Idaho Libertarian Times

Helping the Terrorists

Taken from the "CRYPTO-GRAM" ,February 15, 2009 edition
by Bruce Schneier
Chief Security Technology Officer, BT
schneier@schneier.com
http://www.schneier.com

It regularly comes as a surprise to people that our own infrastructure can be used against us. And in the wake of terrorist attacks or plots, there are fear-induced calls to ban, disrupt, or control that infrastructure. According to officials investigating the Mumbai attacks, the terrorists used images from Google Earth to help learn their way around. This isn't the first time Google Earth has been charged with helping terrorists: in 2007, Google Earth images of British military bases were found in the homes of Iraqi insurgents. Incidents such as these have led many governments to demand that Google remove or blur images of sensitive locations: military bases, nuclear reactors, government buildings, and so on. An Indian court has been asked to ban Google Earth entirely.

This isn't the only way our information technology helps terrorists. Last year, a U.S. army intelligence report worried that terrorists could plan their attacks using Twitter, and there are unconfirmed reports that the Mumbai terrorists read the Twitter feeds about their attacks to get real-time information they could use. British intelligence is worried that terrorists might use voice over IP services such as Skype to communicate. Terrorists might recruit on Second Life and World of Warcraft. We already know they use websites to spread their message and possibly even to recruit.

Of course, all of this is exacerbated by open-wireless access, which has been repeatedly labeled a terrorist tool and which has been the object of attempted bans.

Mobile phone networks help terrorists, too. The Mumbai terrorists used them to communicate with each other. This has led some cities, including New York and London, to propose turning off mobile phone coverage in the event of a terrorist attack.

Let's all stop and take a deep breath. By its very nature, communications infrastructure is general. It can be used to plan both legal and illegal activities, and it's generally impossible to tell which is which. When I send and receive e-mail, it looks exactly the same as a terrorist doing the same thing. To the mobile phone network, a call from one terrorist to another looks exactly the same as a mobile phone call from one victim to another. Any attempt to ban or limit infrastructure affects everybody. If India bans Google Earth, a future terrorist won't be able to use it to plan; nor will anybody else. Open Wi-Fi networks are useful for many reasons, the large majority of them positive, and closing them down affects all those reasons. Terrorist attacks are very rare, and it is almost always a bad trade-off to deny society the benefits of a communications technology just because the bad guys might use it too.

Communications infrastructure is especially valuable during a terrorist attack. Twitter was the best way for people to get real-time information about the attacks in Mumbai. If the Indian government shut Twitter down -- or London blocked mobile phone coverage -- during a terrorist attack, the lack of communications for everyone, not just the terrorists, would increase the level of terror and could even increase the body count. Information lessens fear and makes people safer.

None of this is new. Criminals have used telephones and mobile phones since they were invented. Drug smugglers use airplanes and boats, radios and satellite phones. Bank robbers have long used cars and motorcycles as getaway vehicles, and horses before then. I haven't seen it talked about yet, but the Mumbai terrorists used boats as well. They also wore boots. They ate lunch at restaurants, drank bottled water, and breathed the air. Society survives all of this because the good uses of infrastructure far outweigh the bad uses, even though the good uses are -- by and large -- small and pedestrian and the bad uses are rare and spectacular. And while terrorism turns society's very infrastructure against itself, we only harm ourselves by dismantling that infrastructure in response -- just as we would if we banned cars because bank robbers used them too.

Google Earth helps the terrorists:
http://news.nationalgeographic.com/news/2007/03/070312-google-censor.html or http://tinyurl.com/23nlat
http://technology.timesonline.co.uk/tol/news/tech_and_web/the_web/article5311241.ece or
http://tinyurl.com/5htbj6
http://news.cnet.com/How-law-enforcement-uses-Google-Earth/2100-1025_3-6208034.html or http://tinyurl.com/d6w6h2

Twitter helps the terrorists:
http://www.inquisitr.com/9863/report-indian-government-trying-to-block-twitter-as-terrorists-may-be-reading-it/ or http://tinyurl.com/566bt2
http://bit.ly/terror4

Skype helps the terrorists:
http://www.computerweekly.com/Articles/2008/09/15/232308/taliban-use-skype-voip-bug-to-evade-capture.htm or http://tinyurl.com/5zqlsf

Second Life and World of Warcraft help the terrorists:
http://www.news.com.au/story/0,23599,22163811-2,00.html

Open wireless helps the terrorists:
http://blog.wired.com/defense/2009/01/open-wi-fi-is-f.html
http://www.schneier.com/blog/archives/2008/01/my_open_wireles.html

