Author Archives: Lila

Et Tu, Ron Paul?

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Victor Aguilar at Axiomatic Theory of Economics voices a silent worry I’ve been having recently (apologies if this upsets libertarians and Paul fans, among whom I still count myself):

Note: I don’t know who Aguilar is, have never heard of him, don’t endorse any of his views, since I don’t know them, and only post this because he seems to echo a recent fear of mine about the promotion of Zarlenga and Zarlenga-esque ideas in all sorts of venues, including what I always thought of as the libertarian Daily Bell.

“Stephen Zarlenga writes:

Infrastructure repair would provide quality employment throughout the nation.  There is a pretense that government must either borrow or tax to get the money for such projects.  But it is a well enough known, that the government can directly create the money needed and spend it into circulation for such projects, without inflationary results.

First, incorporate the Federal Reserve System into the U.S. Treasury.

Second, halt the banks privilege to create money by ending the fractional reserve system.

Third, spend new money into circulation on infrastructure, including education and healthcare.

Ron Paul (2009, pp. 204-205) writes:

While a gold standard would be a wonderful thing, we shouldn’t wait for one before we end the Fed…  An end to the money-creating power and a transfer of remaining oversight authority from the Fed to the Treasury would be marvelous steps in the right direction.

Aguilar:

So we see that Ron Paul’s proposal is essentially the same as that of Stephen Zarlenga and his man in Congress, Dennis Kucinich. Like Paul, Zarlenga also believes that a gold standard is a wonderful thing, provided that it does not have to actually be implemented.  Since Paul has no concrete plans for implementing a gold standard, he and Zarlenga are united in their desire to incorporate the Federal Reserve System into the U.S. Treasury as quickly as possible.

The only difference is that, once the Federal Reserve System is incorporated into the U.S. Treasury, Paul vaguely hopes that Timothy Geithner will freeze the money stock while Zarlenga hopes that Geithner will spend new money into circulation on infrastructure.  If I had to guess, I would say that Geithner, once given this enormous power, is more likely to spend the money, though not necessarily on infrastructure, than to freeze the money stock.

Ron Paul (2009, 203) writes,

“In an ideal world, the Fed would be abolished forthwith and the money stock frozen in place.”

Aguilar:

Idyllic is the right word.  There is no reason for Paul to think that Geithner will do this for him.  The Secretary of the Treasury is appointed by the President and the President panders to the voters.  And they certainly do not want the stock of money frozen.  If infrastructure is the new word for pork, then they want nothing more than to get some.

“If there’s anything worse than a secret Federal Reserve, it’s Congress controlling it,” says Sen. Jim DeMint, Republican of South Carolina.  I agree.  I dislike the United States having a central bank (I advocate free banking) but, given the existence of the Fed, I certainly would not put it in the hands of a bunch of squirrelly politicians.

Richard C. Cook writes:

I worked with Steve [Zarlenga] on his first draft of the American Monetary Act. The time came when Steve and I began to meet with Congressman Dennis Kucinich, briefing him and others in Washington on monetary ideas.

So much has happened since then. So many more people have become aware of the evils of the debt-based monetary system. We have seen Congressman Ron Paul ignite a national wave of revulsion against the Federal Reserve System. There is now even hope that the American Monetary Act might be introduced on the floor of Congress.”

Aguilar:

As for eliminating the Fed and giving the Treasury Department free rein to print money, I have already examined Zarlenga’s proposal in my 2008 paper and I specifically spoke of Cook here.  There is no need to duplicate that material here just because Ron Paul has joined them….”

My Comment:

What this tells me is that there can be collaborations with the left on civil liberties and foreign policy, but not on economic freedom, which, for me, actually precedes political freedom.

My money represents my work and my time…and my work and my time represent my life. Through them my engagement in the world unfolds. They are how I come to understand the world in the most real way.

Not in the superficial and  arrogant way that one “understands” the world only to meddle in it, as someone from the political class would. To them, the world is a black-box they engineer.

Hands off my world. Hand off my money. Hands off my work. Hands off my life.

I support Ron Paul, because I believe him to stand for these things and to fight for these things. If, ultimately ,for some reason can’t…. then for me at least there is no need to endorse any one else’s platform. It would be better to forget politics, since obviously there’s no one else who’s even broaching these issues. It’s that simple.

If Aguilar turns out to be right about this, then, regretfully, I’ll have to become a “mere” libertarian. With a small ‘l’. I’d sooner look to an alliance of counter-parties to the US government to teach the banking mafia the hard lesson they need in economics and justice than follow even libertarians blindly down a dead-end.

Polish President Lech Kaczynski Killed In Plane Crash

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This link doesn’t work after updating my blog. Will replace it.

[Note: The video is from Russia Today, which some claim contains Russian disinformation].

Update: Russian investigators say that there was nothing wrong with the landing instruments on the plane and that it was pilot error that caused the crash. Also, it seems that the number of bodies found is 96.

Update 8:

At Asia Times, M. K. Bhadrakumar notes that as the so-called “color” revolutions in Central Asia (Ukraine, Georgia and Kyrgyzstan) have all gradually become undone, Kyrgyzstan has become destabilized, leaving the whole region from Af-Pak to Kyrgyzstan, on the very borders of China, volatile.

Point two. Like it or not, the US needs cooperation with Russia to help it out here before the excursion in Afghanistan is concluded, say, in 2011. It also needs help, as NATO expands into Central Asia, to contain both China and India, and (possibly) play them off against each other.

A strongly anti-Russian, reactionary Pole, like Kaczynski, might have been a very disturbing factor, a thorn also in the side of the much more tractable Polish PM, Donald Tusk.

Point three.

Tusk is on more amicable terms both with the Obama administration and with Russian PM Putin, with whom he met separately at Katyn last week. Tusk is also more Euro-friendly.

