Inflation Caused by Government Policy Failure

[Joe Leote]

How Turkey Became So Expensive, So Fast:

https://youtu.be/ur3nTd0Ddwg

Joe

[Joe Leote]

Recent article compares the political and economic situation in Turkey to the developments in the United States:

A Cautionary Turkish Economic Tale | American Enterprise Institute - AEI

Quote: "Last year, Turkey registered a budget deficit of less than five percent of GDP while its public debt to GDP ratio was only around 35 percent. By contrast, last year the US budget deficit was around 6.5 percent of GDP and the public debt to GDP ratio stood at 100 percent." 

Turkey's low debt to GDP ratio debunks the commonly published idea that government debt to GDP ratio is the primary driver of inflation. My theory is that private credit markets drive asset price inflation at the margin. I have not seen any chart history of private credit to GDP in Turkey. My intuition tells me private debt to GDP has been rising rapidly to drive rampant consumer goods and asset price inflation. Economist Steve Keen compares private debt to GDP in his models usually in conjunction with rapidly rising asset prices.

Joe