Cell phones help the terrorists:
http://www.foxnews.com/politics/2009/01/08/nypd-interrupt-cell-phone-service-event-terrorist-attack/ or http://tinyurl.com/7j9hfd
http://www.guardian.co.uk/technology/2008/dec/04/social-networking-terrorism or http://tinyurl.com/5jcl3r
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/31/AR2009013101548.html
or
http://tinyurl.com/dyxmu2

Cars help the terrorists:
http://www.guardian.co.uk/technology/2008/sep/04/terrorism.terrorismandtravel
or
http://tinyurl.com/6hmuqs

Library computers help the terrorists:
http://www.washingtonpost.com/wp-dyn/content/article/2005/11/04/AR2005110401030.html
or
http://tinyurl.com/c9xyly

Anonymous chat rooms help the terrorists:
http://query.nytimes.com/gst/fullpage.html?res=9900EEDB1230F933A15751C1A9629C8B63
or
http://tinyurl.com/yv2mse

Commercial databases help the terrorists:
http://www.computerworld.com/printthis/2005/0,4814,100161,00.html

Biomedical research helps the terrorists:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/10/29/MN109602.DTL&type=science
or
http://tinyurl.com/bb93zo

In-flight Internet helps the terrorists:
http://www.upi.com/Top_News/2009/02/07/In-flight_Internet_problems_foreseen/UPI-52121234029898/
or
http://tinyurl.com/dzkk76

How soon before the people making this remote fireworks launcher are accused of helping the terrorists?
http://www.maplin.co.uk/module.aspx?moduleno=226037

This essay originally appeared in The Guardian.
http://www.guardian.co.uk/technology/2009/jan/29/read-me-first-google-earth
or
http://tinyurl.com/cjlgq6

Obama's So-Called Stimulus: Good For Government, Bad For the Economy

President Obama wants Congress to dramatically expand the burden of government spending. This CF&P Foundation mini-documentary explains why such a policy, based on the discredited Keynesian theory ...

For a Limited time only Economic Salvation for only $787,000,000,000.00, act now! Time is Limited!

Interesting news
Referenced from an article by Marcelo Perez at: alhambrainvestments.com

"
According to the monthly Commerce Department report, retail sales, which account for about one-third of US gross domestic product, jumped a surprising 1.0% in January, after a downwardly-revised 3.0% decline in December and a 2.4% drop in November. It is the first monthly increase since June 2008 and the largest since November 2007. And rising gas prices didn’t have much affect on the number either, as retail sales ex-gas were still up 0.9%. In the last year though, total sales are down a staggering 9.7%.

The report was a huge surprise, as economists anticipated a decline of 0.4%. Excluding a 1.6% increase in auto sales, and retail sales recorded a 0.9% gain, much better than the 0.3% drop that was expected. This follows a 2% decline in December.

The data reported by the government is not adjusted for any price changes. This basically means that the government numbers may be overstated when prices are rising, and understated when prices reverse course. And considering we are in the midst of a deflationary environment, except, say for gas prices in the last month, this seems to be better news than at first glance. So, once again, I must ask. Are consumers really cutting back in epic proportions, causing our consumption-driven economy to be on the brink of collapse, as it’s being reported, or is this just a case of extreme deflation coupled with an absolutely normal cyclical recession?

Report Details (via MarketWatch):

January’s sales of durable goods were mixed.

• Auto sales rose 1.6% after having fallen 2% in December.


• Sales at furnishing stores fell 1.3% and sales at building materials stores dropped 3.2%.


• However, sales at electronics stores rose 2.6%.


• Sales of nondurable goods were mostly higher in January.


• Sales at general merchandise stores rose 1.1%, despite a 0.3% decline at department stores.


• Sales at apparel stores increased 1.6%.


• Sales at food stores rose 2.1%, the biggest increase in more than two years.


• Sales at restaurants increased 0.8%.


• Sales at health and personal care stores were flat.


• Sales at stores catering to leisure-time activities, such as reading and sports, sank 0.5%.


• Sales at nonstore retailers, such as catalogs and online stores, rose 2.7%.

Retail sales had fallen for six straight months before this report."