Point four. With Iran cementing natural gas deals not only with Pakistan, but with China and India (over US objections), and with a Euroskeptic Polish president (Kaczynski) making unexpected overtures to Russia, America’s power/leverage vis-a-vis Russia might suddenly seem less certain on both fronts, eastern and western, especially with the Russian natural gas pipeline in the Baltic, an initiative that tends to increase Russian influence in Europe.

Point five. The recent discovery of huge reserves of natural gas in Poland has foreign corporations scrambling for drilling rights there.  That makes Poland a much bigger player in the region, especially in its ability to help or hurt a European recovery. Take that into account along with the recent devaluation of the Zloty, which is regarded as helpful to Polish exporters and the economy, but bad for Europe..

Update 7:

On April 8 Obama signed a new arms reduction treaty with Dmitri Medvedev (President of Russia) and met with East European heads of state, including Donald Tusk (Polish PM)  to discuss the future of NATO and to allay fears Eastern Europe might have over the US-Russia deal.

In December 2009 Obama asked for stronger Polish support in Afghanistan

Update 6:

The more I think about it, the more this crash looks odd to me.

Digging for more information, I find the following:

Donald Tusk, the PM, was much less antagonistic to Russia and much more supportive of free market policies and integration of the country into the EU than Kaczynski.

From wiki:

“After being elected prime minister, relations between Tusk and President Lech Kaczynski were often acrimonious due to different political ideologies and the constitutional role of the
presidency. Using presidential veto powers, Kaczynski blocked legislation drafted by the Tusk government, including pension reform, agricultural and urban zoning plans, and restructuring state television.[16]

Tusk and Kaczynski repeatedly sparred over issues ranging from European integration, homosexuality, foreign policy, to constitutional issues, with Tusk taking more socially liberal opinions than the conservative Kaczynski.

In his premiership, Tusk has proposed various reforms to the Polish constitution. In 2009, Tusk proposed changes to the power of the presidency, by abolishing the presidential veto”

It’s wholly plausible that as the second and worse leg of the economic crisis unfolds, and as sovereign default threatens several countries in Europe, a less prickly person as president of Poland might have seemed an attractive option to NATO.

Of course, at this point, all this is no more than speculation…

Update 5:

Former Czech president, Vaclav Havel comments on mounting speculation over the bizarre crash:

‘That speculation [that it was sabotage and not an accident] will influence the elections,’ he said, predicting some Poles would see an analogy to the 1943 plane-crash death of Wladyslaw Sikorski, Poland’s premier-in-exile. Some believe that Sikorski’s plane was deliberately brought down.

Update 4:

Eyewitness accounts says no explosion:

“A witness named himself Roman said he was washing his car in the village near the airport, when he saw a plane crashed down in the woods. “It was foggy here at that time, I couldn’t see it very clearly. I didn’t hear any explosion, but saw a lot of smoke. The plane flew forward a distance after one of the wings had been knocked off by the trees. Then the other wing also broke down, and the plane crashed in the woods 300 to 400 meters away from the airport, ” Roman recalled. A Xinhua reporter at the site saw pieces of the plane wreckage scattering in the sealed-off woods, where four rescuers were carrying out a body from the wreckage.”

 

One police officer pointed at a topless white birch tree about 300 meter away and told Xinhua that it was the first tree hit by the plane. Behind it, a number of treetops were cut off straight in the accident.”

Another eyewitness account says there was an explosion (Lila: this contradicts the other account, but that could be because the witness was closer to the crash).

The explosion was apparently so powerful that pieces were scattered near the outskirts of the town at a distance of a mile.

The plane is said to have crashed about half a mile on the runway. Some sections of the plane burned for more than an hour.

Update 3:

Some background on energy rivalry between Russia and Poland, which as focused on natural gas reserves/pipe line deals that had recently been cemented.

NY Times (April 11):

“Without consulting the Poles, Mr. Schroder (former German chancellor) had supported a major Russian-German gas pipeline, called Nord Stream, now being built under the Baltic Sea. For the first time, Russia could send gas directly to Western Europe, reducing its dependence on Poland, Belarus and the Baltic States as transit countries for sending Russian gas to its lucrative European markets.When the deal was struck between Mr. Schroder and then-President Vladmir Putin in September 2005, some Polish politicians said it was the beginning of a new Russian-German alliance.” (Lila: This would bring back to many Poles the history of German-Russian collusion at Gdansk to divide Poland)

April 5, UK Times:

“American technology to produce shale gas is unleashing a scramble for drilling rights in Poland, where experts believe vast reserves of unconventional gas exist that could help to weaken Russia’s grip on Europe’s energy supplies.

(Lila: Russia supplied 33% of European oil in 2009 and cut supplies to Ukraine during a fight over prices)

ConocoPhillips is poised to launch Poland’s first shale gas drilling programme next month near Gdansk on the Baltic coast. Two other American oil groups — Exxon-Mobil and Marathon — and Talisman Energy, of Canada, are set to follow. The technology has transformed America’s energy industry and driven gas prices to their lowest level in years.”

Update 2:

WSJ April 9, 2010:

“In one of those rare moments of unity, the National Bank of Poland and the Polish government agreed on the need to weaken the Polish zloty, which over recent weeks has rebounded close to its pre-crisis strength. The currency’s strength is now seen a possible threat to economic recovery. After several verbal interventions over the past few days, the central bank intervened with real money Friday, for the first time in more than a decade.”

