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

June 4, 2021

This article was written by Brandon Smith and originally published at Birch Gold Group

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. They grew increasingly protectionist and isolated from each other in pursuing local interests. Ignoring national economies of scale and ultimate profitability, they built redundant enterprises, blocked competition on the “unified market,” and granted unrealistic price increases and subsidies to favored industries. Thus, by the early 1980s inflation in the 30- to 40-percent range became chronic…

Yugoslavia’s inflation troubles were ever present, with up to 76% in price increases annually from the early 1970’s to the early 1990’s. In fact, the Cato Institute’s Steve Hanke calls it The World’s Greatest Unreported Hyperinflation.

Under communist rule, the nation was conditioned to cope with rising costs through the application of government subsidies (also known as stimulus). Under President Slobodan Milošević, parliament secretly ordered the Serbian National Bank (one of the nation’s regional centraly banks) to issue $1.4 billion in credit to Milošević’s friends. This is reminiscent of recent American stimulus efforts, 90% of which went to the top 10% wealthiest.

Overt taxation was used to fill government coffers to pick up any slack that money printing did not solve. Financing Milošević’s war machine was expensive:.

More than 80% of Yugoslavia’s budget was earmarked for the military and police forces, and by December 1993 almost 95% of all government expenditures were being financed with freshly printed dinars.

As we have seen recently in Venezuela, this is a common response of countries that devolve into socialism and communism. The solution is always to increase taxes on the general public directly while also printing more money and letting citizens deal with the indirect tax of inflation.

Government subsidies were notoriously unbalanced, as major companies received the bulk of stimulus dollars while households were given scraps from the table, which were not enough to offset price inflation as well as extremely low interest rates (some economists assert that they were negative interest rates). Large companies and banks were able to squeeze the dinar for value first, while regular citizens had to deal with increased depreciation.

Sound familiar?

In fact, it was communist leader Slobodan Milosevic’s habit of printing billions for his elitist friends that helped to trigger the eventual balkanization of Yugoslavia and the public desire to escape communist centralization.

Subsidies were applied to companies and essentials for years, and the dinar continued to lose value in domestic and international trade as the citizenry barely scraped by. By 1994, only a couple years after the fall of the Soviet Union, the country hit an epic inflation rate of 313,000,000%, with prices on goods doubling daily. Steve Hanke puts this into perspective:

“For a sense of the impact on the local population, imagine the value of your bank accounts in dollars and then move the decimal point 22 places to the left. Then try to buy something.”

This peak lasted for two years and utterly destroyed the economic fabric of the nation.

The supply chain broke down, with many producers withholding goods and raw materials because selling them today would mean taking a huge loss as the currency plunged the next day. The only place to find the items people needed was on the black market, and no one on the black market was willing to accept dinars as payment. Instead they asked for foreign currencies and hard commodities like gold and silver. Government rationing was the only other source of necessities, and this was highly unreliable.

Another problem that was devastating to the public was the fact that many types of debt were adjusted to match the inflation rate, so escaping debts through inflation was not an option. The IMF offered intervention in the form of loans with numerous strings attached, while at the same time the UN enforced an embargo (see how that works?). However, despite the claims of Milosevic, Yugoslavia was already a collapsed nation well before outside influencers stepped in.

Parallels To Today’s U.S. Economic Situation

In the U.S. today we can see the early and middle stages of the same decline. Since the debt crisis of 2008, the U.S. (along with numerous other countries) has been relying on bailouts and stimulus dollars from central banks to kick the can of deflationary collapse down the road. This, however, has led to fiat addiction of the most grotesque kind.

In 2018, all it took was the slightest uptick in interest rates by the Federal Reserve along with moderate cuts to their balance sheet, and once again stock markets began their “taper tantrum.” The U.S. has become a fiat crackhead.

With the advent of the COVID-19 pandemic, the danger has increased a hundred-fold. Now, trillions more in stimulus have been rationalized in the name of saving the economy from the effects of the very shutdowns the government imposed. Of course, the vast majority of these pandemic relief loans have gone to major corporations, not to small businesses. And, stimulus payments to households are barely enough to offset the subsequent inflation in prices we have seen over the past year. It is getting to the point that the average American family will need regular stimulus checks just to survive (and maybe that was the plan all along).

Government officials and globalists call this “UBI” (Universal Basic Income), but it is really no different from the subsidies used by the communists in Yugoslavia to pacify and control the public. Once the public is dependent on the government for their very survival, rebellion becomes unthinkable. Of course, when hyperinflation strikes, government subsidies lose their power.