------------------------------------------------------------------------------------------------------------------------------------------------------------------
By; L.Holcomb
Cut to my part of the story, while everybody's eyes were glued on Washington DC on the $787,000,000,000.00 (is that a butt load of zeros or what)spending package, another story is starting to get some traction, traction we need pay heed to. What is it, well friends "Its the economy" , you know that damn thing thats been in a recession for the last, well, probably 12+ months now. All while the stimulus package was being tortuously dragged across the nightly news, with the talking heads bleating how we need this travesty of pork to save our collective asses. The U.S. Commerce Department trips up & discloses in its monthly report the economy is showing signs of growth. That growth in January, a month noted usually for its economic stagnation more than its growth coming after the usual & this year non-existent Christmas rush, is and of itself interesting. I mean if we have growth this late into the recession this points to the bottom is behind us rather than in front of us, hence I go back to my previous post last week where I stated "I don't think we need this bailout" This economy is righting itself, by & of itself.
Look no one likes a recession, but, they are necessary, they in due course remove the non competitive players from the market while making room for fresh blood to take their place when the market starts to expand again. Well thats unless your too big to fail, erh , well can convince people your too big to fail. Then you get a bailout subsidy. The problem with the Big 3 & the AIG & the LEHMAN Bros bailouts is they didn't work! & the subject of a different post.
The saddest part of the stimulus package past yesterday is, it won't help you or me directly it'll only help the designated few in industry, some to pet projects, and the only way you & I will see any of it is indirectly through the "Trickle down" of the economics after your company, gets its cut. In short the people getting the money are the ones who supported the candidates in the first place, thats probably not you & me.

But there is good news, the 2010 elections are now 19 months away, everything done to date will have a significant bearing on those elections. While I personally fear this stimulus package will delay rather than enhance economic recovery, I see that delay as an opportunity to point out the errors of this bailout thinking that has so swept America of late and add gravitas to the question of what is the best solution for the economy. Keynesian micromanagement or laze fare?

Perhaps our worst president, so far Part 2

Yesterday's blog entry generated a number of replies including this one that prompted me to answer Pat's questions and expand on a couple of other items in the Lincoln post below.

--- In *******@*********.com, Pat wrote:
>
> Boy, do I feel naive.
>
> Here's a question, though: had he allowed the convederate states to leave
> the nation, could the United States of America have survived? The remaining
> states would have been weaker economically and in dependence to a foreign
> country for raw goods like cotton. How would they have been prepared
> militarily and politically to remain strong as a nation?
>
> Lincoln's job, at least in part, was in preserving the republic and doing
> what he could to try to keep it from passing from the scene.
>
> Please clear me up on these issues.
>
> Thanks.

Don't feel bad, Pat, it's more about history-is-written-by-the-winners than it is about you.

I'm actually the one out-of-step: Everybody loves Lincoln. School children learn that he faced down the biggest threat to the union that our country had faced since the Revolution. And what's not to like about a president who abolished slavery?

As usual, the devil is in the details. History books notwithstanding, Lincoln's war was not primarily about slavery.  Rather it was much more about the southern states resisting the economic control that the North was attempting to exert over them with the help of Congress. Based on very low raw cotton prices offered in Northern markets, southern cotton could be shipped to Europe, transformed into textiles and returned to America more profitably than it could be sold to the Northerners.  The Northern textile lobby in Congress, though, was able to "fix" that problem by convincing Congress to raise import tariffs on all European textiles. So rather than become more efficient given the price point feedback they were receiving from the free-market system, the Northern textile industry looked to government for the protectionist solution.

Of course this is a somewhat simplistic explanation and there are a lot more data points to consider. In answer to your question, though, both the United States of America and the Confederate States of America would have probably survived just fine. They would have likely established (peacefully!) very close, mutually supportive economic and military relationships much like we have with Canadia.

Lincoln did sign the papers "creating" Idaho (providing we had a federally acceptable state constitution) and he demonstrated the ability to turn a phrase with his Gettysburg Address.

But there's a lot more to not like about him that's much less well known. He was the first president to: suspend the writ of habeas corpus;  hold a sitting congressman incommunicado at a detention site; order federal troops to destroy the offices and printing presses of opposition newspapers; impose an income tax; create a military draft; burn Atlanta; and on and on.

There are many good sources for further study. A very well-researched, fairly short book on this subject is: The Real Lincoln: A New Look at Abraham Lincoln, His Agenda and an Unnecessary War, by Professor Thomas DiLorenzo.

A one-page indictment of Lincoln as "The American Lenin" is available from L. Neil Smith at this link:

http://www.lneilsmith.org/abelenin.html

All of the above would just be interesting discussion points from American history if not for the political coup de grace* he struck that has reverberated through the years even till today. The actions taken by Lincoln to invade another sovereign country, the Confederate States of America, conquer it, and demand at the point of a gun that the newly conquered country join the Union assumed and asserted federal authority never granted to the federal government by the states or the people. Essentially Lincoln stole the individual liberty and sovereignty of every American then living and all their descendants and all immigrants since by ordering federal action in direct violation of both the 9th and 10th Amendments** to the US Constitution.  Other Amendments were violated, but 9 and 10 were effectively destroyed.

