Russian media: EU delivered ultimatum to Belgrade

Serbian politicians and readers of B92 think of Serbia as though it was a business. If Serbia does not "balance it's books" then, in the minds of these people, Serbia will go bankrupt.

Lesson 1 - countries are not businesses and exist in a very different form. They have citizens that belong to them and they have their own currencies which they can create at will to improve the well-being of the nation. America has a massive national debt, but since this debt is in US dollars the government could pay it simply by creating trillions of dollars on computer screens.

Lesson 2 - Serbia should copy the Americans and create trillions of Dinars which it could spend in Serbia, employing Serbians and buying Serbian goods and services.

Lesson 3 - Serbia should fixed the Dinar exchange rate on a purchasing power basis. If a basket of goods cost £10 in England and 1000 Dinars in Serbia, the the £/Dinar exchange rate would be £1 = 100 Dinars. This rate adjusts automatically as the price of the basket changes in different countries.

Lesson 4 - Serbia gets billions of Euros each year from Serbs abroad who send money to their families. This money is swapped into Dinars and gives the National Bank of Serbia enough foreign currency to handle its modest foreign exchange needs.

Lesson 5 - the Serbian economy is primarily focused on the Serbian market and Serbian customers, therefore it's need for foreign currency will always be limited.

If only the Serbs betray the Russians they will betray themselves. All the rest are the details.

Michael, not a bad vision, unfortunately Nikolic and Vucic rushed into winning elections and employed old cronies and fresh thieves into their party. From our present day until next June more good Serbs will sell their properties and leave and more municipalities raped of the little funds that they have.

As a foreigner living in Serbia the last three years under SNS is depressing.

I agree with Mr.Thomas take no notice of these Eurocrats they can only promise servitude and economic misery.I don't see any Greeks,Spaniards,Portuguese,etc,etc.... dancing on their ceilings do you??

Thank you for your reply, truly amazing.

I only have time to address one of your points. Lesson 3 refers to a self regulating exchange rate policy. If the basket of goods in the UK remains at £10 but now costs 1,000,000 Dinars, then the £/Dinar rate would be £1=100,000 dinars.. This rate arises from the real price of goods in London and Belgrade. The current "free market" system is just a mask for a corrupt game run by and for crooks like Soros and Goldman Sachs.

We should not however assume that printing Dinars will cause inflation. Over the past 6 years the Americans have printed trillions of dollars, the British have printed over a trillion pounds, and the ECB has printed trillions of Euros, and no inflation has been caused. Like these western economies the problem Serbia faces is deflation and not inflation. Serbia could certainly create hundreds of billions of Dinars (100 billion Dinars = $1 billion) without inflation. If inflation were to rise, then the govt would need to decide which was more important, full-employment or low inflation. This is a legitimate policy question for every govt. Spending hundreds of billions of Dinars on infrastructure would employ most of the unemployed and renew roads, schools and bridges. This is a Win-Win policy for Serbia. The only people who lose are private western banks whose credit will not be needed.

Michael Thomas,

What you envisage in your postings is perfectly doable but with certain caveats.It requires a publicly owned Central Bank .At the moment private owned central banks create only the principal whereas the interest is payable from the existing money supply,hence reducing it.The only solution at present is increased borrowing to cover the principal plus the interest of what has been borrowed.A publicly owned central bank could create principal and interest to cover the governments expenses and without increasing the money supply.

As to the question posed by the poster below as to why the US government doesn't print enough money to pay its debt the answer is the control of money has been assigned to privately owned FR and backed by the US constitution.As long as the Federal Reserve System exists, U.S. government debt will continue to go up and up and up.For example, whenever the U.S. government wants to spend more money than it takes in (which happens constantly), it has to go ask the Federal Reserve for it. The federal government gives U.S. Treasury bonds to the Federal Reserve, and the Federal Reserve gives the U.S. government "Federal Reserve Notes" in return.So where does the Federal Reserve get the Federal Reserve Notes?It just creates them out of thin air.When this new debt is created, the amount of interest that the U.S.will pay on that debt is not also created.They'll go back to the FED and ask for more loans to finance it.Perfect PONZI scheme.

