Forgery Mint by Milan Gavrović, in Novosti

What is happening in Europe today is actually a re-run of the drama that was played a full quarter of a century ago on the stage of the then Yugoslavia. Its script can, completely simplifed but none the less true, be summarised in a single sentence. Which reads as follows: banks created money and issued loans to whoever they could, and once the debtors could not service them, the state filled the abyss by printing money. It is but the motives that spur principal characters on that are different. Then Yugoslav, or more accurately: officials of the then different Republics, who goverened the banks, in this manner shunned the consequences of own bad decisions. European leaders of today fill the void created by the decisions of serious capital. This is understandably a consequence of the relations of power within a society. Europe of today is not governed by merry folk that is aired on TV throughout the continent each night. Power is truly in those hands that own money.

Printing fake money cannot be without any consequences. At the time, Yugoslavia faced devastating inflation. This is not occuring in Europe because the excess of money, as well as the greatest share of actual wealth, is concentrated within a few people. This is why (for the time being) there is also no demand that would cause inflation. But numerous economists ring alarm bells nevertheless, claiming the continuation of the policy will cause the tsunami of "Zimbabwean inflation" in the short run. Yugoslav inflation, from the end of 1980s, none perceive as a reference point any longer.

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The then Yugoslavia is still a much better example than Zimbabwe, because it also points to a possible solution. Actually, the sole solution. Dismantling the hyper-inflation in 1989, the Government of Ante Marković also had to face the baloon of printed money. This money, just as in Europe of today, preceded by the situation in USA, stood for uncollectable bank loans.

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All this fake money, that existed in bank papers, was used for new business i.e. was the foundation for new loans. This was one of the principal mechanisms of inflation. New fake money was created based on fake money. Naturally, as is custom in banking and politics, this was hushed up by euphemisms used in lieu of definitions that are clear and understandable to everybody. So none spoke of fake money, but of contaminated banks' assets. The stress was on the word assets here.

Marković next, this was at the beginning of 1989, decided not to invent hot air, but engaged an expert from abroad who had already solved a similair problem. He found him in Spain and brought him to Belgrade, where he analysed the total situation but the situation of each Yugoslav bank as well. When the task was done, the Spaniard proposed the only logical solution. We should face the truth and cancel all fake money. How? Simple. All receivables that banks cannot collect must be "frozen." These were not deleted; the banks thus could still try to collect what they can, but could not keep them as assets. Simultaneoulsy, the chain of inflation was severed and healthy funds were released - therefore, actual banking assets that could finance the economy.

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Twenty years later, Europe is facing the very same challenge that once stood before Yugoslavia. Ante Marković at the time proclaimed the programme he called the New Socialism. Europe and the world are in front of the task of creating new capitalism. Yugoslavia was at the time being dismantled by political bureaocracy in Republics that established their monopoly on economic decisions, turning self-governing into shallow facade. A single step was needed for the bureaocracy to go nationalist. With Milošević in Serbia, this occurred even before the first real elections. In Europe and the world, globalisation also enabled the big money to establish the monopoly to economic decisions. This caused an unseen concentration of wealth and power. Just like the monopoly of the political bureaucracy in then Yugoslav Republics, this monopoly brought about in-depth economic and social rifts.

The application of the Spanish recipe in European banking would erase fake money and the wealth thus created. But as the forgers decide on the fate of capitalism, European and world leaders, despite the galloping crisis, do not even mention such a possibility. Instead, the fake money is attempted to be replaced by real money from the pockets of regular people. Since one cannot find anything even close as huge over there, we're putting out the fire with gasoline, i.e. by printing more money. What this does is deepen the rifts in economy, but society as well.

The original (in Croatian), with further details on the Yugoslav economic crisis - here.