Will the current bank runs leading to an economic collapse in Turkey?

For Americans who want to look into the future, you no longer need a crystal ball or the words of a magical fortune teller. All you have to do is watch what is unfolding in Turkey as this year’s Turkish lira crash pushes their already crumbling country into even deeper ruin. If we continue on the path we’re on, the mighty United States could very well follow Turkey’s lead into a total financial collapse.

Since 2015, Turkish citizens have watched helplessly as their purchasing power plummets year after year, now sitting at less than half of its previous value. The national currency– the Turkish lira– has crashed sharply against the US dollar and many other major global currencies. Where it once sat at 3 lira for each dollar, that rate has now dipped to a record low of 7.37 lira per dollar. This year alone, the lira plunged a staggering 20 percent.
Turkey’s President, Recep Tayyip Erdoğan, made a desperate last ditch effort in late July to enforce shadow capital control and force funding rates upwards of 1000 percent, but even these extreme measures failed. Earlier in the month, Erdoğan removed the sitting governor of the central bank, thus leaving himself as the main figure in charge. Despite his grip on both politics and the country’s financial systems, Erdoğan was unable to prevent the Turkish lira crash to all time low.
Still, that hasn’t stopped Erdoğan from wresting more and more power from other government institutions and consolidating it for himself. Possible foreign investors watch this process with great concern and thus become increasingly wary about dealing with Turkish companies.
That is only adding further to the country’s currency collapse. At this point, the capital controls put in place by Erdoğan–among the strictest in the world–mean that Turkish citizens are heavily discouraged from buying up comparably valuable US dollars that would allow them to build a safety net against the inevitable devaluation of their own national currency. These controls leave the desperate public with very few choices, and not much to lose.

In this video, we are going to discuss the economic collapse in Turkey and the impending crash of the turkish lira, which has already lost more than half its value in the last several years. We’ll tell you how this will affect Turkish citizens, and–looking at the economic indicators–why the US is heading down a dangerously similar path to destruction.

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Epic Economist

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