Where Is the Money

There is no hyperinflation which, at one moment and in some form, does not confront a lack of cash. It is possible that this hyperinflation of ours has still not come up against a shortage of paper and color for printing money, although this should not be ruled out. This July, compared to last July, wholesale prices were higher by 11 964.6%. By the end of the year this growth is to amount to 50 or 100 000%. Who could print enough cash for such an explosion of a policy's failure, for the pointlessness of a concept, for such a discrepancy with reality? Today no one should be surprised by the fact that cash accounts for 38% of the overall amount of money in circulation. In normal economies this percentage ranges between 3 and 8 and at the time of prime minister Ante Markovic we did manage to lower it down 20%. In order for payments to be made with credit cards, checks and dinar transfers we would have to have goods in stores and not in the streets, there would have to exist a realistic exchange rate and a monopoly of the dinar on the domestic market, the legal order would have to be "unified", insolvent banks would have to go bankrupt, budgets would have to announce their bankruptcy and find new creditors and new managers. In short, there would have to be created a state in which people have confidence. In the technical sense, if you go to a bank today and if they tell you that on that day give out only a one thousand dinar bill in cash per person, this probably means that something is going on between the central bank, the republican national bank, the service for payment operations, the budget, the pension fund, the refugee funds, the army, big firms on compulsory vacation and between banks themselves. The fight of these institutions over cash simply means that they all spend money that doesn't exist - fictitious money. And according to the accounts of prime minister Bozovic's economy, there are more than plenty of cases of money being fabricated. The tragic farce with the financial results of the economy in the first six months of this year can best be illustrated by the following example. According to the accountancy which keeps track of negative exchange rates differences as it pleases, in the first six months of this year, the Serbian Oil Industry achieved a profit worth 5.7 billion of the newest dinars, which accounts for 12% of its overall income and over 73% of its fixed income. If this were really so, one could say that not even Dilinger in direct operations with Chicago banks had so much business success and such a rate of profit. Unfortunately, to put it mildly, these results are an outright lie. The only thing that is not known are the true losses of this state-owned firm. Central banking was informed a few days ago that it is to print 160 billion dinars for buying up the autumn crop (in order to illustrate the "proportions" of this let us recall that the federal budget is planned to be around 63 billion dinars from August 1st to the end of the year). Most of the amount is to be given in cash because neither the commodity reserves nor the peasants will accept paper, but only cash (and Dusan Mitevic, director of the commodity reserves didn't even return the money with which he could not buy up all the wheat). Who could print out and distribute all this when, at the same time, cash also has to be ensured for a million people who do not produce anything, for half a million clerks for whom it is impossible to collect taxes, a million pensioners whose pension fund is empty and over indebted, half a million refugees, two million Serbs on the fronts in the Krajina regions, and the 650 000 unemployed people also have to be helped somehow. In the case of agriculture the money-issuing policy at least has some information about the production. From the industry it practically has no serious information except for the fact that the level of production is by 30 to 40% lower than that of two years ago. What kind of "monetary projection" can one speak of then? The process of stripping Milosevic's team of power must obviously be speeded up. It would be better for this team to be dismissed by Panic than by the hyperinflation. Federal vice-premier Oskar Kovac said: "We will ask whether you want a program for everyone to survive or whether you want an anti-inflation program. You have to choose one or the other". He was not precise. He should have said: we have already had a program for survival and it failed, which means that we need an anti-inflation program. Because, in a country with a national product of 500 dollars per capita where public expenditures account for 300 dollars, everyone would like to survive, and those who spend always have more votes. Someone could say that it should not be forgotten that June's inflation of 100% dropped to 42.4% in August and that on the black market the DEM exchange rate has been standing at 280 to 300 dinars for a month now. Nothing unusual. When a family's breadwinner falls sick, first they cut his salary and then one must also pay for his care, medicine, and so on. When the breadwinner eventually dies, at first the family experiences financial relief. The export-oriented economy and the industry dependent on imports are practically dead which has brought "relief" to the black market since it was pressured by demands. In the first seven months of this year "street hard currency" had to be used practically to make up for the entire foreign trade deficit (1003 million dollars). Earlier on, in the spring, the monthly deficit accounted for as much as 200 to 300 million dollars, but in July it fell to only 50 million dollars (exports - 119 million dollars, imports - 173 million). This means that when exports and imports are fully suspended, and last week the EC introduced new measures for tightening the blockade of Yugoslavia, Serbian prime minister Bozovic will be able to proclaim a new success - the elimination of the trade deficit and the entropy of the black market. This, of course, can be achieved only with the help of the poverty among the population which can also not boost the demand for hard currency. There is no cash. It is not unlikely that, over the next few days, everyone will get "scared" because of the general economic die out and that hyperinflation will once again be stimulated by new doses of money. No use.