Inflation soars to nearly 80% in Turkey as food prices double(lite.cnn.com)
lite.cnn.com
Inflation soars to nearly 80% in Turkey as food prices double
https://lite.cnn.com/en/article/h_a309ecbc87c23ea611a9bab31dd6628b
23 comments
Why is this argument never in the other direction? There’s just not enough money to make people into millionaires and billionaires. It’s always trouncing on the lower classes.
Am I going crazy or are we collectively witnessing the birth of a neo feudal class? I wasn’t around during the aftermath of WW2 but people believed in democracy and liberal values without stuffing the coffers of the rich right?
Am I going crazy or are we collectively witnessing the birth of a neo feudal class? I wasn’t around during the aftermath of WW2 but people believed in democracy and liberal values without stuffing the coffers of the rich right?
You completely missed my point.
If you pay the lower income people more, then things cost more, and they have to pay more to get things.
Which makes their income increase worthless.
You've increased the number in their bank account, but have made zero change in their situation.
And, to answer your question, the reason it doesn't work the other way is that the wealthy don't make anything, so their income doesn't change the cost of goods. (At least not directly - they make money on capital, so their income essentially acts as interest.)
If you pay the lower income people more, then things cost more, and they have to pay more to get things.
Which makes their income increase worthless.
You've increased the number in their bank account, but have made zero change in their situation.
And, to answer your question, the reason it doesn't work the other way is that the wealthy don't make anything, so their income doesn't change the cost of goods. (At least not directly - they make money on capital, so their income essentially acts as interest.)
Well, it doesn't work in the other direction. If you have a million dollars you have enough to make one millionaire. But you don't have nearly enough to raise a million people's wages.
You’ve got it completely backwards. At least for the US.
The top 1% in the US has 32% of the wealth. The next 9% has 37% of the wealth.
So basically the top 10% have 70% of the wealth and the bottom 90% have 30% of the wealth.
You can literally double the bottom 90%’s wealth by simply redistributing half the top 10%’a wealth. And the top 10% would continue to remain among the wealthiest human beings in the history of human civilization.
But if you were to redistribute all of the bottom 90%’s wealth, you wouldn’t make even a dent in anyone’s situation. And that’s even before we consider the massively declining marginal value of the dollar for a billionaire vs someone in the bottom 90% of the US economic system.
The top 1% in the US has 32% of the wealth. The next 9% has 37% of the wealth.
So basically the top 10% have 70% of the wealth and the bottom 90% have 30% of the wealth.
You can literally double the bottom 90%’s wealth by simply redistributing half the top 10%’a wealth. And the top 10% would continue to remain among the wealthiest human beings in the history of human civilization.
But if you were to redistribute all of the bottom 90%’s wealth, you wouldn’t make even a dent in anyone’s situation. And that’s even before we consider the massively declining marginal value of the dollar for a billionaire vs someone in the bottom 90% of the US economic system.
You misunderstood my point.
Imagine you did that, you doubled their money, and you made it permanent - all the bottom 90% get a huge wage increase.
What does this do to the cost of goods? It makes everything more expensive! So they are no better off that before.
That's basically what is happening today - wages are going up, and everything costs more.
"Wage Growth in the United States averaged 6.20 percent from 1960 until 2022, reaching an all time high of 15.31 percent in April of 2021"
"Wage growth for workers in lower-wage industries has slowed from 11.4% in August 2021 to 7.6% in January 2022."
The worst part is that inflation is growing faster than wages, presumably because there is more going on than just wage growth.
Imagine you did that, you doubled their money, and you made it permanent - all the bottom 90% get a huge wage increase.
What does this do to the cost of goods? It makes everything more expensive! So they are no better off that before.
That's basically what is happening today - wages are going up, and everything costs more.
"Wage Growth in the United States averaged 6.20 percent from 1960 until 2022, reaching an all time high of 15.31 percent in April of 2021"
"Wage growth for workers in lower-wage industries has slowed from 11.4% in August 2021 to 7.6% in January 2022."
The worst part is that inflation is growing faster than wages, presumably because there is more going on than just wage growth.
Yes! Not just automation, but efficiency.
This is a crucial point missing in the debates about redistribution of wealth. Redistributing money will only change prices to match the new levels. It doesn’t actually change anyones living standards.
The only way to make our living standards rise is increasing efficiency - doing more with less materials, less time or less people. One path to that is automation. Another is simply focusing on efficiency. There is a ton of room here with how grossly inefficient most organizations and institutions are. For example when a company hires 5x the people it needs, dealing with projects that will be cancelled or work that is ultimately thrown away.
This is a crucial point missing in the debates about redistribution of wealth. Redistributing money will only change prices to match the new levels. It doesn’t actually change anyones living standards.
The only way to make our living standards rise is increasing efficiency - doing more with less materials, less time or less people. One path to that is automation. Another is simply focusing on efficiency. There is a ton of room here with how grossly inefficient most organizations and institutions are. For example when a company hires 5x the people it needs, dealing with projects that will be cancelled or work that is ultimately thrown away.
