Is the United States on The Same Calamitous Path as Yugoslavia?

Alt-Market

by Brandon Smith

Of all the inflationary disasters in modern economic history, Yugoslavia’s is the one most ignored by the mainstream. To be sure, the collapse of the Eastern European nation was a slow burn, but with a big explosion at the end. Most people are familiar with the Serbian/Croatian war and the genocide that followed, but few people are familiar with the economic crisis that led to the conflict.

I am not here to present an in-depth analysis of the eventual breakup of Yugoslavia, only to examine the conditions that triggered it. I believe there are some interesting similarities to burgeoning conditions within the U.S., along with some distinct differences.

The First Stage: Inflation

President Josip Broz Tito led the nation in various capacities from 1953 to 1980. He used two powerful tools to clamp down on unrest in the ethnically-diverse nation: large-scale repression of dissenting voices using both police and military forces, and allowing regional foreign borrowing. The latter might not sound particularly important. According to the CIA’s 1983 national intelligence document Yugoslavia: An Approaching Crisis?:

Although self-management in theory permits workers to own and manage their enterprises, in fact the leaders in the six republics and two provinces… became the dominant economic decision makers.

The Enslavement Of Infinite Money

Alt-Market

The phrase “don’t fight the Fed” is an unfortunate but popular delusion. It presupposes that the central bank has limitless power to direct the economy because it can print limitless money. I’m not sure where this idea comes from, but consider the fact that anyone today who is under 30 years old was barely old enough in 2008 to understand or care about the credit collapse. These people spent their formative years knowing only stimulus and QE. In their minds, this is the norm, and they think it always works because they haven’t yet witnessed a collapse. I would say a better phrase for the 2020s is “The Fed is not going to save you”; the Fed is not a superhero and it does not have the power nor the inclination to protect the little people from economic folly. This should be readily apparent today, as the COVID-19 pandemic continues to spread and the central bank can’t seem to cure it with Quantitative Easing.

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