A famous Bitcoin skeptic has called for a gold-backed currency to save Turkey as its national fiat currency collapses.
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In a tweet on Monday, John Hopkins professor Steve Hanke argued that hard money was now the only way out for Turkey, which has spent billions of dollars consolidating the lira.
Hanke: Turkey’s lira is „burned“
At the time of this publication, these efforts remain in vain, as another day of intense sales brought the lira to an all-time low against several currencies, including the euro and Bitcoin (BTC).
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The weakness of the US dollar meant that the lira-dollar pair avoided its own record, falling to its lowest level since May.
„The #Turkish lira is burned,“ Hanke declared.
„The central bank’s net foreign assets are a staggering negative $32 billion. Turkey has run out of ammunition in its futile defense of the desperate lira. Only a gold-backed monetary authority can save the lira.
BTC/TRY lifetime chart
Turkey’s situation is reminiscent of what enveloped Russia in 2014, when the crisis in Ukraine led to a situation that saw the central bank continually selling off its foreign reserves to stabilize the ruble.
„They are intervening strongly. And the question is how long they can do that,“ a strategist at the Dutch Rabobank told the Financial Times last week.
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Ankara has adopted a laissez-faire approach to regulating Bitcoin, with a lack of formal recognition ironically contrasted with moves such as the banning of PayPal in 2016.
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Hanke is well known for preferring other safe haven assets to BTC, which he described in June as „not a currency“.
He joins the likes of Peter Schiff in his support for gold, which itself stands at USD 1,975, an all-time high in US dollar terms.
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The interventionist strategies by governments and central banks regarding the currency is a major argument in favor of Bitcoin as an alternative. As Saifedean Ammous points out in his now ubiquitous book, The Bitcoin Standard, the currency leverage that Turkey is now using only occurred because governments removed gold backing from their respective currencies.
In a timely publication this week, Ammous highlighted a 1957 essay by Ludwig von Mises as an essential weapon against reverence for what he called the „inflationary nonsense“ of fiat.
„Nothing is more important today than to illustrate public opinion on the basic differences between genuine liberalism, which advocates free market economics, and the various interventionist parties that advocate government interference,“ Mises concluded.