[PEN-L:6120] Re: Re: Fw: Hanke on the Dinar

["J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>]

Jim,
      Actually I was going to send out a post on my own
about the WSJ Op Ed piece by Hanke, who was an
adviser to the Yugoslav government in 1991 and is
the father of a lot of these currency board schemes now
in place around the world.  But then I saw this bit from
the Mises Institute, a basically obnoxious outfit, and decided
to lazily forward it even though I knew that the source would
piss some people off.  BTW, the Mises Institute is against
the NATO bombing.
       Some of the material in the article (I am sitting here with
a cutout of the whole piece) I know is accurate, notably the
account of the course of the hyperinflation itself.  What I had
never heard before, and wait to hear somebody come up with
a convincing denial of is Hanke's claim based on alleged inside
information about the issuance at the end of 1990 of dinari to
His Excellency's cronies.  This certainly could have triggered the
beginning of the inflation (the rate of inflation in Yugoslavia had
actually been gotten under reasonable control in 1990, after
being at high rates in the late 1980s), but obviously policies
that followed would have been necessary for accelerating the
hyperinflation to the insane levels that it indeed did reach.  For
better or for worse, His Excellency was indeed the most powerful
policymaker in Serbia during that period and thus probably was
as responsible as anybody else for what happened (want to pick
on the chief of the central bank instead, maybe?).  Certainly after
the IMF expelled Yugoslavia at the end of 1992 it cannot be blamed
for what happened.
      One thing I am suspicious of is the claim (can't remember if
this was in the forwarded piece or only in the original column)
that 80% of the budget was going to military and police spending
in 1992 and 1993.  But then, this was the period of the wars in
Croatia and Bosnia-Herzegovina that Serbian forces backed by
His Excellency started, one and all.
     The other point that I have never heard before, although it is
certainly not incredible, is the claim that this issuance of money
to His Excellency's cronies "hardened the resolve of Croatia and
Slovenia to break away from Belgrade."  Their secessions were
crucial events and were clearly backed by the US and Germany
in particular.  We also know that they had both had longstanding
grievances against having their revenues being distributed to the
poorer regions of Yugoslavia such as Kosovo-Metohija and
Macedonia.  If the main claim about what His Excellency did is
correct, then it would not be at all surprising that the leaders of
Croatia and Slovenia would have such a reaction.
       BTW, I take a Russian position in all this.  NATO bombing
is not justified and is increasingly barbaric and counterproductive.
The Serbian people should be supported along with all the rest of
the other Yugoslavs.  But, His Excellency is a crazy worthless
schmuck.
Barkley Rosser
-----Original Message-----
From: Jim Devine <jdevine@xxxxxxxxxxxxxxx>
To: pen-l@xxxxxxxxxxxxxxxxxxx <pen-l@xxxxxxxxxxxxxxxxxxx>
Date: Wednesday, April 28, 1999 2:52 PM
>Subject: [PEN-L:6116] Re: Fw: Hanke on the Dinar


>Barkley posts a piece by an "Austrian" economist who blames Milosevic for
>Yugoslavian and then Serbian hyperinflation. I am no expert on the economy
>of the area where Yugoslavia used to be, but I think that this personal
>demonization of Milosevic is nuts. I am sure he's a crook and likely a war
>criminal at the same level as Bill Clinton, but to blame him for
>Yugo/Serbian hyperinflation is in the same league as blaming Jefferson
>Davis for the Confederacy's hyperinflation.
>
>An economy and a society that is falling apart, so that the government
>can't collect taxes (because people cheat and evade) and can't cut spending
>(because matters would get worse) and can't get loans (sell bonds) at
>anything close to the normal market rate (because of the large risk of
>default), has little choice but to print money to pay for its deficit. That
>is, unless price controls work really well, a country suffering from a
>civil war will suffer from hyperinflation (unless the government can
>actually win the civil war and then establish a whole new currency).
>
>We can criticize Milosevic for contributing to the collapse of the old
>Yugoslavia and for not successfully ending the wars there and for
>relatively marginal economic corruption, but it seems to be propagandistic
>demonization to blame him for the hyperinflation. There were lots of other,
>more poweful, forces encouraging Yugoslavia to fall apart (including the
>IMF, Germany, the Pope, and the US); other forces have prevented a final
>settling of the civil war, including the US/NATO.  And the kind of
>corruption that Milosevic is accused of sounds exactly like the stuff that
>US allies in poor countries do (e.g., Mobutu and Somoza).
>
>I could be wrong. Barkley, set me straight.
>
>Jim Devine jdevine@xxxxxxxxxxxxxxx &
>http://clawww.lmu.edu/Faculty/JDevine/jdevine.html
>Bombing DESTROYS human rights. US/NATO out of Serbia!
>
>