Global economist Steve Hanke warned on Friday of the risk of a continued free fall in the Turkish lira and expressed his fears that the US economy could enter 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, must create a currency board — a monetary authority established by the central bank to maintain a stable exchange rate for foreign currency — immediately,” Hankey added.
Hankey has made it clear earlier that the Turkish economy is facing a nightmare, which calls for quick action before the matter escalates.
The economist returns to talk about changes in the US economy, warning that a recession is on the horizon.
“Wall Street’s recent gains have been concentrated in a few stocks, and some believe this signals an economic downturn,” Hanke said.
The economist continued, “You don’t have to be an expert on financial markets to know that a recession is coming, just look at how much money supply (M2) – the total monetary assets available in large US trade. Banks – Down 4.6 percent since April 22.
“The US Institute for Supply Management Services index fell to 50.3 in May, a 5-month low,” Hanke said.
The economist added, “The quantity theory of money suggests that a decline in the money supply will lead to a recession, with a difference between 6 and 18 months, and (M2) will fall by 4.6 percent from April 2022. A recession will appear on paper.”
To demonstrate the seriousness of the situation, he quoted the famous American billionaire Warren Buffett, who said, “Continuing to print money is madness. After the genie is out of the bottle and people lose faith, it is very difficult to fix the thing. Currency.”
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