(Michael Thomas, 21 November 2014 19:00)
Your intelligence and knowledge of financial matters is truly, truly amazing.
Lesson 1: Why does the US not just pay this massive debt then?? clue it would cause a total collapse of the US and world economies.
Lesson 2:You can do a little currency fluctuation true, but it has to be in proportion to your economy, but no country is a self supporting island and the value of your currency is based on how it is traded with other currencies, hint: Serbia does not get to set that amount.
Lesson 3: Once you have inflated your currency that good in England at 10 pounds is now going to cost you 1 million dinar and you can offer 1000 all day long but you are going home empty handed.
Lesson 4: The key to your lesson is the words modest foreign exchange needs. I do not believe modest is even close to the range.
Also note you are basing your theoretical economy on billions of euros of charity flowing into Serbia.
Lesson 5: Just a plain old idiotic statement.

So print, print, print away!

Serbia should support "President for Life Vladimir Putin".

Then when the Russians get rid of Putin Serbia will be totally alone.

;-)

Leonidas,
I am assuming your answer was directed to me but actually should apply to Michael Thomas as he is the one who says that the US freely prints money as needed at the rate of trillions of dollars. My question to him was if so why would the US have a debt at all, why not print enough to cover the deficit each year??
You gave a good Wikipedia answer but you fail to understand a lot of the concepts.
1. The Federal Reserve is not part of the US Constitution per se, it was created by congress through their powers derived from the constitution but they also have the power to at any time to change or completely scrap the system and build a new one.
2. You say the Federal reserve is privately owned and that is not entirely correct. It is a mixture with built in safeguards to insure that it cannot be completely controlled by the party in power at the moment. But it is controlled by the Federal Reserve Board which has 7 appointed members to terms and 12 from the privately owned banks of the Federal Reserve, but only 5 of the 12 vote at any given time so there are 12 govt votes to 5 from the private sector.
But I am glad to see you have researched it, as it disproves the point that some here say that the US has become irrelevant in the world power, as how many people study how the Russian or Chinese or French or Serbian govts are set up and work?

As far as the philosophy on economy, one only has to look to Zimbabwe to see if MT's system works.

truly amazing

I think it's you that hasn't got a complete picture of the FR.See the following:

“Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.”

– The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s

haha...

A yellow card.
I have to laugh. Has it truly come to this?

Leonidas, 25 November 2014 10:14
Ok you were able to dig up some quote from the 1930's from a congressman in the US. Ok I'm convinced that I know less about my govt than someone with a computer in Greece or wherever does.
If you dig a little more I bet you can find where someone actually said that the US actually uses Rubles for currency.
truly, truly amazing!

A publicly owned central bank could create principal and interest to cover the governments expenses and without increasing the money supply.
(Leonidas, 24 November 2014 16:21)

EUREKA!!! I'm suprised you are not already in high demand by governement worldwide to implement the solution above. You have the expertise the make, say, Serbia a superpower overnight :)
----------

The federal government gives U.S. Treasury bonds to the Federal Reserve, and the Federal Reserve gives the U.S. government "Federal Reserve Notes" in return.
(Leonidas, 24 November 2014 16:21)

The federal government gives U.S. Treasury bonds to the Federal Reserve, individual investors, the Chinese government and many others. So your point is? You are really struggling to convey what you are trying to say, mate :) But I'm sure you are on to something lol (hopefully without lies this time with you being a certified lier).

Over the past 6 years the Americans have printed trillions of dollars, the British have printed over a trillion pounds, and the ECB has printed trillions of Euros, and no inflation has been caused. Like these western economies the problem Serbia faces is deflation and not inflation. Serbia could certainly create hundreds of billions of Dinars (100 billion Dinars = $1 billion) without inflation. If inflation were to rise, then the govt would need to decide which was more important, full-employment or low inflation. This is a legitimate policy question for every govt. Spending hundreds of billions of Dinars on infrastructure would employ most of the unemployed and renew roads, schools and bridges. This is a Win-Win policy for Serbia. The only people who lose are private western banks whose credit will not be needed.
(Michael Thomas, 24 November 2014 14:55)

Your post builds from faulty factual foundation (see first sentence) so the rest can be dismissed as garbage. However, Serbia is more than welcome to experiment with your policy. Zimbabwe is a good real life example where Serbia is going to end up... Which, I assume is great for you because Zimbabwe has not recognized Kosovo :)

If only the Serbs betray the Russians they will betray themselves. All the rest are the details.