Since that turning point in our history, the federal government has not been constrained by Jefferson's "chains of the Constitution" and, instead, has grown continuously regardless of the party in power, using any and every absurd "interpretation" to torture the plain language of the Constitution to justify clearly un-Constitutional actions. Thank you, Mr. Lincoln.

Abraham Lincoln only counts as the greatest president if the question is: Which president, so far, did the most to destroy the Constitution and send America careening down the road to destruction?

I may have to revise my 'worst president' assessment given BO's actions in his first month. By the time the answer is clear, though, it's unlikely there will be a functioning internet with which I could share that new answer with you. Perhaps we could discuss the issue face-to-face in the re-education camp...

Rob Oates

Caldwell, Idaho

* Coup De Grace - pronounced [kuh-de-grah], means "blow of mercy" in French. The term is used to describe the deathblow intended to end the suffering of a mortally wounded creature and is figuratively used to describe the act which brings about the end of some entity.

**IX - The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

X - The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.

 

Perhaps our worst president, so far

Each year about this time (mostly) republicans get misty-eyed over Abraham Lincoln. The president who conquered the Confederate States of America in the bloodiest war, so far, in American history.

In school years ago I learned about the 'Civil War' and how President Lincoln, American Hero / Saviour of the Union / Ender of Slavery / etc., had put down the southern uprising, abolished slavery and restored order to 'our' country.

I now know that a Civil War is a perfect description for a struggle between competing factions for control of a country. Our 'Civil War' wasn't. Not even close.

Also as a child I always had a nagging question that never found a satisfactory answer: If the Confederate States originally helped create the Union and then joined it voluntarily, then how could they legitimately be prevented from voluntarily leaving the Union? My copy of the Constitution has no 'Hotel Kalifornia' clause [with apologies to the Eagles: "...You can check in, but you can never leave..."]. And it just begs the larger question: Are you still "free" if you're forced to "enjoy" your freedom at the risk of being shot if you don't?!

Much of today's federal government involvement in our states, cities and private lives is due directly to Lincoln crushing the State's Rights protections in the Bill of Rights and vastly expanding federal influence.

Lincoln was wrong to attack the Constitution and the Confederacy and, in response to his aggression, he deserved exactly what he got.

There's a lot more to not like about our bloodthirsty Mr. Lincoln, we'll get to that on another occasion.

Rob Oates

The Myth of Libertarians as Social Liberals

From: The Corner on the National Review on line website
[Jonah Goldberg]

John H. - All good points and I agree with them all to one extent or another. But — and you knew there had to be one — it bothers me when conservatives offer the blanket concession that social liberalism and the social aspect of libertarianism are one and the same. You write: "libertarian views overlap with the traditional GOP on economics and the traditional Dems on social issues." I do not dispute that there is much overlap between libertarian views and Democratic views on social issues. But the overlap isn't nearly so transparent as it is between conservatives and libertarians on economic issues.

To say you are an economic conservative is to say you are a libertarian on 95% of the relevant issues. But to say you are a social liberal isn't anything like saying you are a libertarian on 95% of social issues.

Social liberals are often quite aggressive advocates of using state power to impose their preffered versions of "liberty." Most libertarians are disgusted by thought-policing political correctness, by forced "sensitivity" training, by so-called Hate Crimes tribunals and racial and gender quotas. They detest smoking bans, forced volunteerism and the whole panapoly of Nanny State outrages. They may detest religious incursions on government, but they also detest governmental incursions on religion. Most libertarians are localists who believe that the federal government doesn't have an all purpose writ to make everything better. They believe in the autonomy of business and other institutions to do what they want — within obvious limits — even if what they do is bad. For example, most libertarians I know may be in favor of gay marriage, but they're against the state forcing eHarmony to provide services to homosexual customers against their will.

My point here is twofold. First, liber(al)tarians make a terrible mistake when they assume that a few shared values about what constitutes "social goods" or "tolerance" means that libertarians and liberals actually share a common vision of the role of government.

Second, liberals are dishonest or ignorant when they claim that they are particularly libertarian in their outlook when, more often, they are merely strong champions of having the State mirror and impose their value choices.