Update 1 (the following is paraphrased from a Polish newspaper that I translated with Google translator):

Smolensk’s Severny airport was, until October 15, the 103rd airport Military Transport Aviation Regiment. And, half an hour before the presidential plane landed, a military plane,  Ilyushin Il-76, from Moscow, which was carrying a branch of the Federal Protection Service officers (the equivalent of BOR-u), tried to land. The pilot, originally from Smolensk was thoroughly familiar with local conditions and tried to land twice, before returning to Moscow. A Pole living in a hotel near the site says that the left wing hit a tree and the plane fell to the ground and disintegrated, immediately catching fire. Emergency services on the spot appeared after several minutes.

[Lila: Now this part sounds a bit odd to me, although it could just be confusion at the scene of an accident].

The Russians stated that it made no sense to send ambulances to the site, since everyone was dead. The crash occurred in the forest, and the Russian services couldn’t enter the disaster area because of the mud at the site.

[Lila: How could they be so sure everyone was dead, especially, when many more bodies were recovered than were on the flight list (132 bodies versus 89 on the list)?]

ORIGINAL BLOG POST

Accident, Sabotage, or False Flag?

MSNBC reports that Polish President (from 2005-2010) Lech Kaczynski (1949-2010) and top Polish military and civilian leaders, historians, and activists were killed when the presidential plane crashed on landing in thick fog in Smolensk in western Russia on Saturday, killing 130, according to this report.

(Other reports have placed the death toll at 96, 97 88 (the number on the passenger list according to the Poles), 132, and 135).

Communication with the plane was lost at 10:50 local time (0656 GMT).

Pravda.ru says the plane came down at 11 AM local time about 1.5 km from the airport and 225 km from Moscow.

The Governor of Smolensk told official media there were no survivors of the crash and that the plane had clipped the top of the trees, crashed, and then broken into pieces.

Preliminary data collected show that the plane hit the treetops while approaching the airport in bad visibility,  says an official with the Russian general prosecutor’s office, according to ITAR-Tass news agency, (reported by CBS).

A spokesman for the Smolensk regional government said publicly that air traffic controllers there had advised the pilot not to land in the thick fog at the military airport and to divert to Moscow or to Minsk (the capital of Belarus) instead.

BBC reported that Russian PM Putin visited the scene of the crash and said he would personally supervise the investigation. He also said the investigation would be a joint Polish-Russian investigation. The Russian emergency ministers said both of the plane’s information recorders (black boxes) had been found and would be examined.

The Polish group was on its way to the 70th anniversary of the massacre at Katyn forest near Smolensk, when thousands of Polish officers (including some who were also Jewish) were killed by the Soviet secret police, the NKVD, in 1940.

My Comment 2:

The significance of Katyn was that it was blamed on the Nazis by the Soviets, and, that despite this betrayal of its own ally, Poland, the US continued to treat the Soviets preferentially and cover-up for it.

Furthermore, at the end of WW II, the western powers again betrayed Poland – over whom the war was supposed to have been fought –  by allowing it remain under the Soviet sphere of influence.

So, Katyn is not simply about Poland and Russia, as nation states, it’s also, equally, about Poland’s betrayal by the US and the Allies.

And it’s about the Polish Catholic suspicion of the atheistic Bolsheviks who primarily carried out the massacres ….

Religion, ethnicity, and nationalism all converge in this profound national trauma.

It’s important to remember that President Roosevelt officially rejected the conclusion of his own research team, and stated he was convinced that the Nazis were culpable. That is, he sided with Stalin against the Poles.  And he actually ordered that the report that he himself had commissioned be suppressed. It was only more recently that the true history of the massacre of the flower of Poland by the Soviet NKVD has become common knowledge. This secret history is vital to understanding the  symbolism involved in this crash.

This is not just about Poland and Russia. It is about the anti-Communist and anti-Nazi feelings of Catholics in Poland and their betrayal by the West.

Smolensk is only 11/2 hours away from Warsaw and the symbolism of the crash has struck many people, including former President Kwasniewski, who called Katyn “cursed.”

Polish Prime Minister Donald Tusk called it the most tragic event of Poland’s post-World War II history,  according to BBC.

My Comment 1:

1. It’s very strange that so many of the top brass would be on a single flight, especially on a plane as known for being unreliable and dangerous as the Soviet built Tupolev-154, which has suffered 16 crashes since 1994 (AP).

According to the Aviation Safety Network, there have been 66 crashes involving Tu-154 in the last 40 years, 6 in the last 5 years alone, and Aeroflot has withdrawn its Tu-154 fleet from service, although the TU-154 used to be the workhorse of the Soviets and the eastern bloc in the 1970s and 1980s. The Polish government had been thinking of replacing the planes for flights carrying government officials, but didn’t have the money for it.

Wouldn’t high level personnel have normally been booked on separate flights to avoid difficulties in the military/government in case of an accident? This particular plane was also 26 years old, had been overhauled recently at a Russian aviation facility, and had only few hours on it.

However, the Russian facility Aviakor has said that the plane was in good condition for the flight.

Another aviation expert also told Al-Jazeera that the TU-154 can operate in extreme weather conditions and can land on an unpaved airstrip. He believes the crash was a “fluke”.

2. How is it that the information that the president’s wife had an uncle who was killed at Katyn was so widely and uniformly known that it appeared in a majority of global reports about the crash?

(Katyn is a national symbol of WW II and the anti-Communist struggle and stirs deep nationalistic feelings in Poland).

Another oddity in the media reports was the varying numbers given for the dead, when according to early reports, the Russians were able to collect all the bodies, and had verified that all on board had died. In that case, why such different numbers?

Also, how is it that the original flight list was for only 89 people (one didn’t show up)? How did some 30 plus extra passengers apparently fly…or is this a reference to something else?

3. What a bizarre coincidence that several people whose death would be calculated to arouse nationalist remembrance of the past (Katyn, communist crimes, Solidarity), should all die on a trip to Katyn, along with significant members of the political and military establishment? The people who died were all people significant to Poland’s anti-communist history. Kaczynski and his twin brother, Soviet era child actors, both played important roles in Polish politics.