Serbian politicians and readers of B92 think of Serbia as though it was a business. If Serbia does not "balance it's books" then, in the minds of these people, Serbia will go bankrupt.

Lesson 1 - countries are not businesses and exist in a very different form. They have citizens that belong to them and they have their own currencies which they can create at will to improve the well-being of the nation. America has a massive national debt, but since this debt is in US dollars the government could pay it simply by creating trillions of dollars on computer screens.

Lesson 2 - Serbia should copy the Americans and create trillions of Dinars which it could spend in Serbia, employing Serbians and buying Serbian goods and services.

Lesson 3 - Serbia should fixed the Dinar exchange rate on a purchasing power basis. If a basket of goods cost £10 in England and 1000 Dinars in Serbia, the the £/Dinar exchange rate would be £1 = 100 Dinars. This rate adjusts automatically as the price of the basket changes in different countries.

Lesson 4 - Serbia gets billions of Euros each year from Serbs abroad who send money to their families. This money is swapped into Dinars and gives the National Bank of Serbia enough foreign currency to handle its modest foreign exchange needs.

Lesson 5 - the Serbian economy is primarily focused on the Serbian market and Serbian customers, therefore it's need for foreign currency will always be limited.

(Michael Thomas, 21 November 2014 19:00)
Your intelligence and knowledge of financial matters is truly, truly amazing.
Lesson 1: Why does the US not just pay this massive debt then?? clue it would cause a total collapse of the US and world economies.
Lesson 2:You can do a little currency fluctuation true, but it has to be in proportion to your economy, but no country is a self supporting island and the value of your currency is based on how it is traded with other currencies, hint: Serbia does not get to set that amount.
Lesson 3: Once you have inflated your currency that good in England at 10 pounds is now going to cost you 1 million dinar and you can offer 1000 all day long but you are going home empty handed.
Lesson 4: The key to your lesson is the words modest foreign exchange needs. I do not believe modest is even close to the range.
Also note you are basing your theoretical economy on billions of euros of charity flowing into Serbia.
Lesson 5: Just a plain old idiotic statement.

So print, print, print away!

Serbia should support "President for Life Vladimir Putin".

Then when the Russians get rid of Putin Serbia will be totally alone.

;-)

Leonidas,
I am assuming your answer was directed to me but actually should apply to Michael Thomas as he is the one who says that the US freely prints money as needed at the rate of trillions of dollars. My question to him was if so why would the US have a debt at all, why not print enough to cover the deficit each year??
You gave a good Wikipedia answer but you fail to understand a lot of the concepts.
1. The Federal Reserve is not part of the US Constitution per se, it was created by congress through their powers derived from the constitution but they also have the power to at any time to change or completely scrap the system and build a new one.
2. You say the Federal reserve is privately owned and that is not entirely correct. It is a mixture with built in safeguards to insure that it cannot be completely controlled by the party in power at the moment. But it is controlled by the Federal Reserve Board which has 7 appointed members to terms and 12 from the privately owned banks of the Federal Reserve, but only 5 of the 12 vote at any given time so there are 12 govt votes to 5 from the private sector.
But I am glad to see you have researched it, as it disproves the point that some here say that the US has become irrelevant in the world power, as how many people study how the Russian or Chinese or French or Serbian govts are set up and work?

As far as the philosophy on economy, one only has to look to Zimbabwe to see if MT's system works.

haha...

A yellow card.
I have to laugh. Has it truly come to this?

truly amazing

I think it's you that hasn't got a complete picture of the FR.See the following:

“Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.”

– The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s

I agree with Mr.Thomas take no notice of these Eurocrats they can only promise servitude and economic misery.I don't see any Greeks,Spaniards,Portuguese,etc,etc.... dancing on their ceilings do you??

Thank you for your reply, truly amazing.

I only have time to address one of your points. Lesson 3 refers to a self regulating exchange rate policy. If the basket of goods in the UK remains at £10 but now costs 1,000,000 Dinars, then the £/Dinar rate would be £1=100,000 dinars.. This rate arises from the real price of goods in London and Belgrade. The current "free market" system is just a mask for a corrupt game run by and for crooks like Soros and Goldman Sachs.

