2023-06-09 23:26:16
Global economist Steve Hanke warned, on Friday, of the danger of a continued free fall in the Turkish lira, and he also expressed his fear of the US economy entering a recession.
“The value of the Turkish lira against the US dollar has fallen by a significant 37 percent since January 2022,” the senior lecturer at Johns Hopkins University said in a tweet.
“To save the lira from a free fall, Turkish President Recep Tayyip Erdogan and his new finance minister, Mehmet Simsik, need to form a currency board – a monetary authority established by the central bank to maintain a fixed exchange rate for foreign currency – immediately,” Hankey added.
Hankey had made it clear earlier that the Turkish economy was witnessing a nightmare that required speedy action before the matter escalated.
The economist turned to talk about the changes in the US economy, warning that an economic recession is on the horizon.
“Wall Street’s recent gains are concentrated in a few stocks, and some believe that this portends an economic downturn,” Hanke said.
And the economist continued, it does not take you to be an expert in financial markets, “To know that a recession is coming, just look at how much the money supply (M2) – the total amount of cash assets available in large US commercial banks – has decreased by 4.6 percent since April 22.” .
“The US Institute for Supply Management services index fell to 50.3 in May, the lowest level in 5 months,” Hanke said.
The economist added, “The theory of the quantity of money states that with a difference between 6 and 18 months, the collapse in the money supply will lead to a recession, and a (M2) decline of 4.6 percent since April 2022. The American recession appears on paper.”
To prove the seriousness of the situation, Haneke cited the famous American billionaire Warren Buffett, who said, “It is crazy to continue printing money. It is very difficult to remedy the matter after the genie comes out of the bottle and people lose confidence in the currency.”
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