“The twins (Kaczynski and his brother) pushed unashamedly for conservative values and a righting of historical wrongs with 20th century foes Russia and Germany in ways that ruffled feathers and often seemed out of step with the times,” says the WSJ.

The BBC noted that Kaczynski was a right-wing Catholic, who opposed rapid free-market reforms and favored retaining social welfare programs:

“He had advocated a right-wing Catholic agenda, opposed rapid free-market reforms and favoured retaining social welfare programmes.”

The LA Times noted his campaign against liberal sexual mores:

“At home, Kaczynzki, who was mayor of Warsaw before becoming president, sought to expose former communists and cleanse what he and his brother regarded as pervasive liberalism. He took a hard line against homosexuality and often assailed the media over salacious magazines and TV shows. His critics regarded him as a politically dangerous mix of Polish nationalism and religious conservatism.”

CBS adds this:

“The president was a conservative and a lifelong skeptic of Russia with many detractors at home and abroad.”

Consider also this piece of symbolism, among many other coincidences:

“Rossiya-24 showed footage from the crash site, with pieces of the plane scattered widely amid leafless trees and small fires burning in woods shrouded with fog. A tail fin with the red and white national colors of Poland stuck up from the debris.”(BBC)

4. In case this proves not to be an accident, Poles might be tempted  look to the FSB (and Putin) as the possible culprit, since the plane was recently overhauled in Russia. Yet, Russia is unlikely to have downed a Polish plane with top military and civilian commanders on its own territory. That would be a political and military blunder almost unthinkable.

5. Exploring another angle, it’s been known for a while now that the CIA has a presence in Eastern Europe, as also suggested in a piece I wrote in 2005 on CIA black sites there.

Poland is a staunch ally of the US in other areas as well, thus provoking some dislike in Russia:

“The European Union member nation of 38 million people sent troops to the U.S.-led war in Iraq and recently boosted its contingent in Afghanistan to some 2,600 soldiers.

U.S. Patriot missiles are expected to be deployed in Poland this year. That was a Polish condition for a 2008 deal — backed by both Kaczynski and Tusk — to host long-range missile defense interceptors. The deal, which was struck by the Bush administration, angered Russia and was later reconfigured under President Barack Obama’s administration. Under the Obama plan, Poland would host a different type of missile defense interceptors as part of a more mobile system and at a later date, probably not until 2018.” (CNN)

Russians also distrusted his advocacy of NATO membership for the former Soviet states of Ukraine and Georgia and his support of Georgian President Mikhael Saakashvili during the  2008 Russo-Georgian war (CS Monitor).

6. However, in recent times, relations with Russia had thawed:

“Polish-Russian relations had been improving of late after being poisoned for decades over the Katyn massacre of some 22,000 Polish officers.”(Stanford Advocate, April 10, 2010).

Last year in September, Russian PM Putin met Kaczynski in Gdansk (Danzig) on the anniversary of the Hitler’s invasion of Poland and had made partial amends for the USSR’s role in breaking up Poland under the Molotov-Ribbentrop Pact (the Non-Aggression Treaty between Germany and the Soviet Union in 1939).

and this:

“Russia never has formally apologized for the murders but Putin’s decision to attend a memorial ceremony earlier this week in the forest was seen as a gesture of goodwill toward reconciliation. Kaczynski wasn’t invited to that event because Putin, as prime minister, had invited his Polish counterpart, Tusk.” (CBS) http://wcco.com/national/polish.Kaczynski.dead.2.1623978.html)

6. Exploring this from another angle, could this tragedy have anything to do with the another strange incident in Eastern Europe a few weeks ago?

Two Gulf Stream V type jets equipped with sophisticated intelligence equipment violated Hungarian laws by flying low into Hungary without landing and then flew 1300 miles over Turkey, Hungary and Romania and disappeared, all around the same time a Syrian-Hungarian man implicated in money-laundering was mysteriously killed in Budapest, in what some have suggested was a Mossad hit.  That incidence should be read in light of the recent expulsion of the Israeli ambassador from the UK, and the threat of diplomatic sanctions against Israel in Australia, following the revelation that the Mossad  had forged multiple passports from different countries in carrying out the killing of a Hamas operative in Dubai, earlier this year.

But Kaczynski was on  very good terms with the Jewish community in Poland, once almost wiped out by the Holocaust. In 2008, he became the first head of state to attend service at a synagogue in Poland, and before that, as mayor of Warsaw, he donated land for a projected museum on Jewish history. Israel and the Jewish community expressed deep shock at the deaths and  called Kaczynski a great leader.

That would seem to make him an unlikely target for an Israeli false-flag operation.

Update: AP has a list of the top officials and political significant people who died in the crash. Here are some of them:

Lech Kaczynski (President), Maria Kaczynska (his wife), Andrzej Kremer (deputy foreign minister and chief of staff), General Franciszek Gagor (army chief of staff since 2006, Polish rep at NATO, 2004-06), General Andrzej Blasik (head of airforce, trained in Montgomery, Alabama in 2005), (Vice-Admiral Andrzej Karweta, Navy Chief since 2009, served as Supreme Allied Command Atlantic, Norfolk, Virginia, 2002-05), Gen. Tadeusz Buk (land forces commander, 2009, commander of Polish troop in Iraq since 2007), Slawomir Skrzypek (president of the National Bank since 2007, close friend of the president), Alexander Szczyglo, head of National Security Office, former defense minister, Jerzy Szmajdzinski (opposition candidate for president, deputy parliamentary speaker, defense minister during Iraq war), Ryszard Kaczorowski (last president in exile, who passed on presidency to first democratic president Lech Walesa), Janusz Kurtyka (head of the state-run National Remembrance Institute, commemorating communist crimes), Anna Walentynowicz (Solidarity activist whose firing sparked the movement which led to Polish freedom), Piotr Nurowski (head of Poland’s Olympic Committee), Krystyna Bochenek (deputy parliamentary speaker)