The question is, how much inflation will it take before the U.S. sees a similar balkanization and breakup? My suspicion is that unlike Yugoslavia, in America the rebellion and breakup will come before hyperinflation fully takes hold.

The U.S. Isn’t Yugoslavia (Yet)

There are advantages and disadvantages that America has compared to Yugoslavia. For example, the U.S. dollar is the world reserve currency. This means that (for now) the U.S. has the ability to borrow money from almost anywhere even as it is devaluing. It can also print dollars without affecting domestic inflation quite as much because some of these dollars, whether digital or physical, are often sent overseas and held in foreign banks as reserves.

But what happens if the dollar’s world reserve status is removed or reduced, perhaps by a basket currency system like the IMF’s SDR basket? Well, all those dollars being held as Treasury bonds overseas will come flooding back to the U.S. and all our checks will get cashed at once. Hyperinflation or hyperstagflation would ensue.

All it would take is a portion of the world’s major economies to agree to a basket system for the dollar to crash. The slow burn of the U.S. collapse will mirror much of what happened in Yugoslavia, and the moderate inflation of today will be replaced with an avalanche tomorrow.

In terms of balkanization, this is already happening because of the pandemic. There are U.S. states that are seeking to assert draconian medical mandates on their citizens, following the guidelines of the Biden Administration. And, there are states that are protecting the rights and freedoms of citizens despite the pandemic. The divergence in our society cannot be denied. We are separate peoples with separate values – one side is communistic and the other side respects liberty.

Economically, conservative states are greatly outperforming leftist blue states in terms of recovery exactly because they have removed pandemic restrictions. Blue states have become stimulus dependent and will likely need even more stimulus dollars as the year progresses. With red states in defiance of the global reset and pandemic restrictions, it is only a matter of time before Biden (like Milosevic) asserts the need for “unity,” and accuses those states that want freedom of seeking to “weaken the nation.”

This will probably happen before true hyperinflation bubbles over, but in the meantime prices on goods will continue to rise exponentially. States that show fealty to the federal government will receive their subsidies (their table scraps), while defiant conservative states will be cut off completely. The fracturing of the U.S. is inevitable at this point.

This is not to say that this is a bad thing in the long run. It is a necessary outcome for economic and personal freedom to survive. But, it is important that we learn from examples in history so that we can remain prepared. Some people will claim that the U.S. and Yugoslavia are nothing alike, but we are unfortunately much closer than we should be. America is no longer a free market society, and we haven’t been for decades. We are an increasingly socialist nation with all the frailties associated with such cultures.

One defining difference that could save us is our heritage of independence and the will to return to a self reliant system. For Yugoslavia, communism was all they knew, and adapting to an alternative economy was hard to imagine. Black markets arose out of necessity, but these are merely stop gap solutions to structural decay. There has to be a revolutionary return to free markets, production and sound money for a country to rebuild, but I believe this is possible in the U.S. given at least half of Americans want this already. They don’t need to be convinced.

And, like Yugoslavia, civil war will eventually follow American balkanization, but that is a discussion for another time. It is enough for now to understand that to solve the economic decline caused by socialist and communist policies, more of the same is not the answer. More centralization is not going to fix the disasters caused by previous centralization. We need a sea change in how we view our relationship to the economy; a return to an older and BETTER way of doing things in the history of our nation. And, if we have to break up America to achieve this freer system, then so be it.



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Brandon Smith

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  • Serge June 4, 2021 at 7:16 am

    Most (all?!) geopolitical analysts have focused on the destruction of Yugoslavia in preparation for the encirclement of Russia.
    Russia’s natural resources aroused the greed of Anglo-American elites, not to mention that the collapse of the Soviet Union – a “deadly” enemy of the West – was the jackpot for strategists like Brzeziński: nothing and no one could anymore prevent a world domination without division of the West and especially of the United States (Cf the book “Le Grand Echiquier”, of Brzezinski). Except the collapse of the dollar.

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      Brandon Smith June 4, 2021 at 12:09 pm

      The “collapse” of the Soviet Union was coordinated with the Russian Government. Mikhail Gorbachev was a massive globalist; he helped found multiple globalist institutions including one in San Francisco. The Cold War was a fake war.

