Spain, like Greece, is broke. The Spanish people are being subjected to the “austerity” of high unemployment, low wages, high prices and high taxes. The primary object of this “austerity” is to compel the people of Spain to make good on the debts incurred by the government and/or banks of Spain.
But, as I’ve said for years, what can’t be paid, won’t be paid.
Therefore, the people of Spain–unable or unwilling to pay the debts incurred by their government and banks–are protesting en masse against their alleged obligation to repay all of those debts. Spain’s police, acting as knee breakers for the government and bankers, are endeavoring to suppress the people’s protests and thereby impose and enforce the debt obligation upon the people. People have begun to refer to the police as the “Austerity Nazis”.
It’s debatable whether the people are really liable for their government’s debts. On the one hand, if a government has behaved irrationally, criminally or acted in favor of wealthy special interests and contrary to the interests of the majority of the people, I see little reason to hold the common people accountable for debts incurred by a treasonous and/or fascist government. On the other hand, the people were dumb enough to elect the corrupt s.o.b.s who currently masquerade as honorable men in the offices of government. If the people are dumb enough to elect the treasonous whores, maybe it’s appropriate that the dummies be made to pay for their electoral stupidity.
What’s not debatable is the size of the debt owed and the ability of the Spanish people to pay it. They can’t pay, therefore they won’t pay. Spain’s debts will be substantially repudiated. That’s what the protesters are really advocating: debt repudiation. The fascists who run the Spanish government are demanding that the debts be paid and are therefore telling the Spanish police to beat the hell out of the Spanish protesters.
The video below ultimately illustrates the conflict between the purported creditors and purported debtors. The voice on the video sounds like Judge Andrew Napolitano. The video is presented as a warning of what might be coming to American streets when the American people are subjected to “austerity” to make good on gov-co’s debts.
There is a significant difference, however, between Spain and the USA: guns.
According to GunPolicy.org, the people of Spain hold about 4.5 million guns–about one gun for every ten people. The Spanish military hold 3.5 million guns and the Spanish police hold about 150,000 guns. Thus, the number guns held by Spain’s people and by her government are roughly equal.
According to GunPolicy.org, in the United States, the American people hold 270 million firearms–about 9 guns for every 10 people. The US military holds 3 million firearms and the US police hold another 900,000. Thus, there are almost 70 guns in the hands of American people for every gun held by the US military, federal, state and local governments.
This doesn’t mean that American “austerity” riots won’t take place. It doesn’t mean that in the event of such riots, American police will be “kinder and gentler” than Spain’s police. It does suggest, however, that American riots may turn violent and murderous in fairly short order. I don’t think Americans will tolerate the kind of beatings being administered by Spanish cops to Spanish protesters. So long as we hold 70 firearms for every firearm owned by the gov-co, we really are the 800 pound gorilla.
That’s an impressive video, but you can’t help but wonder if its relatively few clips were “cherry-picked” to exaggerate the extent of Spain’s protests.
However, if you have any doubt about the magnitude of Spain’s riots, Google “Spanish Protests” and scroll down through the mass of photos until you find yourself saying “Ohh, my God . . . ” In that wall of photos, you’ll see a far more powerful presentation of Spain’s protests that overwhelms by virtue of the mere number of images.
How did Spain’s debt become too great to be repaid? It wasn’t simply due to government incompetence or corruption. It was by means of fiat currency. The debt could never have reached levels that couldn’t possibly be repaid, if Spain’s money was still redeemable in gold or silver.
Alan Greenspan explained the problem with fiat currencies back in A.D. 1966 in his article “Gold and Economic Freedom”. He observed that the welfare state can only exist by borrowing huge sums of currency, and thereby going into great (and inevitably ruinous) debt. He understands that only gold can protect us against that debt. He implies that the massive debt was only possible by means of fiat currency. Greenspan essentially equates fiat currency to debt to the welfare state. (You can’t have one without the others.)
“[T]he gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money [and therefore go into great debt], by issuing government bonds, to finance welfare expenditures on a large scale.
“Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited.
“The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which—through a complex series of steps-the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets.
“The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. . . .The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
“This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending [massive, governmental debt] is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.
Today, the welfare states of Greece, Spain, much of Europe, and the United States are so deeply indebted that the debt can’t ever be repaid. The collectivists running those governments can no longer borrow enough to sustain the Ponzi-welfare scheme. They are therefore insisting that the people now be made to pay for all of the seemingly “free” benefits they’ve received in the past. The people are unable or unwilling to pay those debts and therefore protest.
The protests and violence seen in Greece and Spain–and which will be seen in the US–aren’t simply about unemployment or rising taxes. These protests aren’t against a particular political party. Although the people protesting may not yet understand it, their protests are ultimately against welfare states of the world, against the massive, unpayable debt on which those welfare states depend, and against the fiat currencies without which such enormous debt would be impossible.
In Greece and Spain we’re seeing tremendous challenges to welfare states and fiat currency. I expect these challenges to spread throughout much of Europe, Japan, Australia, and finally the United States. Unless governments are prepared to openly repudiate all or most of their “national” debts, every indebted nation is destined for an dose of “austerity” (high unemployment,high prices, and high taxes). That austerity will precipitate riots, confrontations with the “authorities”, and perhaps shooting revolutions.
Even if governments won’t openly repudiate their debts, they will seek to secretly repudiate those debts by means of inflation (perhaps, hyper-inflation). The debts can’t be paid, and therefore won’t be paid. By means of inflation the inevitability of debt repudiation may be concealed from the masses of people for a while longer. But the moment is coming–maybe in six months, maybe in six years–when the world must admit that the debts can’t be paid and must instead be repudiated.
When we reach that moment, the world will no longer accept promises to pay (debt) in return for goods and services. Instead, sellers will demand a payment rather than a promise to pay. Fiat currencies (promises to pay) may still be used, but they’ll be treated with contempt. The world will move back to gold and/or silver for a monetary system, and the global welfare-state system will die.
The question is, What will follow?
We’ll first experience several years of national poverty, chaos, suffering and perhaps widespread death.
Then, if we’re smart, courageous and blessed we might return to some semblance of freedom. In the alternative, if we’re stupid, cowardly and cursed, we might degrade into an overt, Stalinist-like police state.
It could be a decade or more before we see what follows the end of the fiat currencies, governmental debt and our welfare state. But right now, in the riots in Greece and Spain–and the coming riots in the US–we are seeing the early death throes of fiat currency and welfare states.
I expect these deaths to be painful for all of us–including me. Still, I say Hooray! To hell with fiat currencies, unpayable government debts, and the welfare states. To hell with big government. To hell with ’em all.