The Flying Frisby - money, markets and more Dominic Frisby

Over the last decade, the Turkish lira has seen declines of more than 95% against the US dollar. It took just ₺1.50 to buy it dollar ten years ago. Now it takes ₺33. The lira has been one of the world’s worst-performing currencies - and in a fiat world, that is saying something - rivalled only by the Venezuelan bolivar and the Argentinian peso.
While in Istanbul last week, I spoke to two young professionals, Emre, 25, and İlker, 27, about life under the lira. Both are bright, articulate, and empathetic young men who speak three languages fluently - English, German, and Turkish - as well as competent French.
Given that the currency has been so bad, I was expecting to see more widespread use of foreign money, but in fact, lira are changing hands everywhere - you see people all over the place with wads of them. “You have to use lira,” they explained. “It is the national currency.” Even with such dire inflation, there is still trade. The economy still functions, albeit badly. (That said everything in the airports was denominated in euros).
Food, energy, travel, housing, consumer goods - everything has gone up in price, but, surprise, surprise, wages have not gone up by nearly as much. The result is that ordinary people have been impoverished.
“The average wage in Istanbul is about £650 per month,” they told me. (One thing that impressed me was how immediately they could translate the lira into pounds, dollars, or euros).
“What about the receptionist in my hotel or a waiter?”
“Maybe £500. A taxi driver working all hours, maybe £800.”
With those kinds of earnings, it is hard to make ends meet.
“That’s why everybody wants to meet a tourist,” they smiled in reply.
“What do you do?” I asked. “Do you spend money as soon as you have it? Before it loses purchasing power?”
“Yes,” they said. “There is no point saving. When we were students a few years ago, you could save for maybe three years and buy a car. Now it would take you 20 years. There is no point saving in lira. We spend the money as soon as we have it.”
“Even on stupid things,” added Emre, pointing to his Casio watch. “You may as well.”
Everyone is the same, apparently. They spend as soon as they earn. There is no point saving a currency that will soon be worth less. The rates of interest paid do not compensate, especially given that you usually have to tie your money up for one, two, or three years to obtain decent rates, and the inflation risk of doing that is too great.
Interest rates have been quite the issue in Turkey, by the way. Mainstream Islamic finance prohibits interest, something they claimed Turkish President Recep Tayyip Erdoğan exploited. Until 2023 Erdoğan kept a lid on rates (they are now 50%), arguing that high rates cause inflation. He repeatedly replaced central bank governors who resisted low rates.
“How do people save?” I asked.
“Gold,” came the answer straight away. Everyone who can buys gold, even tiny amounts below a gram.
“Silver?” I asked.
“Not so much.”
I asked them if they use Revolut or similar to hold foreign currencies. They had no idea what Revolut was (probably a good thing, given what can happen), but it seems most banks also offer the ability to hold euros, pounds, and dollars, and so citizens tend to convert their lira as quickly as they can.
“What about bitcoin?”
“Not really,” they said. “Some young people.”
I was surprised by that. I saw a few adverts for bitcoin-related products out there. But apparently gold is more common.
“What about saving up to buy a house?”
They both laughed at the impossibility. And there isn’t even a lot of debt in the Turkish housing market. Mortgages, as we know them in the West, don’t really exist, though there are ways to borrow money. Housing is still unaffordable
“So people aren’t starting families then?”
“No, we can’t. Our population growth is starting to turn negative.”
“So you two are not clo

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I started out with the intention of writing just one article on this subject, but it has become three. It’s a big subject … (Here is part one and here is part two, if you are not already up to speed)
The latest polls show Labour comfortably in excess of 400 seats, maybe even 500.
They are going to have such a thumping majority (with less than 50% of the vote - how crap is first past the post), together with a Blob which, broadly speaking, is theologically aligned, that they are going to be able to do pretty much what they like. There is scope for a lot of invasive government. The socialist mindset does not respect private property. It feels entitled to it. So today I wanted to further explore wealth taxes and what Labour might do, should the socialist-leaning instincts in the party come to the fore during those first 100 days and beyond.