Lew Rockwell On Radio Free Market – Saturday, April 10, 1 PM CT

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TUNE IN TO THE WEB’S MOST POPULAR POLITICAL COMMENTATOR: LEW ROCKWELL

Saturday, April 10th, 2010 at 1PM CT

** LEW ROCKWELL ** – An Exclusive Interview and Wide Ranging Conversation. Lew is the Founder and Chairman of the Ludwig von Mises Institute (www.mises.org) and Editor of LewRockwell.com – two websites having among the highest Internet Traffic in the entire world. We will the Disastrous Effects of Government Intervention on Jobs, Businesses and How to Quickly Cure Unemployment.

LEW, THE THINKER-ACTIVIST

Lew was, in the 1960’s, an editor for the books of Ludwig von Mises and he was Ron Paul’s Chief of Staff in the 1970’s.

We will talk about The Future of Liberty in America and The Practical Steps Each Person Can Take To End the Spread of Tyranny. We are very honored to have Lew on our show and know that everyone will find him an extraordinary teacher from whom to learn.

Hosted by Michael McKay along with Special Commentator, Ms. Zoe Russell.

Refuting Kucinich’s Funny Money Platform

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Kaj Grussner, a tax-adviser in Finland, has a piece at the Mises blog that responds to Stephen Zarlenga. Zarlenga is the director of the American Monetary Institute and the author of “The Lost Science of Money.” He had previously criticized the Austrian position at Gnostic Media.

The critique is important because Zarlenga’s ideas have been adopted by Dennis Kucinich and they may very well bear fruit in policies (the American Monetary Act) that could make things worse (if you can imagine that). Here’s Grussner:

“Zarlenga criticizes economists for many things. One of these is that economists have taken morality out of the science of economics. He also says that economists have tried to hide this exclusion of morality, because if people were told about this atrocity they would be outraged.

Of course, morality has no place in the science of economics.

[Lila: I see where Grussner is coming from, but actually he’s mistaken, mainly because economics isn’t a science, but also for other reasons].

Science is, by its very nature, value-free.

[Lila: Actually, this too isn’t quite right. Science has a different set of values, but I take his point].

When you try to explain why action A had consequence B, you should examine theory and fact. It is only when you start too advocate certain actions or programs, such as the 100-percent-reserve solution, that morality comes into play. Let us therefore examine the moral aspects of Zarlenga’s monetary reform.

From the very outset, printing dollars out of thin air, declaring them legal tender, and purchasing goods and services with them is tantamount to theft. The printer acquires property without giving anything of real value in return. After all, the money is merely ink on paper with no value of its own except what it derives from the violent force of the government.

In addition, it is always those who get the new money first who benefit the most. In this instance, it would be the government. But those who are second in line will benefit too, while the new money still has most of its value. The recipients of the new money can turn around and again acquire something for nothing. The amount that can be acquired diminishes over time, so those who get the money last are the ones who pay for the early recipients’ gains.

Zarlenga explicitly mentions healthcare and education as being areas of government spending, as this would benefit the masses, who otherwise couldn’t afford such services. What he fails to understand is that it isn’t the students and patients who benefit, but the hospitals and universities. It is the medical professionals and academics who are the true recipients of the money. It is to them that the money is paid for the services they provide, and the constant influx of new money into these sectors will of course raise prices significantly over time.

[Lila: All this is true, and, in addition, cheapening will actually strengthen big business, because it is big business that takes on the most debt. This is an act that will win the approval of the underclass that doesn’t pay taxes; debtors, who get to see their debts diluted;  the governing class and all its clients, who live on public money; and the corporate class that pays taxes, but extracts much more back from the government in the form of subsidies and the use of infrastructure].

Every bout of new money will draw value from the existing amount of money, which means that after the initial theft of property by the government and its preferred interest groups, the debasement of the currency will continue at an ever-increasing rate; the more devalued the dollar gets every year, the more dollars must be printed every year to pay for the same things. For people far away from the printing press, this means that the value of their savings and income is transferred to the money printers and first recipients of the new money, much as it is today.

Another obvious problem with having the government print money is that it creates rent-seeking behavior. With fresh supplies of money coming from the government at an increasing rate, it becomes more and more reasonable for private corporations to lobby for a part of the public-spending cake than to appeal to consumers. In the long run, this means that an ever-increasing part of the private sector will become dependent on the influx of new government money.

From a moral point of view, it makes no difference who counterfeits the money and acquires property for nothing. It is still fraud and theft.
Conclusion

There is no point in making the Austrian case for commodity money here. There are many easily read books that do that. The purpose of this article is to explain that no matter how bad a system is, it can always get worse. Not all reforms are improvements. As we have seen, the 100-percent-reserve solution is ripe with unintended consequences.

When this economic crisis evolves into a currency crisis, which it most probably will, reform will become inevitable. The question then is what ideas for reform are lying around for the people and the politicians to choose from.

The reform advocated by Zarlenga and introduced to the Congress by Dennis Kucinich may very well appeal to politicians and bureaucrats. Also, the increasing animosity toward both the Fed and the banking establishment as a whole will likely encourage ordinary Americans to support Zarlenga and Kucinich’s initiative. On the face of it, the solution sounds rather reasonable and has the support of a very popular congressman.

Just think about it. It would strip the banks of their privileges and put the money power back into the hands of the people through their elected representatives; it would break the bankers’ secretive monopoly racket, which enables them to pay out billions in bonuses while ordinary people suffer. Doesn’t that sound familiar? Isn’t that how the Federal Reserve system was sold to the American public following the Panic of 1907?

