An interesting reflection from Financial Sense.
Yugoslavia tried to jumpstart its woeful economy by turning to a Keynesian “solution”. In 1989, Yugoslavia enacted its “stimulus plan”; it went on a government spending binge. If the country was wallowing in economic squalor, where did the money come from? Simple….it was created out of thin air! In other words…INFLATION. It merely printed up the money and flooded the struggling economy with “spending”. That was the final nail in the coffin for my former homeland. The “stimulus plan” brought on hyperinflation and Yugoslavia collapsed amid economic and social disintegration. By 1994, Yugoslavia was no more. New sovereign nations arose from the rubble (such as Croatia where I was born). The ruling elite in the former Yugoslavia thought (wrongly) that prosperity and wealth could be created or stimulated by simply using government force and a printing press. How wrong they were!
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They probably just didn’t spend enough
“They probably just didn’t spend enough”
Spend enough of what?
It seems to me, that they did not produce anything TO spend.
Ha, ha. I know you were being sarcastic. I was just adding to it.
lol @ sean m’s comment.
I second that lol.
Ah, my former country.
Mostly bad text from somebody who didn’t live here, and then wrote about things he didn’t witnessed.
My family and I escaped communist Yugoslavia in 1963.
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Wrong, it was socialist self-management. Country wasn’t communist. It was ruling party.
The “stimulus plan†brought on hyperinflation and Yugoslavia collapsed amid economic and social disintegration. By 1994, Yugoslavia was no more.
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It wasn’t “stimulus plan”. That were printing presses. And hyperinflation started 1993 because UN Security Council imposed sanctions on FR Yugoslavia – regime spend whole saving in banks by people (only few in time managed to withdraw money from saving accounts before Government prohibited it), Government run large pyramidal scheme with several private banks, and when nothing else left to spend (just not to forget epic fail and theft with so called “loan for revival of Serbia”) – Government ordered National Bank of Yugoslavia to print money as much as can. The rest is history.
Btw, SFR Yugoslavia broke up 1991 and IMF have very large role in it.
P.S.
), and I can scan it and upload it for download. The largest bill was 500 billion dinars.
If anybody is interested in Mises Institute, I have a lot of money from hyperinflation (as was useless, I have them so much
I’m moving to Cascadia when it becomes a real country. Where are you guys going?
no no. They didn’t spend enough on fixing the roads
I don’t think that there was a stimulus plan at that time. The war broke out in 1990-1991 and hyperinflation lasted until 1994 (we had 500.000.000.000 banknotes at that time!).
The hyperinflation was a government’s tool for financing the huge war expenditures.
Cune,
You mean war expenditures like Pakistan, Afganistan and Irak?
ok, now I understand
Government spending is simply Government spending and a “Stimulus plan†is no different. The title of the plan says it all. It is nothing more than a stated Government outcome or goal. Once it is implemented though its end result can go in a wide variety of ways as we all well know. The Yugoslavian Government’s own “stimulus plans†at the time were no different than what is occurring in the United States and other nations today. The difference is the Yugoslavian Government did not title their increased spending plans. They simply implemented their increased spending policies at a rapid pace.
Furthermore, it is in my opinion that internal (I.E. civil unrest, etc.) and outside influences (I.E. sanctions, etc.) are always present. True, they are a factor but then again they are always a factor to some degree even when a nation’s currency and economy are strong. Those internal and outside influences simply become more pronounced and noticeable the worse a nation’s economic situation becomes.
In the end, the primary cause of chaos due to the economy found within a nation and the devaluation of its currency lay solely with the entity that holds the monopoly over its control and creation. I am of course talking about governments acting through their central banks. We have seen this occur countless times throughout history and now we are witnessing it with the United States and other nations.
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