I don't think we need this bailout

Fore Warning, I am a Libertarian, & I fear any government intervention in the markets, especially since it is my opinion that the present housing bubble was precipitated by poorly constructed & executed Government regulation of Fannie Mae & the lack of ethical over sight at the Loan Originators, the SEC & yes Treasury & the Federal Reserve. However I don't want to see large numbers of people go homeless because a system, Washington lobbyists, help put in place failed all of us.

Taken verbatim from CBNC's FastMoney website
Feb.06 6:46 PM ET
Friday, 6 Feb 2009
Corning Pops On Positive Outlook
Posted By: Lee Brodie

Companies:Corning Inc

Corning [GLW 11.73 0.76 (+6.93%) ], the world's largest maker of liquid-crystal-display glass, said Friday demand is poised to rebound in the second quarter as manufacturers begin to replenish supplies. And it expects overall demand to improve in the second half of the year.

James Flaws, the company's chief financial officer, said in prepared remarks the company is targeting revenue of $5 billion for the full year. Analysts projected $4.7 billion in full-year revenue, according to a Thomson Reuters poll.

CORNING INC
(GLW)
11.73 0.76 (+6.93%%)
NYSE

We found the news to be hopeful if not downright optimistic. So we invited Flaws onto the show (FastMoney).

He told us despite what you might expect in this economy, “a lot of people around the world are still buying flat panel TV’s.” And he adds, “retail demand for TVs and notebooks is stronger than investors had feared.”

And he says demand is picking up right now -- just in the first few weeks of the year. That might seem like crazy talk but Flaws tells us, “we have to call it like we see it.”

Is Corning a buy on the news?

I like the story and I love the optimism, says Guy Adami, but I’m afraid in 3 months he might say we were too optimistic. In other words, don’t rush in.

-----------------------------------------------------------------------------

Guy Adami's response to this report is totally in line with the way this economic crisis is being reported or misreported depending on who you listen to, was one of skepticism. My question, is this rally we had this last week in the market, the one built on better than expected earnings reports, not on the bail out, the one that happened when Walmart among others reports higher earnings than the street said it should have. And the reports this rally is seeing aren't even that good, they're just ahead of the street estimates, of course Walmart published "1/30/2009 2/1/2008 Walmart U.S. made $17.964 $16.937 6.1%" jump during a recession! is it Real?? I mean the data isn't supporting a doom & gloom scenario

For me personally another non-correlate is the 7.6% unemployment levels. In every recession I've had to labor through previously, when the unemployment data was only a fraction of this level, I usually had been unemployed or under employed for at least one quarter by this point. However I work in tech and I've in the last 6 months (at my own discretion), job hoped twice, each time taking a pay increase. After reading Lee Brodie's piece "Bleak Jobs Report; Silver Lining"(http://www.cnbc.com/id/29054113) I was rather incensed that the obvious data observation was not voiced more clearly.
#1 the data shows the worst off people this recession are "in people 25 and older without a college degree. That (this sub-sector's) unemployment level is about 12%," explains Zach Karabell."

#2 However (Karabell stated further) if you have a bachelor's degree the unemployment level is 3.8%."

That's 1.8% above where we as a nation feel confident there is no crisis, but a full 3.8% or 50% below the national unemployment stats and a full 8.2% below Zach Karabell's claim of 12% for non college educated workers statement.

Opinion: I don't think we need this bailout. what has been pared to $800+ billion in this latest bailout bill won't solve the real woes of our economy the data no matter how you twist it is still showing only a secular downturn, namely the people with the least job skills are the ones suffering the most. (thats normal)

"If" Washington really wants to make feel good legislation, then drop this spending nightmare omnibus & concentrate on the real cause of this recession. The housing crisis which by the way has been buried in D.C. by the bank bailouts & the auto maker bailouts. BUT, is the core reason these other two sectors were so economically effected.
After all, the loose change for the last 6 years, came from an over abundance of equity in homes that was commonly taken out in home equity loans to make car & other purchases.
When the bubble burst in the housing sector the money for the automotive buys evaporated. In the financial sector the losses were from repurchasing of these loans from the originators & bundling these now devalued home & equity loans (before they were devalued)at the original 100% marketed value inside of "CDO's" (Collateralized debt obligations (CDO's) a type of asset-backed security (ABS) & structured credit product.) that for metaphorical terms was a box of loans all repackaged into these Collateralized debt obligations & resold in the financial markets (as an investment).
The problem in the financial sector is the loans that made up these CDO's were bought at the estimated 100% original loan value, & a lot of Financial names like Lehman & others that bought CDO's, now own CDO's deflated by some estimates as much as 25% or more equity deflation in their value. This because of the recent devaluation in home prices.
Now as a result, the mark to market rules come into effect stating you now have to restate the new devalued value of the cdo's you own,that is deflated by 25% from the original purchase price so instead of the 100% value, the new value is 75 cents of the original loan value dollar. Hence the losses in the financial sector especially at places like Lehman Brothers who bought big into these CDO's.

