Listen, this Turkish lira story is funny.

Really, anything to do with Erdogan is funny. Unless you're a Turkish journalist. Or a Turkish academic. Or a member of Turkey's opposition. Or a Kurd. If you fall into any of those categories, there isn't anything “funny” about Erdogan.

The lira is in a downward spiral ahead of early elections set for next month and the proximate cause for that downward spiral is Erdogan and his insistence on pushing his own theories about FX, rates and inflation, theories which are diametrically opposed to anything that even approximates economic orthodoxy.

He's convinced that there's a conspiracy afoot to keep rates artificially high and according to him, high rates cause inflation. As noted in our week ahead preview, Erdogan delivered a series of characteristically ridiculous comments at a speech in Istanbul on Sunday. Here's the money quote:

I promise that inflation, interest rates and current account deficit will fall, that the Turkish economy will become more resilient to external shocks and financial attacks, that Turkey's investment appeal will increase.

If that sounds like he's assuming an election win, that's because the election is of course a farce – the results are a foregone conclusion, which means he's free to go ahead and make promises about what he'll do once the “vote” consolidates even more power in his office.

The lira's recent trials and tribulations have been well documented here and one of the points that more than a few analysts were keen on driving home following the fleeting rally in Turkish assets once Erdogan made early elections official, was that the idea of the currency rallying on a purported decrease in “uncertainty” brought about by getting the election out of the way is patently absurd precisely because the lira's problems stem from Erdogan and the vote will effectively make him a modern day Sultan.