For Austrians, it is easy to dismiss Zarlenga as a crank, which, based on the ridiculous claims he makes, he undoubtedly is. So why should we pay attention to someone like him? Because if we don’t, we increase the risk of him being successful in making the American Monetary Act become law. After all, similar monetary systems have been tried before.

This is why Austrians need to expose the real dangers of such a system. It would be a mistake to simply assume that that everyone will recognize its inherent problems and reject it. If the government can pass a constitutional amendment to sign the Federal Reserve Act into law and thus create a private central bank, they can certainly do this too.

So in addition to making the case for the free-market solution in money and banking, Austrians need to take up the debate with all their intellectual opponents. Zarlenga is one of them, and he should not be taken lightly.”

I’m posting a response to Grussner I saw  here.

I can’t say I was impressed by Zarlenga’s original criticism of the Austrians or the response to Grussner. The monetarists seem completely mistaken on fundamental economic principles, and I’m appalled that they are being taken so seriously.

In the first place, Zarlenga does not seem to understand that both money and debt represent claims to real goods. But while debt is a claim to real goods not yet produced, money is a claim to those goods in the present. That is, money represents production.

If a bank (either private or public) issues money without sufficient real goods to back that, the money is essentially “funny money” and it represents a theft from people who have savings based on real production. That’s what’s happened already. Savers have lost the high interest rate they ought to have received for the past two decades, and have subsidized an orgy of debt and spending by other people. Now the “other people” are using the force of the law (the gun, really) to make the savers give up more, so that the debtors can walk away from their debts. If the debts were fraudulently contracted, the defrauders should pay, not innocent savers who had nothing to do with the fraud. And if the debts were fairly contracted, the debtors should pay up.

Invoking imaginary golden ages where “the people” simply gave themselves whatever they wanted doesn’t cut it. Ain’t no such thing. Proof? Look at countries where there is “public” money. Inflation runs even higher in India than in the US. Corruption is rampant. A resource-laden, skilled and manpower-rich country has a per capita income no better than some of the poorest countries in sub-Saharan Africa.

The banking mafia is a symptom, not the root cause of our problems. The root cause is the state, and the philosophy that allows the state to set aside natural law because it is “the lawgiver.”

Peter Schiff said it in a nice way:

“We Americans also must be honest with ourselves and recognize that we have been living beyond our means and that our lifestyle has been largely financed by austerity in China.”

And here, Peter Gorenstein (who, amazingly, seems to approve) states the obvious – the Fed wants to inflate away debt because it believes it will grow the economy (I kid you not):

“The Fed can’t admit that one reason it wants high inflation is to reduce the real burden of our debt, but you can bet that that’s one of its objectives.  What’s more, says Nobel-winning economist Paul Krugman, inflation should be one of the Fed’s objectives.  Because that’s how we’ve gotten out from under debt burdens in the past.

Here’s Krugman:

So how did the U.S. government manage to pay off its [World War 2] wartime debt? Actually, it didn’t. At the end of 1946, the federal government owed $271 billion; by the end of 1956 that figure had risen slightly, to $274 billion. The ratio of debt to G.D.P. fell not because debt went down, but because G.D.P. went up, roughly doubling in dollar terms over the course of a decade.

In other words, after World War 2, we didn’t “pay down” our debt.  We grew into it.

And, importantly, this growth came from a combination of real growth AND inflation:

The rise in G.D.P. in dollar terms was almost equally the result of economic growth and inflation, with both real G.D.P. and the overall level of prices rising about 40 percent from 1946 to 1956.

So inflation is an important tool in getting us out of this mess.  It’s painful and unfair–those who have been responsible and saved money will pay the price for those who borrowed money, racked up huge debts, and spent more than they could afford.  But it’s what the Fed is (quietly) aiming for.”

Someone might say that the system where I do the borrowing and spending, and you do the saving and working is a version of slavery.

[That isn’t an anti-American statement either. It was made by a rather plain-speaking CEO of an American company…]

Debtors are demanding that savers work for them, through foregoing their own consumption and the market- price of money. Monetarists are demanding that people walk away from the obligations of their government with a slow-motion dilution of the currency. People on fixed income will be destroyed. People dependent on wages in industries where wages are not rising (nearly every industry) will find prices rising beyond them. Responsible workers and savers, here and around the world, will get stiffed. Future borrowing costs will soar. The US will suffer retaliatory treatment from foreign countries. Other countries will default on their debt or renege on their contracts. So will citizens everywhere. Corruption will rise. Gamblers in the stock market will benefit, as their portfolios of cash now get plumped up.  That is banana-republicanism.

Iraq War: Firing On Old Women And Taxis

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Update: This comes from Glenn Greenwald. There’s been criticism by the Weekly Standard and others that WikiLeaks released an edited rather than a complete video. Greenwald says Wikileaks released both on the same site and the mistake arises from an erroneous statement in a NY Times piece on the subject.

“The only problem with this?  From the very beginning, WikiLeaks released the full, 38-minute, unedited version of that incident — and did so right on the site they created for release of the edited video.  In fact, the first video is marked “Short version,” and the second video — posted directly under it — is marked “Full version,” and just for those who still didn’t pick up on the meaning, they explained:

WikiLeaks has released both the original 38 minutes video and a shorter version with an initial analysis. Subtitles have been added to both versions from the radio transmissions.

This is Bumiller’s fault for misleadingly suggesting that WikiLeaks failed to release the full video. I know she’s been notified by at least one NYT reader of her misleading sentences but has thus far failed to respond.  Establishment media outlets can’t stand that WikiLeaks is breaking major stories and are trying — consciously or otherwise — to imply that they’re not as reliable as Real Media Outlets (hence, the “WikiLeaks edited the video to 17 minutes” without indicating that they released the full video).  But this is exactly how clear falsehoods are manufactured and then spread.”