So Ends the diatribe!
So begins the point!

"IF" you absolutely have to bail somebody out, bail out the home owners, ditch this Crony bail out nightmare. The market is & of its own accord beginning to right it self. IT JUST TAKES TIME!

The home owners are the ones who need the help, wall street, all hyperbola aside, will make it through this mess. No it won't be the same market place, Lehman is DEAD, Merrill Lynch also DEAD! But it will be OK, with new players, & the many of the same old players all making a market.
However, the core cause for Wall Streets woes is the liquidity issues derived from the housing bubble that turned economically from bubble to black hole when home values to plummeted roughly 25%, so far, and the financial sectors CDO holdings values deflated flatter than a pancake! And Detroit's auto sales bottomed out.
In the end forget Detroit & Wall Street they will be ok!
Just help the Home owners!

Fed Up

Copyright © 2009 The American Conservative

The popular uprising against central banking

By Thomas E. Woods Jr.

The way Ron Paul tells it, his more than 30 years of speaking and writing about money, inflation, and the Federal Reserve System attracted only limited interest outside libertarian and constitutionalist circles. The subject, and Paul as its spokesman, were scarcely to be found in the media, even—or perhaps especially—on the business networks.

But Paul’s 2008 presidential bid changed that. Suddenly the Fed was on the table for discussion for the first time since Congress established it in 1913. With Paul making the evils of central banking and fiat money a theme of his campaign, the issue took on a vigor that few expected. Even calling for the Fed’s outright abolition was longer unheard of on the television news networks.

When Paul first raised the issue in his campaign, he had no idea what he was tapping into. “I didn’t realize people your age knew so much about money and inflation,” he told a rally at the University of Pittsburgh last year. “But it gets the largest applause at college campuses. I figured the first time it happened [at the University of Southern California] it was an accident. … But then at the University of Michigan, they started to burn Federal Reserve Notes.”

To Paul’s surprise, some of his loudest applause lines involved salvos against the Fed. Chants of “End the Fed!” greeted his denunciations of the economic damage the central bank was unleashing. An underappreciated reason for Paul’s fundraising prowess was his outspoken opposition to the Fed, a subject that had long been off limits in American politics. Eventually, a national organization called End the Fed, with local chapters around the country, gave institutional expression to the issue, sponsoring a series of demonstrations against the central bank in 39 cities last November.

This is a new phenomenon on the Right. The libertarian and conservative think tanks that liberally invoke the names of Austrian School economists like F.A. Hayek have tended to ignore these men’s opposition to central banking, a position too politically incorrect even for those who pride themselves on their willingness to defend unpopular positions. The Ludwig von Mises Institute and the Foundation for Economic Education have been among the handful of exceptions to this rule, providing the scholarly infrastructure to convert what was sometimes an inchoate unease about the Fed among Paul supporters into well-honed arguments.

Unlike in the past, moreover, commentators with high media profiles now defend this view of money and central banking. Peter Schiff, president of Euro Pacific Capital, may be the best known of these. Schiff foretold the crisis before it happened, including the bankruptcy of Fannie Mae and Freddie Mac. His books Crash Proof and The Little Book of Bull Moves in Bear Markets, both of which have sold well, take an Austrian approach to current conditions. A grassroots movement is even trying to draft Schiff, a resident of Connecticut, to run for U.S. Senate against Chris Dodd in 2010.

Schiff isn’t alone. Famed investor Jim Rogers calls for the abolition of the Fed when he’s a guest on business networks. Indeed, he predicts the Fed’s demise sometime in the next ten years. Another Austrian analyst all over television and the print media is James Grant, editor of Grant’s Interest Rate Observer. Similarly high-profile is Mish Shedlock, whose Global Economic Trend Analysis blog takes a reliably anti-Fed position.

It’s not surprising that arguments against the Fed are finally resonating. Since the crisis began in 2007, Fed Chair Ben Bernanke has engaged in all manner of emergency activity, much of it unprecedented and of such dubious legality that even some of those who may reject or be unfamiliar with arguments against the Fed have begun to wonder about the unaccountable power this institution wields over the economy.