We should not however assume that printing Dinars will cause inflation. Over the past 6 years the Americans have printed trillions of dollars, the British have printed over a trillion pounds, and the ECB has printed trillions of Euros, and no inflation has been caused. Like these western economies the problem Serbia faces is deflation and not inflation. Serbia could certainly create hundreds of billions of Dinars (100 billion Dinars = $1 billion) without inflation. If inflation were to rise, then the govt would need to decide which was more important, full-employment or low inflation. This is a legitimate policy question for every govt. Spending hundreds of billions of Dinars on infrastructure would employ most of the unemployed and renew roads, schools and bridges. This is a Win-Win policy for Serbia. The only people who lose are private western banks whose credit will not be needed.

Michael Thomas,

What you envisage in your postings is perfectly doable but with certain caveats.It requires a publicly owned Central Bank .At the moment private owned central banks create only the principal whereas the interest is payable from the existing money supply,hence reducing it.The only solution at present is increased borrowing to cover the principal plus the interest of what has been borrowed.A publicly owned central bank could create principal and interest to cover the governments expenses and without increasing the money supply.

As to the question posed by the poster below as to why the US government doesn't print enough money to pay its debt the answer is the control of money has been assigned to privately owned FR and backed by the US constitution.As long as the Federal Reserve System exists, U.S. government debt will continue to go up and up and up.For example, whenever the U.S. government wants to spend more money than it takes in (which happens constantly), it has to go ask the Federal Reserve for it. The federal government gives U.S. Treasury bonds to the Federal Reserve, and the Federal Reserve gives the U.S. government "Federal Reserve Notes" in return.So where does the Federal Reserve get the Federal Reserve Notes?It just creates them out of thin air.When this new debt is created, the amount of interest that the U.S.will pay on that debt is not also created.They'll go back to the FED and ask for more loans to finance it.Perfect PONZI scheme.

Leonidas, 25 November 2014 10:14
Ok you were able to dig up some quote from the 1930's from a congressman in the US. Ok I'm convinced that I know less about my govt than someone with a computer in Greece or wherever does.
If you dig a little more I bet you can find where someone actually said that the US actually uses Rubles for currency.
truly, truly amazing!

Michael, not a bad vision, unfortunately Nikolic and Vucic rushed into winning elections and employed old cronies and fresh thieves into their party. From our present day until next June more good Serbs will sell their properties and leave and more municipalities raped of the little funds that they have.

As a foreigner living in Serbia the last three years under SNS is depressing.

A publicly owned central bank could create principal and interest to cover the governments expenses and without increasing the money supply.
(Leonidas, 24 November 2014 16:21)

EUREKA!!! I'm suprised you are not already in high demand by governement worldwide to implement the solution above. You have the expertise the make, say, Serbia a superpower overnight :)
----------

The federal government gives U.S. Treasury bonds to the Federal Reserve, and the Federal Reserve gives the U.S. government "Federal Reserve Notes" in return.
(Leonidas, 24 November 2014 16:21)

The federal government gives U.S. Treasury bonds to the Federal Reserve, individual investors, the Chinese government and many others. So your point is? You are really struggling to convey what you are trying to say, mate :) But I'm sure you are on to something lol (hopefully without lies this time with you being a certified lier).

Over the past 6 years the Americans have printed trillions of dollars, the British have printed over a trillion pounds, and the ECB has printed trillions of Euros, and no inflation has been caused. Like these western economies the problem Serbia faces is deflation and not inflation. Serbia could certainly create hundreds of billions of Dinars (100 billion Dinars = $1 billion) without inflation. If inflation were to rise, then the govt would need to decide which was more important, full-employment or low inflation. This is a legitimate policy question for every govt. Spending hundreds of billions of Dinars on infrastructure would employ most of the unemployed and renew roads, schools and bridges. This is a Win-Win policy for Serbia. The only people who lose are private western banks whose credit will not be needed.
(Michael Thomas, 24 November 2014 14:55)

Your post builds from faulty factual foundation (see first sentence) so the rest can be dismissed as garbage. However, Serbia is more than welcome to experiment with your policy. Zimbabwe is a good real life example where Serbia is going to end up... Which, I assume is great for you because Zimbabwe has not recognized Kosovo :)