<a fr-original-style="" href="https://twitter.com/Nesrinnas" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">Dr. Nesrin Nas</a>The government's economic policy, which focuses on growth rather than inflation, creates "the severity of uncertainty" and increases despair.The first six months of 2022 were the most rapidly increasing period of inflation in the 99-year history of the Republic, excluding the years of the Second World War. When I started this article, Turkey's CDS premium was around 900. And the markets were anxiously awaiting the FED's decision.Finally, the FED raised interest rates by 75 basis points to prevent 8.6% annual inflation from becoming sticky, with foresight that the world's war and supply constraints were permanent.Unlike the FED, we hold on to keep the negative real interest rate at minus 56% with our reserves of minus 53 billion dollars and 73% CPI inflation, arguing that the risks are temporary. Moreover, we do not have another magical tool in our saddlebags like currency hedged deposits (FX hedged deposits), which kept the exchange rate below 18 liras for a while, albeit for a short time. The lack of excitement over the recently announced income-indexed bond is proof of this. In addition, there is very little individual demand for foreign currency anymore. Because the demand for foreign exchange comes from the forced import channel, the diagnosis is wrong.Moreover, in Turkey, where 72% of total deposits are held in foreign currency, including KKM (currency hedged deposits), and where 72-74% of the energy and commodities and 11-12% of capital goods required for production have to be imported, the President says that interest rates will cut further.<h2 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">The government's priority is growth, not inflation</h2>With a growth rate of 7.3% in the first quarter of 2022, the economy shrank by 4.3% in dollar terms. Minister Nebati says, "We chose growth, not inflation," while the President, the head of the legislature, the executive, and even the judiciary, says things are going well despite some problems.The President has put those who say things are not going well in their place and warned the President of TÜSİAD (Turkish Industrialists' and Businessmen's Association) with the following harsh words:"We are growing poorer...we should not continue with an approach that contradicts the science of economics," also prioritizes the turning of the wheels. But the wheels are finding it increasingly difficult to turn. Because the foreign currency to lubricate the wheels is about to run out.To get a realistic idea of the economic outlook, one should look at quarter-on-quarter growth, not annual growth. The growth rate from the last year's last quarter to the first quarter of this year was only 1.2%, and the growth rate from the third quarter of 2021 to the fourth quarter was 1.5%.Meanwhile, the two most important cogs of growth are close to stalling; private consumption and exports fell by 2.8% and 3.2%, respectively. Unfortunately, we are in a much worse place than six months ago.We have spent 157 billion liras so far on the RCC. Worst of all, inflation is almost four times higher than in November 2021 and 2.5 times higher than in December. Meanwhile, producer prices increased by 8.76% month-on-month. The annual increase is 132.16%.Consequently, poverty is on the rise. According to Ipsos Research, 84% of the population in the country is just trying to survive. According to the United Nations, 14.8 million people in Turkey are starving.<h2 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">The hybrid system is the turning point</h2>2018 is a turning point for us. That year, with the transition to a hybrid system, called the Presidential government system, which rejects political responsibility, public accountability, and transparency, and puts all power and authority in the hands of a single person, everything started to break down. So total collapse accelerated.The legal and economic institutional infrastructure, which had been badly damaged until then, was largely destroyed. The Central Bank and TurkStat were severely damaged. Yet the reputation and credibility of these two institutions are vital. It's led to a currency-inflation spiral. One-quarter of inflation comes from abroad and three-quarters from the exchange rates level we have distorted at home.Undoubtedly, the government is trying to prove not only the "interest rate is the cause and inflation is the consequence" thesis, but also the "impossible trinity" hypothesis in the economy. As a result, the interest burden, which will be passed on to future years and generations, increases without increasing the debt stock due to inflation. The foreign trade deficit and the current account deficit are growing.Worse: The likelihood that this journey to the heights of irrationality will end in either an exchange rate shock, an interest rate shock, a balance of payments problem, or all three simultaneously has increased dramatically.<h2 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">The real survival problem</h2>In short, no one can even predict what look like tomorrow might. It is a form of violence. We call it the violence of uncertainty. Bekir Ağırdır puts it this way:<blockquote fr-original-style="color: rgb(9, 9, 9); border-color: rgb(37, 44, 60); border-width: 4px; font-style: italic; padding-left: 10px;" style="color: rgb(9, 9, 9); border-color: rgb(37, 44, 60); border-width: 4px; font-style: italic; padding-left: 10px; margin: 0px 0px 1em; border-left-style: solid; box-sizing: border-box;">In Turkey, uncertainty is one of the most visible elements you can feel on the street, at work, and at home. It has become a hegemonic feeling. And you see tens of millions of people oppressed under this feeling.</blockquote>In a country where 20 million voters under the age of 30, the so-called "home youth," try to live on pocket money from their families, this preferred policy and approach is tearing them away not only from the future but also from the country. And the single decision-maker points to February and March 2023 as the brightest days, ignoring impoverishment, inflation, and the need for economic and political reform.For young people, this is the clearest violence of uncertainty. It destroys their hopes and confidence not only in the future but also in their country. It is the actual survival problem. The main priority of politics should be to eliminate this violence and create a predictable and secure future for everyone. It is the only way to mend the broken hearts of young people and restore their trust.

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