Wealth taxes are hard to collect
Let us start with the golden rule of taxation, something with which readers of Daylight Robbery, the definitive book on taxation, will be familiar, as articulated by Louis XIV’s minister of finance, Jean-Baptiste Colbert.
The art of taxation consists of so plucking the goose as to obtain the most possible feathers with the least possible hissing
(If you haven’t read Daylight Robbery - How Tax Shaped Our Past and Will Change Our Future, by the way, I urge you too. I think it’s the best of my books and one of the things I will go to my grave feeling proud of).
With that Colbert quote in mind, let us turn to wealth taxes. I’ve often argued that one reason we don’t see as many wealth taxes as you might expect is that, in practical terms, they are not as simple as they might seem. Income Tax works well because it is easy to collect. The employer collects it for the government - and faces harsh penalties if they don’t, so the onus is on them. Ditto VAT: only it is the seller on whom the responsibility to collect falls.
Wealth taxes, however, rely on declarations. There is much more scope for non-compliance, whether deliberate or accidental. Say the government wanted to impose a 5% net worth tax. It would have to find out about your real estate, both at home and abroad, and reach a fair valuation for that. It would have to find out about your stocks and bonds, your possessions, your vehicles, your savings, your ISAs, your pensions, your cryptocurrencies, your art, your antiques. Anyone who has ever had to value an estate for Inheritance Tax purposes knows what a headache this is. It can take many months.
The government can force banks to collect a lot of this information, and the bank can then get heavy with you, if you don’t comply (this is a route I think we will go), but there is still an awful lot of scope for non-compliance, avoidance, and evasion. Most will be truthful about what they own; but many will not - and hope that HMRC does not have the resources to investigate them properly, which it doesn’t. Many people have valuable things - from antiques to lost bitcoin wallets - that they don’t even know have value or can’t access. Note: I’m not saying a “net worth tax” won’t happen - I’d give it a 50:50 chance - just that they are not quite as easy as they sound. The goose will hiss a lot.
That said, I do think that, for sure, we will see changes to wealth reporting requirements, which is a first step in that direction.
You really should subscribe to this letter.

But if not a net-worth tax, here are some wealth taxes that could quite easily be imposed:
* A savings tax. Savings are relatively easy to prove and then tax. Banks are the ally of government here. There is some  £1.5 trillion held in savings accounts in the UK, so there is plenty there to be tapped (though a lot of this is in ISAs, which are supposed to be tax free). Starmer has made noises about ordinary working people not having savings, so I doubt he will have too many qualms

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We have a General Election coming up in the UK, and citizens of this once-great nation want to know how to protect what they have worked for from the incoming Labour Government, which, you can be sure, is going to be sniffing around like a spaniel on luggage in an airport.
We now have the Labour Manifesto, so we can start to be a bit more specific than we were in part one of this series. (Here, also, is part three).
I stress: this is only the manifesto. There is a long history of governments doing things they didn’t mention in their manifestos or failing to honour manifesto commitments. Roosevelt’s confiscation of Americans’ gold is one example that springs to mind, but that might just be because I have just been writing about it. There are plenty of examples in the UK too, even with the current government - increases to National Insurance, the Covid money splurge, failures on renters’ reform, home building, immigration pledges, social care, and so on. Circumstances change and so will pledges, especially with a Prime Minister who has quite a track record when it comes to changing tack. Do not be surprised by the surprises that are inevitably coming.
The broad argument of part one is that the pound will continue to be debased. It will buy you a lot less in five years than it does now. Whether we will see the 33% declines in the pound’s purchasing power we have seen since 2020, I’m not sure, but the way to hedge yourself is to own non-government money - gold and bitcoin.
