Proud Spain again humbles itself to the euro's demands … The eurozone's appetite for self harm knows no bounds. With one in four Spanish workers out of a job, output contracting by the day and Asturian miners marching through the capital, the Spanish prime minister, Mariano Rajoy, has determined to push through a further €65bn (£51bn) of austerity measures, as if deliberately set on a strategy of economic death by a thousand cuts. To say "determined" is possibly not the best way of putting it, for this is more like forced with a gun to his head; the latest austerity package is part of the conditionality attached to the eurozone loans for banking bailouts, thereby giving the lie to Mr Rajoy's proud insistence that the Spanish bailout is in some way less of a subjugation than the others. – UK Telegraph
Dominant Social Theme: Spanish austerity boggles the mind.
Free-Market Analysis: UK Telegraph associate business editor Jeremy Warner has just written a very good appraisal of Spain's misguided "austerity" policies being put in place by Prime Minister Mariano Rajoy.
And yet, as good as it is, we want to use it for purposes of this article to show how the mainstream media – even the best of it – simply doesn't seem to have the vocabulary to describe what is really taking place.
What concerns Warner – and we've written about it before – is that Spanish austerity is just making things worse for that bruised and bloody country. But in making the case for "worse," Warner doesn't really provide the antidote. This is the problem …
Read between the lines, and the solution that Warner wants seems fairly obvious. It is the standard "Keynesian" one of more monetary stimulation. Open the taps, he seems to indicate, and things will gradually get better. Here's more from his article:
"We are living in a crucial moment that will determine the future of our families, our youth, our social welfare and all our hopes," Mr Rajoy said. "That is the reality. We have to get out of this mess and we have to do it as soon as possible." Well here's a spot of advice. What was announced today is not going to do it.
In economic terms at least, developments in Europe look ever more like a repeat of what happened in the interwar years, where misplaced devotion to the gold standard and inability to resolve differences between creditor and debtor nations forced governments into ever more counter-productive policies.
What Spain is embarked on is a strategy of despair, a form of madness in which the patient deliberately does the wrong thing in the hope it will support the higher purpose – a currency union which is manifestly harming Spanish interests and is already effectively busted beyond repair.
What on earth does Mr Rajoy think he is doing applying a further huge drag to growth in an economy which is already in an apparent death spiral? In attempting to cut its way back to fiscal sustainability, Spain is caught in a vicious circle of demand contraction which looks set only to make the fiscal problem even worse. Unlike Britain, there is nothing to mitigate the process of fiscal contraction by way of devaluation or monetary accommodation. It is as if the patient is forced to undergo open heart surgery without anaesthetic. The shock alone threatens to kill the subject.
Nor is Britain attempting anything remotely similar to the forced march back to balanced budgets imposed on Spain. You wouldn't believe it to hear the howls of protest from Britain's Labour opposition, but in fact UK fiscal policy is for the moment still expansionary. What's happening is not so much a fiscal contraction as the gradual withdrawal of the fiscal stimulus provided by an unsustainable structural deficit. This might sound a somewhat technical, and therefore worthless distinction, but it is real enough.
You see? This is standard stuff. John Maynard Keynes literally wrote the book on monetary stimulus, proposing that government-affiliated central banks could print more money to alleviate the misery of a downturn.
Keynes' idea was simple enough. He didn't bother to define WHY economic downturns take place. He was merely concerned with alleviating them and in his General Theory he explained why. His idea was that central banks could print money that government could use to put people back to work … and Keynesian promulgations remain fashionable today.
In fact, Keynes was Fabian, a moderate socialist (though he denied it) of the most devious type. He knew full well that what he was really doing was providing Western governments with a justification for monetary policy. Without Keynes modern economics would not exist.
The idea that one can print funny pieces of paper and then use these pieces of paper to "pay" people to dig holes in the ground is ludicrous. Yet every day around the world, people with decades of financial and economic education seriously propose that this is a way to alleviate recessions and depressions.
