Et tu? Ripping Stocks, Cratering Currencies, & Soaring Yields.BIST Istanbul IndexBIST_DLY:XSISTROW_PartnersTake a look at the weekly comparison: Left side: Turkey BIST Istanbul Index ripping parabolic into all time highs. Right side: Turkish Lira Futures sliding off a cliff. At first glance, an equity benchmark carving out vertical records looks like an economic boom. In reality, it is textbook currency debasement and a classic crack up boom. When domestic purchasing power melts away, capital does not stay parked in cash. It scrambles into any available asset to survive. The 4 Horsemen: Debasement, High Yields, Soaring Nominal Prices, & Gold Reality Check This sequence is not unique to Turkey. History shows the exact same dynamic unfold whenever a sovereign currency breaks loose: Turkey Domestic inflation surged above 80%, triggering a massive flight into domestic equities as an inflation shield. Once orthodox monetary policy resumed, benchmark sovereign bond yields ripped above 30% to 35% to arrest the currency slide. In nominal Lira, the index exploded upward. In hard terms, domestic investors were simply running to keep up with purchasing power destruction. Argentina Lives in this pattern constantly. The nominal Merval index routinely records vertical rallies as the Argentine Peso sinks against foreign benchmarks. Capital crowds into equities, export producers, and local real assets, while short end debt yields and sovereign borrowing rates remain in heavy double digits to price in continuous inflation risk. Weimar Germany (1922 to 1923) During the Weimar hyperinflation peak, the Berlin stock exchange soared to astronomical sums in paper marks. Equities preserved far more purchasing power than cash or fixed bonds, but the parabolic move was pure monetary destruction rather than genuine corporate growth. Venezuela and Zimbabwe Both the Caracas Stock Exchange and Zimbabwe Stock Exchange posted the largest nominal equity percentage gains on the planet during their respective currency collapses. In both instances, currency purchasing power went to zero while local borrowing rates and yields exploded. Did These Markets Eventually Crash? The short answer is yes, eventually, absolutely! The Real Terms Collapse: When measured in hard assets or foreign reserve currencies, these equity markets frequently endure brutal 50% to 85% drawdowns throughout the debasement process. Business earnings cannot outpace skyrocketing input costs, regulatory capital controls, and domestic currency collapse. The Nominal Liquidity Trap: When central banks finally capitulate and hoist interest rates into restrictive territory to defend the currency, risk free yields pull capital out of equities. Once easy liquidity vanishes, domestic equity indexes roll over into vicious nominal corrections and prolonged freezes. The Fourth Horseman: The Gold Reality Check This is where gold delivers the ultimate truth check. When an equity index goes vertical in local fiat, reprice that exact same index in gold terms (for example, BIST divided by XAU/TRY). The parabolic boom completely vanishes. Instead of an aggressive bull breakout, the gold ratio reveals a market moving sideways, chopping erratically, or actively bleeding real value. Investors bid up equities not because business productivity doubled, but because paper currency was losing value faster than company share counts could dilute. Repricing equities against ounces of gold strips out the monetary distortion and reveals true purchasing power. A soaring equity index inside a collapsing currency regime is never a sign of genuine economic strength. Always measure a breakout against gold and external reserve currencies before assuming you are looking at real wealth creation. Why this post? Today, several economies are walking this exact path. Some are only in the opening stages, while others like Turkey are deep into the damage. The largest global economies are bleeding just the same, but larger printing presses allow them to mask the symptoms longer. Do not mistake nominal all time highs for genuine economic strength. The debasement playbook remains undefeated. TGtg!