–How the International Monetary Fund saved Spain

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor,
which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.


If you would like to understand why the IMF told Spain to raise taxes and to cut spending, the purpose is to accomplish the following wonderful results.

Quoting from this IMF press release: IMF Executive Board Concludes 2013 Article IV Consultation with Spain, Press Release No. 13/292, August 2, 2013:

Key imbalances are correcting rapidly. Sovereign yields fell sharply since the European Central Bank’s announcements about Outright Monetary Transactions (OMT), the current account swung into surplus, the fiscal deficit fell sharply in 2012 despite the recession, private sector debt declined, and the banking system is stronger.

Wow! Sounds great. It looks like that IMF austerity thing really works.

Er, uh, what?

But the adjustment process is proving slow and difficult. Growth has been negative in the last seven quarters, unemployment has reached unacceptably high levels, and financing conditions remain tight for small firms.

Translation: Don’t worry about negative growth, high unemployment and small firms starved for money, when “key imbalances are correcting rapidly” and the “banking system is stronger.” Sure, the little folk are getting killed, but the rich folk are doing O.K., and they are the ones who pay us at the IMF.

The reform process has accelerated and deepened.

Translation: “Reform” is a euphemism for: “Cut benefits to the middle- and lower-classes.” We’ve convinced Spain to “accelerate and deepen” those cuts.

An independent council is being introduced and a commission of experts has issued a proposal to ensure pension system sustainability.

Translation: “Pension system sustainability” is another euphemism for: “Screw the people out of their pensions.” A pension that pays $0 is sustainable, forever. Right?

On labor market policy, a major reform was instituted in July 2012 to improve firms’ ability to adjust working conditions (including wages).

Translation: “Adjust working conditions and wages” is yet another euphemism for: Worsen working conditions and lower wages.

Don’t you just love people speaking euphemisms? These folks say “bullsh*t” and you hear “natural plant growth enhancer.”

Unemployment insurance was reduced by 17 percent after 6 months of benefits, and hiring subsidies were reformed.

Translation: We like the fact that Spain stopped giving financial help to companies hiring employees, making it harder for people to find jobs, and at the same time, cut unemployment insurance. A brilliant one-two punch workers’ guts.

Executive Directors commended the authorities for strong progress on critical reforms amid challenging conditions, which is helping to stabilize the economy.

However the economy remains in recession, with unacceptably high unemployment, and the outlook remains difficult.

Spain Unemployment Projections:
Year: 2009 . 2010 . 2011 . 2012 . 2013 . 2014 . 2015 . 2016 . 2017 . 2018
Rate: 18.0 .. 20.1 . 21.7 .. 25.0 . 27.2 .. 27.0 . 26.9 .. 26.6 . 26.0 .. 25.3

Translation: “Stabilize the economy” means: Unemployment has gone from awful to catastrophic, but in a “stable” way.

The economy remains in recession, with unacceptably high unemployment, and the outlook remains difficult. Directors stressed the need for decisive further action to generate growth and jobs.

Translation: Following our recommendations has put your economy in the toilet, so do more of the same.

Directors underscored that labor market dynamics need to improve further in order to reduce unemployment sufficiently, including by enhancing internal flexibility, reducing duality, and improving active labor market policies.

Translation: Employment needs to increase in order to reduce unemployment. Right? The rest of what we said is additional garbage.

Many Directors generally saw merit in exploring a social agreement between unions and employers to bring forward the employment gains from structural reforms, while they noted that it would be difficult to achieve.

Translation: Unions have to agree to even lower wages, even worse working conditions and non-union businesses. For some reason, they resist this “social agreement.”

Directors agreed that the new medium-term structural targets strike a reasonable balance between reducing the deficit and supporting growth in the short term.

Translation: Oops, did we just admit that reducing the deficit is the opposite of supporting growth? We hope nobody read this far.

Directors stressed that actions at the European level, including initiatives aimed at improving monetary transmission, reversing financial fragmentation, and making progress toward a banking union are essential to support Spain’s adjustment effort.

Translation:Whoa! did we also just admit that the euro itself is a truly stupid idea? By “banking union” are we finally talking about a “financial union”? Are we on the cusp of recommending a form of United States of Europe, and is this the first hint?

[For many years I’ve said there are only two solutions for the euro nations. Either:
1. Drop the euro and re-adopt your own sovereign currency to become Monetarily Sovereign or
2. Create a financial union in which the EU gives (not lends) euros to nations as needed.]

O.K. folks, here’s the plan. We, the IMF directors, will criticize everything and recommend everything. Then, no matter what happens, we’ll be able to point to an article that warned about what happened and recommended what solved it. We never can be wrong!

And that’s why we get paid the big euros

Rodger Malcolm Mitchell
Monetary Sovereignty


Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone (Click here)
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone. Click here
6. Salary for attending school (Click here)
7. Eliminate corporate taxes (Click here)
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports


One thought on “–How the International Monetary Fund saved Spain

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s