Labour has pledged to “keep mortgage rates low” and to “retain the 2% inflation target,” which means it will keep a lid on interest rates, or try to, especially with official inflation now having come down to 2%. That all furthers my argument that the pound will continue to lose purchasing power.
Labour has a gazillion things it wants to spend money on, ranging from Great British Energy to new teachers, breakfast clubs, and increased NHS appointments, so it is going to need low rates. It has also said it plans to move the “current budget into balance” and “ensure debt is falling.” All I can say is good luck with that. No chance. Spending is going to increase, and, even with the inevitable currency debasement, it is going to need to find tax revenue too. That means higher taxes.
But higher taxes where? Taxes, relative to GDP, are already at their highest levels since World War Two, and Labour has promised no increases in National Insurance, Income Tax rates, or VAT. It has also pledged to cap corporation tax at 25% throughout the Parliament.
Some increased revenue, it says, will come from clamping down on tax avoidance and modernising HMRC. A lot easier said than done.
The big unmentionables have been Council Tax, Capital Gains Tax, and Inheritance Tax. All three, I expect, will go up. Council Tax valuation bands are based on 1991 property prices. That is an obvious anachronism to “update,” though council tax goes to local coffers and Labour will be more interested in revenue at the national level. Even so, it is an obvious area of tax revenue growth. Not a lot you can do to avoid it, except move.
Inheritance Tax, meanwhile, will not come down and will probably go up. It is, of course, morally wrong to want to pass the wealth you have earned and already paid taxes on to your heirs. Changes will be justified on the grounds of unearned wealth and exploit the politics of envy. The rate could rise to 50%, I suppose, while areas of relief - the seven-year gift rule, perhaps, the relief on main homes - could be removed. All I can say is plan early.
Capital Gains Tax, meanwhile, is likely to rise. Starmer has avoided saying it won’t. I expect to see it rise to levels concomitant with Income Tax with similar bands (i.e., 40% above £37k and 45% above £125k). The way to avoid this is by not transacting, which is what most will do unless they really

At a drinks party in around 2011 or 2012, I had the ear of Andrew Feldman, aka Baron Feldman of Elstree, former Chairman of the Conservative Party—he of “swivel-eyed loons” fame, though he never actually said that. (Andrew is a friend, by the way.)
“Tell George Osborne to buy back the gold Gordon Brown sold,” I advised.
“At these prices?” smiled Andrew with a mix of incredulity, amusement, and polite condescension.
“Yes!” I said. “It might be good publicity, even. Or do it secretly, and announce it afterward. The important thing is getting the gold back. We will need it at some point. Why not just quantitatively ease the money and buy it back? You’re doing that and buying bonds.”
Andrew laughed at my joke, which wasn’t a joke, and then wandered off in search of someone more sane to talk to.
Given the government has this extraordinary power to create money out of nothing, why don’t they just print money and buy hard assets with it?
Park that thought for a moment.
A couple of months ago, I was at Liz Truss’s book launch—aren’t you impressed with all this name-dropping?—and I ran into Mark Littlewood, former director of the IEA and now of PopCon. I started bending his ear about the media’s failure to report on the Bank of England and how it had shafted Truss with its advanced notice of gilt sales, Quantitative Tightening, which began the day before Kwasi Kwarteng’s budget and led to a collapse in the gilt market, the blame for which was then left at Kwasi Kwarteng’s doorstep. Mark nodded. “Do you think I don’t know?” said Liz.
“I would love to be able to grill Andrew Bailey in public,” I said. “Or just ask him one question with people watching. I know exactly what I’d ask him.”
“What?” said Mark.
“If the Bank of England can print money, why do we need taxes?”
Mark laughed and, thinking I was asking him that question, replied, “Money illusion.”
Money illusion is one of those economic terms that is pretty self-explanatory, but here is an example. Most of know a hundred pounds does not buy you today what it bought you ten years ago, but we still think in terms of past prices. (Old people do this more, for obvious reasons). A worker might feel great with a 5% raise, but if inflation is 7%, he is actually earning less than before. This has been an ongoing process for decades with the result that, in real terms, wages are lower.
