket when he obtains a loan.
The results are terrible. Even if the nation cut policy interest to 22%, it would not keep TL. Rather, it withdraws new savings from banks and deposits in REEL assets. This is the main reason why we currently have access to 2.2 million national investors in the Stock Market. Waiting for a deposit in TL will lead to some loss of wealth, but if you invest in HakYemez Holding Uzay Teknolojileri AŞ on the Stock Exchange, you have at least the same luck at the roulette table.
I can extend this analogy here to Mars or Kars. The nation gets free credit anyway, buys land and cars that are considered half an investment regardless of price. Housing is a little different, because there is a problem of comparing income and interest.
Let me continue, if nominal turnover skyrockets due to high inflation, not increased unit sales, then VAT and SCT will skyrocket as well. The government collects huge taxes, but the consumer, whose purchasing power is low, screams as if sitting in an ashen bar. This explains the budget surplus.
In general, the propensity to save falls and the propensity to consume increases. Despite TL’s rapid depreciation, demand for imported goods also skyrocketed. Although 40% of the population survives with the financial support of the state, it is probable that the remaining 60% of the population will increase from one quarter to another with the trend of increasing spending of the exchange rate. The rest is up to TUIK’s magic tricks that will turn Harry Potter to gold.
FÖŞ said: The war of civilizations shapes the world economy
FÖŞ wrote: Steps of the global financial crisis