This is why we write that people like Warner – and he is obviously not alone – simply don't have the vocabulary to explain what's going on. Warner and others like him can explain roughly what the problem is but the assumptions about the solution are inadequate. Here are words we'd like to see Warner use: "competitive money," "free-market economics," "human action."
Even the title of Warner's piece is wrong-headed. He writes, "Proud Spain again humbles itself to the euro's demands."
Well, in fact, there is no such thing as Spain, or not in the sense that Warner means it. There are PEOPLE who identify themselves as Spanish. But if you travel there, you'll find that many people identify themselves within the context of many sub-cultural groups such as the Basques.
There are at least four or five different regional cultures that want to disassociate themselves from Spain. Some of these cultures occupy large portions of the land. Spain, it turns out, is just another authoritarian concept driven by a power elite that demands increased global centralization whenever possible.
The modern global conspiracy insists on nation-states whenever possible. It is engaged via various unions in expanding these "nations." Yet if you ask those who are involved, many are not enamored of the "nations" in which they live.
It gets even worse when one examines the appurtenances of the nation-state, specifically the military and banking facilities. It turns out, eventually, that for the most part in the larger and more powerful states military and economic resources are controlled by a supra-national elite that is answerable neither to the "nation" nor its elected representatives.
This is what we mean when we say the "vocabulary" is lacking. Rajoy was elected by "Spanish" voters but he doesn't work for Spain. He works for Money Power based out of London's City with affiliates in Washington DC, the Vatican and Tel Aviv.
The austerity that Warner finds so puzzling is being demanded by an elite that is trying to generate world government and is determined to inflict a maximum amount of chaos and misery to bring about this desired state of affairs.
The solutions that Warner seems to want to see implemented are the reverse of what is being tried in Spain. He has written a good article, better than most, but in the end anyone who works for mainstream media will not find it easy to cross the divide from power elite nostrums to what we consider to be common sense.
You know, people are basically responsible to themselves, their families and their local communities. That's human nature. People do best when they are involved in productive work. The idea that some higher powers can print money on a printing press and then pay people to do non-productive work in order to "stimulate" the economy is simply ridiculous.
Keynes's "solutions" didn't work in the 1930s and they won't work today. You can't inflate away the massive imbalances inherent in modern monopoly-printing central banking nation-states. You can only put them off for a while, which makes them worse.
So, yes, there ARE ways of reflating in the short term, especially if the powers-that-be were willing to bypass the banks and simply hand out "money" to those who need and want it.
But were the power elite to bypass banks – their distribution facility – the true farcicality of the system would be revealed for what it is and the whole elaborate economic charade would likely collapse. People don't believe in the system now and they certainly would be even less inclined were those in charge of the printing presses to offer its largesse directly to the public.
The vocabulary is lacking. The thinking is entirely constrained and rehearses predictable dominant social themes. Just as troubling, one cannot be seriously considered for assignments by the mainstream press if one wants to delve into the current money system in order to illustrate its basic psychopathology.
And Lord help you if you want to explain to readers WHY the system is as it is – and who is actually responsible. This is why Warner cannot go beyond a certain point. Even if the problem is analyzed appropriately, the basic frame of reference will still have a Keynesian taint. It is not possible to properly define what's going on using the tools that the power elite itself has created for promotional purposes. The communication has been purposefully misaligned.
The point of this article has not been to criticize what is actually a good mainstream article but to show that even the best modern reporting is woefully inaccurate because it begins with inaccurate premises.
These premises have been created on purpose, maliciously, to confuse the general populace. In the process, reporters have been confused as well. Until writers, educators and the man-on-the-street begin with the right inputs the outputs will inevitably be wanting.
It is our hope that the Internet and what we call the Internet Reformation will give people the conceptual tools that they need to understand their societies. Once the vocabulary has been rehabilitated a real discussion can begin to take place.
Is such a process a proverbial pipe dream? We would argue it's already started.