  • Serge June 4, 2021 at 7:37 am

    P.S: In “The Grand Chessboard”, Brzezinski deals mainly with military power, diplomacy and a bit of Softpower.

    “The Grand Chessboard”, and “Between Two Ages: America’s Role in the Technetronic Era”, both books written by Brzezinski contribute – to my mind – to the understanding of the globalists’ projects and their mentality, as does Ayn Rand (cf the book: “Atlas Shrugged”).

    • Brad June 4, 2021 at 4:05 pm

      Yes. In Brzezinski’s ‘Between Two Ages…” he stated that socialism was to be an intermediate stepping stone to a ‘technetronic’ or technocratic dictatorship….better known as Technocracy. This is a totally different type of ideological economy never before tried by humans. Unfortunately it is based in trans humanism/eugenics and scientism and is on open display in the plannings and implementations of the globalist elite, their corporations and R&D labs working across every spectrum of the UNSDGs.

  • vivian tzamis June 4, 2021 at 9:33 am

    I think Secession or regionalization falls into the Globalists plans
    They’re the ones behind the Catalan movement–they’re breaking up Libya & Syria into regions—they want Texas to secede
    Instead of nations & national identity–they want smaller regions–over which will be a Central Regional Control
    The Asian Block–The Americas Block—The European Block–The Middle Eastern/African Block

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      Brandon Smith June 4, 2021 at 12:05 pm

      It only falls within their plans if they can control it. Secession is inevitable; their success in controlling it is not.

  • Ya'aqov ben Ya'aqov June 4, 2021 at 10:27 am

    According to Zero Hedge (among other sources) the dollar recently dropped below the 50% benchmark as an instrument of exchange in international trade. How can it continue to be credibly called the world’s reserve currency when it is being used in fewer than 50% of all global trade? And that decline will accelerate toward 0% in the coming weeks and months as the process of de-dollarization marches on.

    And because the dollar is now viewed by the international community as toxic, as it’s no great secret the interest on treasuries are well below global inflation. So that trend cannot & will not reverse itself. The dollar very soon will end up on the ash heap of fiat currency history.

  • californiawoman June 4, 2021 at 1:12 pm

    There is something I can’t reconcile in my own head, and maybe someone can help me with this. With low interest rates, we are back to taking on massive debt especially in housing. When that dam breaks would that not be a stronger deflationary force than the inflationary pressures?

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      Brandon Smith June 4, 2021 at 2:12 pm

      You can have both inflation in prices and deflation in certain sectors. It’s called “stagflation”.

      • gauntlet33 June 5, 2021 at 9:28 pm

        Brilliant article Brandon!

        Also, totally agree on the stagflation possibility, where it could cost $20+ for a peach (so a consumer would feel the hyperinflation), and still see a massive drop in the price of housing (highly deflationary, as banks curtail loans by demanding extremely high interest rates around 15% along with 20-50% down payments.

  • Armed Resistance June 5, 2021 at 7:57 am

    Thank you for your great insights and relentless pursuit of liberty. You ability to see the big picture and articulate it well has helped many in their quest for freedom and preparedness of the difficult times to come! May God continue to bless you, your message of truth, and your readers and supporters!

  • Capthank June 5, 2021 at 12:57 pm

    The 4th quarter will be very telling. June 30th marks end of forbearance. There will be 11 MILLION renters who have not paid any rent in over a year that owe all that back rent. There will be a tidal wave of foreclosures. September 6th marks the end of stimulus checks. 24 states are exercising their option to end that in June. So we will have millions who are evicted with no income later on this year.

    What will the government do? Allow the country to fall into Great Depression or reverse their stated plans and continue with the stimulus checks until inflation starts to get out of control?

    • Ves June 8, 2021 at 12:53 pm

      This is similarity what one can line with Yugoslavia. On like 1/10 scale (or 1/20 it’s better, many there lived on the lend, house and food, here – almost nobody) so, much smaller scale, but…..
      Yugoslavia didn’t have Rent Moratorium. They had Living Problem. After the WWII people and state built many living spaces. Huge projects were going for Affordable Housing (you see the parallel?) The slogan was – Everybody deserve Living Space. There was also the slogan – Work Place must be guaranteed.
      So, idea was noble.
      It worked, until those who proclaimed those noble slogans got what they wanted.
      After that was – who the fuk cares. Literally. Even for your own kids – fuk you, son/daughter I found myself a job, and got the apartment, do the same (parallel – there is us government add running for last year – do something, find something new).