Here’s the Wikipedia definition (edited by me):
In economics, money illusion, or price illusion, is a cognitive bias where money is thought of in nominal, rather than real, terms. In other words, the face value (nominal value) of money is mistaken for its purchasing power (real value) at a previous point in time. The term was coined by Irving Fisher in Stabilizing the Dollar, and popularized by John Maynard Keynes in the early twentieth century. Fisher also wrote a book on the subject, The Money Illusion, in 1928.
Mark and I both doubted that Bailey would give that as the answer, even if he thought it, which we doubted he would. If governments started printing money and buying assets, many would start questioning money, and faith in fiat might quickly evaporate. If governments worldwide started doing it (eg Britain prints money and starts buying land in France) you are in race-to-the-bottom territory. It would be a race to the bottom for fiat currency.
Even if Bailey thought money illusion was the answer, he certainly wouldn’t say it because that in itself undermines fiat.
Modern money has nominal value, but not intrinsic value. It relies on illusion (and the law) to function. The more you debase it, the less likely that illusion is to hold. Maybe money delusion is more accurate. Obviously, the backing of the law makes a great difference, as does the fact that taxes must be collected in this money, but, boy, is the system vulnerable. Illusions can last a long time. But when they shatter, they shatter very quickly, and then there is not

While Prime Minister Rishi Sunak, like a jilted boyfriend turned desperado, is announcing a new policy every day, future Prime Minister Keir Starmer’s strategy has been to be as vague and non-committal as possible about everything, and get elected on the back of the Tories being so useless. It makes sense: the less he promises now, and the less specific he is, the more scope he will have when he comes to power to do what he wants.
Such is the topsy-turvy Orwellian world in which we live. Labour’s five missions—massive cringe—read like something that should be on the Conservative Party website. Labour declares upfront, first and foremost, that its “first duty” is “to protect our country – through economic stability, secure borders, and strong defence.” I’m sure this is all part of Starmer’s strategy to win over the middle and rid himself of the ghosts of Labour incompetence. “I’ve changed the Labour Party so we are back in service of working people,” he boasts. “Together we can change Britain.”
So what exactly will this huge change that is coming to Britain entail?
One of the few things Labour has been specific about is VAT on school fees. This has generated a lot of negative press, particularly in the mainstream media, which is heavily populated by people who went to public school and send their kids there too. But with only 7% of children actually going to public school, I guess Labour has figured, in these times of envy, that this will be a vote-winner. While it purports to be an attack on the rich, in real terms it is an attack on the middle classes, many of whom will now put their kids into state schools. The extra burden of this on an already overburdened sector does not justify the limited increase in revenues that will come from VAT, never mind the practicalities of imposing this charge and the schools that will go bust as a result. But extra revenue is not what this is about. It’s exploiting the politics of envy.
Nevertheless, there is one clear thing we can infer from it: the middle class is going to get shafted. Where it tries to be independent and self-sufficient, it will find itself dragged into state dependency. That is not change, though. This is a process that has been going on for decades—since the imposition of fiat money, in fact. And that, I’m afraid, is the broad brush stroke. The details may be different, but the direction is the same. We are going to see more government, more spending, more technocracy, more bureaucracy, more quangos, more regulation, more taxation, further declines in the purchasing power of money, further erosion of individual liberty, more state solutions to things that would sort themselves out perfectly well if government stayed out of it, and so on. We will also see further steps in the direction of supranational bodies, one-world government, and all the rest of it. Change is not coming. Continuity is.
So the absolute first thing you have to do is keep as much wealth as you can outside the system. Do not hold sterling, or any other fiat money for that matter. Yes, sterling is holding up moderately well in the forex markets, which know Labour will win, but that is just comparing it with other fiat currencies. Use gold and bitcoin as your savings vehicles. They will outperform sterling quite comfortably by the time of the next government. Make a note of what £100,000 currently buys you. It will buy you a lot less in five years.