Update (Thanks to AD Niven):

The blog post below (April 6, 2010; see also the April 8, 2010 post) says the Wikileaks video was edited to make the event look less defensible.

(Lila: That’s the reason I didn’t post it…….I’ve been through this a number of times with “war footage”)

***********************************

The NY Times, in their story about the incident, spends paragraph after paragraph fretting that we killed a bunch of innocent men standing around doing nothing more than contemplating whether Grotius’ notion of jus ad bellum conflicted with that of Aquinas. Then they hit you with this seemingly important piece of information buried near the end:

“Late Monday, the United States Central Command, which oversees the wars in Iraq and Afghanistan, released the redacted report on the case, which provided some more detail.The report showed pictures of what it said were machine guns and grenades found near the bodies of those killed. It also stated that the Reuters employees “made no effort to visibly display their status as press or media representatives and their familiar behavior with, and close proximity to, the armed insurgents and their furtive attempts to photograph the coalition ground forces made them appear as hostile combatants to the Apaches that engaged them.”

I’d also direct you to Bill Roggio’s post on the subject if my own thoughts didn’t convince you that this was one of the worst smear jobs against our military based on zero evidence in the last decade.

Case closed.

Dahr Jamail in Truthout (hat-tip to Lawrence Vance at LRC blog):

“On Monday, April 5, Wikileaks.org posted video footage from Iraq, taken from a US military Apache helicopter in July 2007 as soldiers aboard it killed 12 people and wounded two children. The dead included two employees of the Reuters news agency: photographer Namir Noor-Eldeen and driver Saeed Chmagh.

The US military confirmed the authenticity of the video.

The footage clearly shows an unprovoked slaughter, and is shocking to watch whilst listening to the casual conversation of the soldiers in the background.

As disturbing as the video is, this type of behavior by US soldiers in Iraq is not uncommon.

Truthout has spoken with several soldiers who shared equally horrific stories of the slaughtering of innocent Iraqis by US occupation forces.

“I remember one woman walking by,” said Jason Washburn, a corporal in the US Marines who served three tours in Iraq. He told the audience at the Winter Soldier hearings that took place March 13-16, 2008, in Silver Spring, Maryland, “She was carrying a huge bag, and she looked like she was heading toward us, so we lit her up with the Mark 19, which is an automatic grenade launcher, and when the dust settled, we realized that the bag was full of groceries. She had been trying to bring us food and we blew her to pieces.”

The hearings provided a platform for veterans from Iraq and Afghanistan to share the reality of their occupation experiences with the media in the US.

Washburn testified on a panel that discussed the rules of engagement (ROE) in Iraq, and how lax they were, to the point of being virtually nonexistent.

“During the course of my three tours, the rules of engagement changed a lot,” Washburn’s testimony continued, “The higher the threat the more viciously we were permitted and expected to respond. Something else we were encouraged to do, almost with a wink and nudge, was to carry ‘drop weapons’, or by my third tour, ‘drop shovels’. We would carry these weapons or shovels with us because if we accidentally shot a civilian, we could just toss the weapon on the body, and make them look like an insurgent.”

Hart Viges, a member of the 82nd Airborne Division of the Army who served one year in Iraq, told of taking orders over the radio.

“One time they said to fire on all taxicabs because the enemy was using them for transportation…. One of the snipers replied back, ‘Excuse me? Did I hear that right? Fire on all taxicabs?’ The lieutenant colonel responded, ‘You heard me, trooper, fire on all taxicabs.’ After that, the town lit up, with all the units firing on cars. This was my first experience with war, and that kind of set the tone for the rest of the deployment….”

Rick Ackerman: Headlines Misread The Market

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“Trader Rick Ackerman interprets the cheer-leading in the headlines:

“Could the newspapers simply be misinterpreting the signs? It would certainly seem that way. To take the headlines cited above, we see oil’s price surge as having absolutely nothing to do with a pick-up in demand. Rather, the push toward $90 a barrel represents speculative excesses in the futures markets, exacerbated by the reluctance of traders to take short positions.

How could they, when, on any given day, a terrorist with a missile launcher could cause the global price of crude to double instantly by scuttling a tanker in the Strait of Hormuz?

As for “bets on growth” pushing stocks higher, it is not bullish speculation that has been driving up shares for the last 13 months, but rather a vast excess of liquidity in the financial system.

As for the rise in T-Note yields to four percent, we seriously doubt this is being caused by competition from expansion-minded borrowers in the private sector; rather, it comes from the rising fear among lenders that they will be repaid in a currency whose value looks all but certain to fall precipitously in the years ahead.

If the central bankers truly believe that strong economic growth is about to trigger inflation, why do they continue to hold the federal funds rate near zero?“

Frank Lloyd Wright: Education Today Provides Conditioning…

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This is a brief excerpt from a live interview with legendary architect Frank Lloyd Wright (June 18, 1957), when he was ninety. The audio isn’t very clear, so I’ve provided a transcript. The words are pungent and speak succinctly to the task of weaning people from dependence on the state:

“Education has been unrealistic.
Education has not seen the nature of the thing we needed as a people.
Education has not provided enlightenment. It’s provided conditioning
By way of books, by way of what has been, by way of the past,
By the habituation of the human species to date.
And it hasn’t taken the views of the men who are capable of looking beyond
and seeing what the nature of the thing was.
What is the nature of this thing we’re in.
Now that’s the grace(?) of seeing in, not seeing at.
And all education today is a seeing at.”

Possible Mossad Links to Killing of Syrian Man In Hungary?

