💸🇹🇷 The Turks Are Piling In
Happy Hump Day everyone!
Hope you all have been having a wonderful week! Let’s get over this week’s Hump Day together ;)
This week, something really interesting is happening in Turkey. The local currency: the Turkish lira, has been plunging and Turks have been piling into Bitcoin and Tether as a response.
Back in November, the Turkish lira plummeted to a new record low against the U.S. dollar. Most economists agree that the catalyst for the drop in value was President' Tayyip Erdoğan’s unconventional views on interest rates and how they affect inflation. Essentially, Erdoğan cut interest rates three consecutive times and said in a speech that high interest rates cause inflation in complete contradiction to the more widely accepted stance that low interest rates cause inflation.
Here is a brief timeline of the Turkish lira compared to the USD from The New Statesman.
The focus of today’s article isn’t how interest rates affect inflation (if you’re interested) but rather the response from average citizens in Turkey and the benefit of having a decentralized currency. We’ve seen the developing world embrace cryptocurrency as a result of a distrust towards their own government’s economic policies. Nigerians use Bitcoin after currency devaluations and tight control over access to foreign currencies. El Salvador enacted policies to recognize Bitcoin as legal tender, becoming the first country to do so.
From the beginning, cryptocurrency enthusiasts were selling the decentralization aspect and now we are seeing the benefits unfold in real time. It is only a matter of time before more developing nations with a distrust for their government policies take matters into their own hands (like the countries mentioned above) and adopt something like Bitcoin to safeguard their savings. Will cryptocurrency keep corrupt governments in check? Time will tell, and we’ll be watching.
By the way, if you’d like extra Premium Content on Stocks and Crypto, as well as Live Coaching Calls, make sure to check out my Patreon here, where we offer that as part of supporting the channel!
Enjoy this week’s Hump Days!
- Humphrey & Rickie
In the Markets
Weekly News Roundup
Inflation Rises 7% Over The Past Year, Highest Since 1982 (CNBC)
The Consumer Price Index, a measure of costs across dozens of items, increased 7% in 2021. This move was the fastest increase since June 1982.
RH: 2021 also saw higher wages but that still resulted in a 2.4% pay cut.
HY: Will be interesting to see the next CPI report in February. My team & I are working on some investment suggestions you can make against Inflation, video coming soon!
Turks Piles Into Bitcoin and Tether to Escape Plunging Lira (WSJ)
The Turkish lira has become so volatile following a push for repeated interest rate cuts in the face of soaring inflation, that Turks have ditched the local currency for cryptocurrency. Despite an official ban on cryptocurrency, Turks have particularly embraced Tether which is a stablecoin pegged to the U.S. Dollar.
HY: Pretty amazing, bullish for Bitcoin, but lately Bitcoin has been somewhat correlated with the markets, and unsure if Turkish bullishness can keep its price up.
Microsoft Will Buy Activision Blizzard, a Bet on the Next Generation of the Internet (NYT)
In Microsoft’s largest acquisition ever, the nearly $70 billion Activision Blizzard (company behind Call of Duty, World of Warcraft and Candy Crush) leapfrogs them into a leading spot in the video game/augmented reality industry with the likes of Tencent and Sony.
RH: There is clearly an arms race for companies to position themselves for the next generation of the internet. It will be interesting to see what Meta has been working on to keep up with the competition, whether that is a major acquisition of their own or an internal development from their elite group of engineers.
HY: I think it’ll be a year before major changes start taking place, but perhaps Microsoft is looking for the next “Metaverse” play and owning ATVI/Blizzard IP and game systems are going to be core to that.