If you are interested in buying gold, check out my recent report. I have a feeling it is going to come in very handy.
My recommended bullion dealer is the Pure Gold Company.

Labour’s Five Missions
* Get Britain Building Again
Labour promises to “strengthen public finances” and “reform planning laws, so we build more houses, giga factories (SIC), windfarms, roads, labs, and ports, developing the skills needed to do so.” It will “reduce energy bills and invest in the jobs and industries of the future via our

I am experimenting again with a video this Sunday morning. (Podcast listeners can still get just the audio). Enjoy :)
It was August 2018. Brexit Derangement Syndrome was only just starting to kick in, though the effort to derail it was underway. In comedy circles, I still was not talking very openly about having voted for Brexit—it would be another six months before I wrote 17 Million F Offs.
I was doing a show at the Edinburgh Fringe, my financial gameshow.
Now something happens to a performer at the Fringe. There are so many shows and so much competition that you will do (almost) anything to get publicity and draw attention to your show. The Fringe is a distillation of the entertainment industry; all the best things about it and the worst, all the highs and lows, seem to get magnified there. My PR man texted me and asked if I wanted to do a short spot about Brexit and comedy for Channel 4 News. I said yes. He said to go to the Pleasance at 5pm. They wanted someone who voted Leave.
I met the film crew there, and the presenter— I have no idea what his name was—was a very nice, very charming young Englishman in his early 30s. University-educated, probably public school, made me feel very at ease. We found a little alcove, and our interview began.
“In a comedy club, what do you say when heckled about Brexit?” he asked me.
Now there are three types of comedy gigs. One is where the audience has come to see you; two is when they have come to see comedy (not necessarily you); and three, the worst type of gig, is when they neither come to see you nor comedy.
Comedy clubs mostly come under category two (unless you are doing a solo show).
I answered the question truthfully: “I MC a lot of nights. My job is to create a warm and friendly atmosphere. Audiences in comedy clubs are fairly mixed. So, I tend to avoid talking about Brexit, as you risk losing half the room, which is not good for the night.”
“Sure, but what would you say if someone heckled you about Brexit?”
“Well, I don’t talk about it, so they don’t.”
“But if you did?”
“But I don’t.”
This went round in circles for a bit. Then he changed his approach. “And if someone heckled you about voting Leave?”
“Well, they don’t because I don’t talk about it.”
“No, but what if they did?”
“Well, they don’t. As I say, in a regular comedy club, with a mixed crowd, if you come down very heavily on one side, you risk losing half the room. I’m the host. I don’t like to do that. It might be different if I was doing a show specifically about it, but I’m not.”
“Well, what if you were?”
“Well, I’m not. And if I was doing a show about voting leave, I doubt many remainers would come.”
“But what if they did?”
It just kept going round and round in circles. I thought I was being reasonably articulate about the need to be diplomatic in a mixed room if you are the host, and I made the same point several times, each time phrasing it slightly differently, but he just was not having it. He kept coming back to this same question.
“But if someone heckled you about voting Leave, what would you say?”
Eventually, somewhat exasperated, I said, “Oh, I don’t know. ‘Whatever, loser.’ Something like that.”
He smiled and quickly drew the interview to a close. We parted company with, apparently, good will expressed. I had spent probably five minutes explaining the need to be diplomatic and a microsecond with that last line.
Later that day, I watched the clip from Channel 4 News. Guess which part of the interview they used?
“Leaver comedian calls people who voted Remain losers,” ran the headline of the vid on the Channel 4 site, or some such (I can’t find the vid now to quote it accurately).
The only clip from the interview they used was me saying, “Whatever, loser,” even though it was totally misrepresentative of the rest of the interview. Then in the comments beneath, I remember reading a load of remarks along the li