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Last, week there was another killing suspected to be the work of the Israeli intelligence agency, Mossad. This one was in Budapest, Hungary. The dead man was supposedly involved in money laundering. Hungarian officials have since played down the connection, but it was widely reported there, as well as in Israel and Russia.

“On Wednesday March 17, just after seven in the morning, Dr Bassam Trache, a 52-year-old veterinary surgeon with dual Syrian and Hungarian citizenship, was shot dead in his black Mercedes at a junction in Budapest’s 16th district. The killer grabbed a black briefcase from the car and made off on foot.

Dr Trache, it was revealed, operated a money-changing business. A few years ago he was acquitted in court of attempting to bribe – with jewellery and Arab cakes – the head of the Budapest police’s money-changing investigation division.

At first, his murder was regarded as yet another killing connected with the shady world of money-changing; in the past ten years, there have been no fewer than 123 murders connected with the business in Budapest.

But then a more fantastic theory to explain Dr Trache’s murder emerged.

It transpired that on the very day that Trache was killed, two Israeli Gulfstream V-type jets were spotted flying low over the Hungarian capital, leading to speculation that, just two months after the assassination in Dubai of Hamas commander Mahmoud al-Mabhouh, the Syrian might have been the victim of a Mossad hit…..”

That’s from The First Post ( UK), which goes on to list some of the puzzling inconsistencies in the government’s statements that have been fueling the rumor.

“Last week, however, it was announced that a leading official of the NKH had been sacked, with a further four members of staff disciplined, over their failure to consult Hungary’s secret services before issuing a permit for the Israeli aircraft to enter Hungarian airspace.

And while Szollar claimed that Israel’s flying manoeuvres were merely “routine”, Hungary’s transport minister, Peter Honig, conceded that they were not fully in line with Hungarian laws. Then the Hungary’s HirTV claimed that the Israeli ambassador to Hungary, though denying the term “spy planes”, had referred to the planes as reconnaissance jets.”

The New York Post has reported that the Israeli ambassador told the Hungarian news agency MTI that the jets were on a diplomatic mission and were not spying. The NY Post said the Hungarian government had declined to comment on this response.

Another newspaper, MY Sun, reported that it was Hungarian officials who claimed the jets were on a diplomatic mission.

In a Reuters report, Hungarian spokesman Domokos Szollar stated that the jets were in “routine training” and Israel had cleared the overflights with Hungary two months in advance. Szollar explained the earlier confusion by officials as a case of bad internal communications. Apparently, the Hungarian defense department hadn’t been notified, and so, on first hearing of the flights, PM Gordon Bajnai had ordered an investigation.

The head of Budapest’s criminal investigations team, Zsolt Bodnar, reportedly dismissed allegations about a Mossad link as “fiction.”

I’m going ahead, nonetheless, and posting this video, because it happens to follow two far more substantial stories I’m also watching: the story about documented Mossad links to the murder of a Hamas operative in Dubai, as well as the possible Mossad ties of David Headley, the CIA operative who admitted to being guilty of the Mumbai terror attack of November 2008, at the time blamed on Islamicists. All three events together form a news story that’s quite riveting, especially since it accompanies the continual drum-beat for war with Iran. This story also suggests that any arrests for domestic terrorism need to be looked at with a great deal of skepticism, at this point.

At this point, I should repeat, the forgery of the passports in the killing of the Hamas official is documented; any ties to Headley are very plausible but so far unproven (and have not been reported in the mainstream press, for that’s worth); and the Hungarian story seems to be still in the “allegations” stage.

Arms and Mark Thatcher..

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Mark Thatcher, son of the former UK PM, seems to have been dogged with accusations of financial impropriety. I bring him up, because of a comment on this blog about his direct involvement in an international conspiracy to cover up the manipulation of precious metals that was apparently outed in 2002 in the UK, but was covered up. In researching the comment, I began with some background on Mark Thatcher.

Here’s a brief summary of some financial “improprieties” as they show up in a Guardian article from 2004.

“But hit controversy in 1984 when the Observer alleged that he benefited from his mother’s position when a large construction deal in Oman was awarded to a building firm, Cementation, with which he was involved, after Mrs Thatcher visited the tiny Gulf state. The accusations were never proven.

Further controversy dogged him through his friendship with the Middle East businessman Wafic Said – a quiet-spoken Syrian with close links with Saudi royalty.

Among other business ventures in the 1980s, he was involved in several large-scale arms deals, most notably a £20bn contract between British Aerospace and Saudi Arabia.

Although rumours of impropriety have dogged his business career, he largely disappeared off Fleet Street’s radar after moving to the US.

But it is recorded that his wealth grew to the point where he spent periods as a tax exile in Switzerland.

In the 1990s he helped secure the multimillion pound contract for his mother’s Downing Street memoirs, but after the failure of a security alarm business in the US and a prosecution for tax evasion, Mark, his wife and their two children moved again – this time to South Africa.

Three years after the move to Cape Town, in 1998, he was investigated by South African police over a money-lending business to police officers. He counter-claimed that officers working for him as agents had defrauded him and the investigation was eventually dropped.

He returned to the UK last July for the funeral of his father, Sir Denis, a former oil businessman, who died aged 88. He inherited his father’s hereditary baronetcy to become Sir Mark.

Sir Mark, who was known as “Thickie Mork” among other nicknames at Harrow and who has been criticised for his lack of charm, was once described by the Financial Times as “a sort of Harrovian Arthur Daley with a famous Mum”.

A devoted Lady Thatcher, however, has always had faith in him. “Mark could sell snow to the Eskimos, and sand to the Arabs,” she is reported to have said.

His notoriety was not welcomed by Sir Bernard Ingham, Lady Thatcher’s former press secretary.

Asked by Sir Mark how he could best help his mother win the 1987 general election, Ingham reportedly replied: “Leave the country.”