The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheStreet) -- Spain's economy is teetering on collapse, and its journey shows how strict controls on central banks and budget deficits -- advocated by some U.S. conservatives -- can wreck an economy. Unlike Italy and Greece, Spain did not unravel because Madrid borrowed to finance a welfare state it could not afford. Like the U.S. in the 2000s, Spain had a real estate boom caused by efforts to encourage home ownership and Northern Europeans seeking vacations and second homes in its warm climate. Much was financed by private foreign investments in Spanish bonds and banks. Tourism and construction boomed, growth was stronger and unemployment lower than most of Europe. Private debt soared but Spain's government enjoyed budget surpluses. As in the U.S., when the real estate bubble burst, banks could not attract deposits or sell securities backed by loans to maintain liquidity, and faced insolvency. In 2008, the Federal Reserve began lending U.S. banks hundreds of billions of dollars against loans and securities backed by mortgages, business and auto loans, and credit card debt. Essentially, the Fed ran the printing presses to bail out U.S. banks. Critics like Congressman Ron Paul predicted a burst of inflation would follow and advocated tighter control on the Fed, or even abolishing it and returning to the gold standard. 12 Highest-Rated Consumer Stocks Picked by S&P The great inflation never came. Any first-year graduate student in economics knows, full employment is required for more money to create with certainty additional inflation. What additional inflation the United States endured was instigated by commodity prices driven higher by growth in China. Spain was operating under the kind of regime advocated by Fed critics. Using the euro, the Bank of Spain could not print money to bail out banks. Instead, the national government borrowed in bond markets to lend to banks. Its budget swung from a 1.9% of GDP surplus in 2007 to an 11.2% deficit in 2009. And Madrid was in no position to borrow further to finance the kind of aggressive stimulus spending Barack Obama pursued to soften the recession.