  • JustOneGuy June 5, 2021 at 3:28 pm

    Indeed, history is rife with examples of disastrous forays into ‘Alice in Wonderland’ economics, Yugoslavia being one of the more recent – albeit little publicized – examples.

    Of note, over the long passage of time, is the role that both modern telecommunications and Global interconnectivity/dependencies seem to be acting to accelerate each successive instance. To be sure, the relative ‘Mass’ of the economy involved is a factor also, ie, the larger the system under consideration then the more ‘economic inertia’ must needs be overcome ere the reflexive concomitant results are apparently and visibly manifest openly.
    Here, the US stands as the Reserve currency of the planet, seemingly impervious to every new form if mismanagement the Federal Reserve can concoct but I submit that the appearance of any remaining vitality is phantasmic at best. Of those who have awakened over the last decade who now yet believes that ‘A way OUT’ currently remains; few I suspect.
    “THE BILL comes due…” and certainly it will must need be PAID all too soon. The greater system is already showing clear signs of being ‘over-driven’ without any retarding or restoring impulse acting to restore any effective equilibrium. Under circumstances such as we see today, there is only one outcome possible and I shudder to think just how few are actually, truly prepared to cope with the World that is coming…something wholly at odds with anything heretofore seen on a scale so vast.

    Paraphrasing the old carpenter adage here, ” Think THRICE…ACT but once.”

    See Y’all on the OTHER side…


  • Dennis June 8, 2021 at 10:30 am

    The website Greek National Pride reports,

    “[Soros] was part of the full court press that dismantled Yugoslavia and caused trouble in Georgia, Ukraine and Myanmar [Burma]. Calling himself a philanthropist, Soros’ role is to tighten the ideological stranglehold of globalization and the New World Order while promoting his own financial gain. He is without conscience; a capitalist who functions with absolute amorality.”

    “The main obstacle to a stable and just world order is the United States.”

    – George Soros-

  • Rodster June 9, 2021 at 3:35 pm

    Wow, another excellent article by Brandon. Martin Armstrong says his computer models has been predicting a breakup of the United States and it could happen before 2032. My home State, Florida is one along with Texas to buck the trend. My Gov. Rick Desantis supposedly told Pres. Joe Bidet to F-Off!

    The US really needs to breakup and create opportunities for those who love freedom and liberty, foremost.

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      Brandon Smith June 9, 2021 at 8:47 pm

      I have to warn you that Armstrong is a hack. You don’t need “computer models” to guess that the US is going to balkanize, it’s already beginning to happen right now. And when we finish separation it will be a lot sooner than 2032.

      • Freeman June 10, 2021 at 12:07 pm

        Great article! Been following Brandon for awhile now and one thing I HAD to comment on fools thinking FL is free; here is a hint, “It’s not!” I’ve been here for years and Desantis is one of the worst governors in the US as he is a “Wolf in sheep’s clothing,” ala Trump. He ‘claims’ he is about freedom, but all he represents is big government, big spending, reduction in freedoms, and lies. Opening the state was to fill his own pockets. Read the ‘Anti-Riot’ law he signed by executive order(Why didn’t we get to vote on it??). Now if you ‘appear’ like you are protesting, they can lock you up with no bail. He didn’t tell Biden F-YOU, Desantis happily took all the federal stimulus money. Hell Rick Scott here told him to send it back, but Desantis refused. Newsom, Wolf, Dewine, Cuomo are sadly better cause you know where they stand. We need to get rid of them all! When this thing implodes, FL will be a ghost town as the people on fixed incomes, pensions, vacation homes, etc will be forced to move in with their relatives in other states.

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          Brandon Smith June 10, 2021 at 4:19 pm

          Florida opened because it had to. It does not matter what the position of the governor is, it only matters how much pressure they feel from the population. Florida IS free, because the conservatives in Florida made it so.

  • chronoblip June 11, 2021 at 12:50 pm

    Out of curiosity, at this stage, how does regional alignment matter compared to immediate?

    For example, if one already has a small close-knit community, but in a region which is politically opposed to the values of that small group, is it “worth it” to cut ties and relocate to a region which is politically aligned, but take on the risk of being an “outsider” or “newcomer” while everything is falling apart?

    • Avatar photo
      Brandon Smith June 11, 2021 at 1:06 pm

      You are better off sticking with your existing community if it is squared away and ready to defend freedom. Just be sure this is actually the case.

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