For example, John Hussman of Hussman Funds accused the Fed of going beyond its legal boundaries when it offered a $30 billion “non-recourse loan” to J.P. Morgan, which was secured by the worst of Bear Stearns’s mortgage debt. The Fed is supposed to provide liquidity to the banking system or shore up the solvency of a non-bank institution. This loan was neither. J.P. Morgan was in no financial trouble: it was “effectively offered a subsidy by the Fed at public expense.”

Shedlock is even more blunt: “The Fed simply does not care whether its actions are illegal or not. The Fed is operating under the principle that it’s easier to get forgiveness than permission. And forgiveness is just another means to the desired power grab it is seeking.”

The most significant argument against the Fed, though, is not political but economic. The Austrian view is that a central bank is not merely unnecessary but harmful. There is no need for a monopoly institution, by means of artificial money creation, to prevent the natural and healthy phenomenon of falling prices. There is likewise no need for a “lender of last resort” for the banking industry any more than for the personal computer industry or the shellfish industry. As long as the banking system is run on sound principles—an unlikely outcome, while there is a central bank with powers to prop up unsound banks—there is no reason for the bankruptcy of one or two major banks to provoke a systemic crisis, as can happen under the Fed system.

Then there are the problems that stem from artificial money creation. Not only do people on fixed incomes suffer from the rising prices that increases in the money supply bring about, but the process of money creation inevitably enriches politically well-connected groups at the expense of everyone else. The powerful are in a position to receive the newly created money first and spend it before prices have commensurately risen. Still other problems are discussed in the major Austrian treatments of money, including Mises’s Human Action and Murray Rothbard’s The Case Against the Fed.

Under a commodity standard, people could save for the future by accumulating gold and silver coins. The coins’ value appreciated over time because of their natural increase in purchasing power, as the relatively slow increase in the production of precious metals was outpaced by the much faster increase in the production of other goods and services. Today, only a fool would try to save for the future by piling up dollar bills. Everyone is forced to enter the financial markets, which are risky even for knowledgeable investors, in order to prevent the value of his retirement savings from vanishing before his eyes.

Austrian business cycle theory, which Paul has made a point of explaining, blames the central bank for the boom-bust cycle. (And yes, it can also account for financial panics that occurred before the Fed was established.) Under fiat money, currency without commodity backing, the central bank can artificially lower interest rates by increasing the supply of money—and thus the funds banks have available to lend—through the banking system. This is supposed to stimulate the economy. What it actually does is mislead investors into embarking on investments that the artificially low rates seem to validate but that cannot be sustained under existing economic conditions. Unprofitable investments are made to seem profitable, and over time the result is the squandering of untold resources in lines of investment that should never have been begun.

If lower interest rates are the result of increased saving by the public, those greater saved resources provide the means with which to see the additional investment through to completion. But the situation is very different when lower interest rates result from the Fed’s creation of new money out of thin air. In that case, lower rates do not reflect an increase in the pool of savings from which investors can draw. Fed tinkering, in other words, does not increase the real stuff in the economy. The additional investment that the lower rates encourage therefore leads the economy down a path that is not sustainable.

That is how the Austrians knew the present bust was coming. The preceding boom had been based not on real factors but on bubble conditions created by the Fed’s artificial credit expansion. It had to end in a bust, as Mises and Hayek said. That’s also what they said in 1928 and 1929, as respectable opinion hastened to assure everyone that business cycles were a thing of the past.

To be sure, while the Fed is slowly but surely becoming an issue for discussion in politics and the media, as yet only a small segment of the population opposes—or indeed knows much about—the central bank. But because this issue is one about which most Americans are lethargic or uninformed, that small and growing segment can influence public life on a scale out of proportion to its numbers. And the presence of this once-excluded point of view makes it harder for the regime to pretend that economic crises have no cause, that no person or institution is to blame for them, and that the federal government and its central bank have the solutions.

Paul is said to be finishing a book on the Federal Reserve for 2009 release. If it should become a bestseller, the profile of the anti-Fed campaign will be raised still higher.

The End the Fed movement likewise is pressing forward. Organizer Steven Vincent says the group is coordinating a series of rallies in 40 cities on April 25, to be followed by an event at the National Press Club at which they will present the fruits of their nationwide petition campaign in support of Congressman Paul’s Federal Reserve Board Abolition Act.

As the economic crisis continues to worsen, it will become harder and harder to portray old-school Keynesianism as “change,” and the potential audience for the Austrian message will only grow. That, one hopes, is a silver lining to the disaster the Fed has unleashed.
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Thomas E. Woods Jr. is the author of nine books, most recently Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse.