>when you increase wages, you increases costs, and then those wages don't help: AKA inflation
The problem you are addressing is the income share of capital vs labor. Thomas Piketty has this theory called r < g meaning the return on capital is greater than the growth rate of the economy. This means the income share of capital is too high, there isn't enough money left to pay labor so you either get paid less, get fired or the business must raise prices which results in inflation at full employment.
As interest rates fell this problem has diminished but the interest rates on loans are still positive. Another problem is that during full employment people can afford to spend more on limited housing which drives its price up in popular locations. The problem isn't necessarily that housing is too expensive, the problem is that supply doesn't catch up to demand and that plots of land are kept empty, abandoned or underutilized (single family zoning).
The problem you are addressing is the income share of capital vs labor. Thomas Piketty has this theory called r < g meaning the return on capital is greater than the growth rate of the economy. This means the income share of capital is too high, there isn't enough money left to pay labor so you either get paid less, get fired or the business must raise prices which results in inflation at full employment.
As interest rates fell this problem has diminished but the interest rates on loans are still positive. Another problem is that during full employment people can afford to spend more on limited housing which drives its price up in popular locations. The problem isn't necessarily that housing is too expensive, the problem is that supply doesn't catch up to demand and that plots of land are kept empty, abandoned or underutilized (single family zoning).
What are you talking about. There is more than enough money for high wages, the problem is 90% of it is in like 5% of hands.
Incase anyone's wondering why, it's because Turkey's money printer is stuck on the brrr setting.
It is more like the president is jealous of the Eurozone and thought he can do the same by lowering the interest rate. The obvious problem is that he didn't pursue any austerity policy to lower the interest rate, no, instead he messed with the central bank and just set the interest lower by decree. One of the reasons why interest rates are so low in Germany and Switzerland is because of their tendency to conduct austerity. Germany insisted on a debt brake after 2011. That is how you get lower interest rates.
Getting inflation in check merely requires that the Turkish government raises taxes and does not borrow any additional money whatsoever. The risk of deflation is so far away it won't hurt the economy.
Getting inflation in check merely requires that the Turkish government raises taxes and does not borrow any additional money whatsoever. The risk of deflation is so far away it won't hurt the economy.
So the same as America's then. Great news.
Not at all.
I don’t understand how people can keep fear mothering about the US’s “money printers” with a straight face when the USD is stronger than its ever been and there is no indication in any of the currency markets, bond markets, etc that it’s about to change.
The Fed is still independent. And the people running it are a heckuva lot smarter than nearly everyone that Monday Morning QBs their decisions.
The Turkish “Fed” is not independent at all. Every time the finance minister in Turkey wanted to make the correct financial decision over the past couple of years (ie, raising rates), Erdogan fired them and hired someone else, until he reached the point that the only person who would take up that job was a family member with no economic training.
I don’t understand how people can keep fear mothering about the US’s “money printers” with a straight face when the USD is stronger than its ever been and there is no indication in any of the currency markets, bond markets, etc that it’s about to change.
The Fed is still independent. And the people running it are a heckuva lot smarter than nearly everyone that Monday Morning QBs their decisions.
The Turkish “Fed” is not independent at all. Every time the finance minister in Turkey wanted to make the correct financial decision over the past couple of years (ie, raising rates), Erdogan fired them and hired someone else, until he reached the point that the only person who would take up that job was a family member with no economic training.
The US turned theirs off earlier this year and then turned the money shredder on in June.
Not a big deal for Erdoghan, he just needs to choose a new victim to move people attention away. Kurds, Greeks, Armenians who is next?
How are they affording wars?
Considering the high inflation rate, they can't. Military sector spending is at the expense of the rest of the population.
anyone has any theory on whether turkey is special case, or if its neighbors are going to follow the same path ?
I believe the monetary policy of Erdoğan is somewhat Unique. Türkiye has dropped / resisted raising interest rates, and pretty much done the opposite to what few things economists agree on. This has caused the Lira to drop in value increasing the cost of imports.
They are importers of Energy unlike most of their neighbours and is a net food importer having been especially hit hard by the Ukraine conflict.
They are importers of Energy unlike most of their neighbours and is a net food importer having been especially hit hard by the Ukraine conflict.
https://wits.worldbank.org/CountryProfile/en/Country/UKR/Yea...
Turkey was indeed in the top 5 food importers from Ukraine in 2018. Interesting stuff!
Edit: actually the 5th top importer
Turkey was indeed in the top 5 food importers from Ukraine in 2018. Interesting stuff!
Edit: actually the 5th top importer
Planet Money did a good episode on this:
https://www.npr.org/2022/04/06/1091287991/turkeys-runaway-in...
Basically, the president doesn’t trust interest rates because it means some people can’t pay back loans.
https://www.npr.org/2022/04/06/1091287991/turkeys-runaway-in...
Basically, the president doesn’t trust interest rates because it means some people can’t pay back loans.
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Either we continue to subsidize the world with low income workers, or we massively increase automation.
It's crazy - there were times we were predicting that people would not need to work, and we'd need to give people basic income, and now it's clear there's just not enough people to do all the work that needs doing.