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925 billion dollar bailout

Ok
Everybody's screaming about it, now its time to do something about it.
What is 'IT' , well, it's the 925 billion dollar bailout. Thats right, up from the 810 billion last week when it passed the House, thanks to additional larding up by the Senate!
I'm willing to bet all most all the people I'm writing to will, when the subject arises, bloviate on how much they don't like the bailout!
BUT HAVE YOU ACTUALLY WRITTEN YOU CONGRESSMAN ABOUT IT????
Well???
Here's your chance!, just click the link below, sign up & let them have it!

Congress won't know what your thinking until you tell them!

Tell them enough, to kick this bloated turkey of a bill to the curb & let the economy recover of its own accord, & to quit meddling by saddling you & me with a pointless debt of outrageous proportions!
Do it Now!

http://www.downsizedc.org/

Stop Digging

While I don't agree with everything from the Heritage Foundation, I do agree with this assessment.
Taken from The Heritage Foundation: Opening Bell: FRIDAY, FEB. 6, 2009

Another day, another poll showing public support for President Barack Obama's Trillion Dollar Debt Plan sinking fast. Trying to turn these numbers around, Obama went on the offensive yesterday delivering some red meat to House Democrats at their posh Resort and Spa retreat in Williamsburg, Virginia. Defending his plan, Obama told Democrats: "[We] are not going to get relief by turning back to the same policies that for the last eight years doubled the national debt and threw our economy into a tailspin. ... I found this national debt, doubled, wrapped in a big bow waiting for me as I stepped into the Oval Office. ... What do you think a stimulus is? It’s spending — that's the whole point! Seriously."

Seriously, where has Obama been the last eight years? What does he think got us into this mess? Where does he think those deficits came from? Here are the facts. Before President Bush took office, the federal government took in $2 trillion in revenue in 2000. In 2009, the federal government is expected to take in $2.4 trillion. After eight years under President Bush, the federal government is taking in $400 billion more a year in revenue. So why did Congressional Budget Office project a $1.4 trillion deficit for the 2009 budget? Massive spending increases. As McClatchy reports "George W. Bush, despite all his recent bravado about being an apostle of small government and budget-slashing, is the biggest spending president since Lyndon B. Johnson. In fact, he's arguably an even bigger spender than LBJ." McClatchy goes on to detail Bush's spending binge including an 18% increase in education spending, a doubling of agriculture spending, the 2003 Medicare expansion which was the "biggest single expansion in the programs history", and the $295 billion 2005 infrastructure bill.

So to recap, in 2000 the federal government spent just $1.8 trillion. Now the CBO estimates that the feds will spend almost double that, $3.5 trillion, in 2009 (and that does not include Obama's Trillion Dollar Debt Plan). Combining the increased $400 billion in revenue with the $1.7 trillion increase in spending, we see that the mountains of debt Obama is whining about inheriting all came from massive increases in federal spending. It was borrowing and spending that got us into this mess. Obama's Trillion Dollar Debt Plan is not a 'change' from Bush, it is Bushonomics on steroids.

And the $816 billion price tag is a completely dishonest scoring of the plan's real size. This is because the stimulus bill pretends that most of its welfare benefit increases will lapse after two years. In fact, both Congress and President Obama intend for most of these increases to become permanent. The notion that Congress intends to temporarily increase Pell grants and Earned Income Tax Credit benefit levels for just two years and then let benefits fall back to their original status is out of touch with Washington reality. Any Congressman who, two years from now, suggests that the new welfare spending be allowed to lapse to pre-stimulus levels would be pilloried for slashing welfare.

According to a new study by Heritage senior research fellow Robert Rector, once the hidden welfare spending in the bill is counted, the total ten year fiscal burden (added to the national debt) will not be $816 billion, as claimed, but $1.34 trillion. Where is Obama going to find all the money to pay for this spending? Right now Treasury securities are selling at high prices and with low yields. But how long will credit be cheap? Will it still be when the Treasury is scrounging around in the international credit markets six months or a year from now? China and Japan account for almost 65% of total Treasury securities held by foreign owners. But their economies are also slowing. If they even start slowing their appetite for U.S. debt, a drop in world market demand for Treasurys could drive borrowing costs upward, and there could be a ballooning of the interest cost line in the budget that will worsen an already frightening outlook.

Last night Obama told Democrats, "If you’re headed for a cliff, you have to change direction." That's a decent analogy, but the problem is his Trillion Dollar Debt Plan is not a change in direction. It is a foot on the accelerator. Instead, the Senators voting today should take another saying to heart: "When you find yourself in a hole, stop digging."