Militants in Iraq have used $26 off-the-shelf software to intercept live video feeds from U.S. Predator drones, potentially providing them with information they need to evade or monitor U.S. military operations. (Read more from online.wsj.com)

My bullshit meter just went off the charts.

See also:
Iraqi Drones May Target U.S. Cities
Monday, February 24, 2003

Hey guys. Pay attention to this. The talking heads on Television will probably try to spin stories like this one to disguise the demise of the dollar. Europe’s inflationary policies do not help us, but they serve as a red herring for the propagandists.

The euro tumbled as debt woes spread around the euro zone from Greece, where pledges of austerity and fiscal rigor failed to stem growing fears that the Continent’s economic recovery could be derailed.

The euro fell as low as $1.4505 on Tuesday, its lowest level since early October. New worries about Austrian banking also roiled markets, with rumors of trouble at an Austrian lender with shaky investments in Eastern Europe following Monday’s surprise nationalization of another Austrian bank at the behest of the European Central Bank. (Read more from online.wsj.com)

Patrick Barron’s comments:

The Fed and the ECB are trying the old “beggar thy neighbor” policy, whereby each tries to cheapen its own currency in order to spur exports to its neighbor. Great plan. Now both currencies can crash together. Misery loves company, I guess.

From a Campaign for Liberty email:

Dear Friend of Liberty,

While Americans busy themselves with holiday preparations, the weeks surrounding Congress’ Christmas break can often be the most dangerous time for our freedoms.

After all, we were given the “gift” of our Federal Reserve System just a couple of days before Christmas in 1913.

Part of the legislation being considered before Congress adjourns this year is the $636 billion Defense Appropriations bill.

It’s bad enough that this Congress, which was elected by a country tired of our endless nation-building, is about to vote to keep overextending our military and involving it in unconstitutional interventions, but lawmakers are seeking to include much more than defense items in this appropriations package.

According to the latest reports, legislators may attempt to tack on language forcing monopoly bargaining on every policeman, firefighter, and emergency medical technician (EMT) in the country, as well as extending the PATRIOT Act.

Some in Congress want to add H.R. 413 and S. 1611, the Public Safety Employer-Employee Cooperation Act of 2009, to the House and Senate appropriations bills.

H.R. 413 and S. 1611 would override state labor laws, increase the power of the federal government to intervene in local arrangements, and continue to strip away the decision-making power of non-unionized workers.

And reports indicate that lawmakers are looking to include a temporary extension of some of the PATRIOT Act’s provisions that are set to expire at the end of the year. These representatives argue that they need more time to debate revisions to the Act.

When it comes to the PATRIOT Act, there’s only one course of action that needs to be taken – once again respecting our civil liberties by immediately repealing the entire bill.

In addition to the massive appropriations legislation, lawmakers could also vote as soon as Wednesday on raising the debt limit on the federal government’s credit card by as much as $2 trillion.

It is long past time Congress began paying down its debts instead of firing up the printing presses. Real change means facing reality and rejecting any further attempts from both major parties to add to our debt.

Nice to hear this message from both sides of the aisle.

EARLIER this year, America’s Transportation Security Administration, the agency responsible for airport security, published an improperly redacted version of its operating manual on the internet. . . .

Here’s the Post’s summary of what got leaked:

The 93-page TSA operating manual details procedures for screening passengers and checked baggage, such as technical settings used by X-ray machines and explosives detectors. It also includes pictures of credentials used by members of Congress, CIA employees and federal air marshals, and it identifies 12 countries whose passport holders are automatically subjected to added scrutiny.

. . . .

Boing Boing’s Cory Doctorow explains:

Unfortunately, the security geniuses at the DHS don’t know that drawing black blocks over the words you want to eliminate from your PDF doesn’t actually make the words go away, and can be defeated by nefarious al Qaeda operatives through a complex technique known as ctrl-a/ctrl-c/ctrl-v. Thankfully, only the most elite terrorists would be capable of matching wits with the technology brilliance on display at the agency charged with defending our nation’s skies by ensuring that imaginary hair-gel bombs are kept off of airplanes.
(Read more from economist.com)

Two years ago, Congress ordered the nation’s gasoline refiners to do something that is turning out to be mathematically impossible.

To please the farm lobby and to help wean the nation off oil, Congress mandated that refiners blend a rising volume of ethanol and other biofuels into gasoline. They are supposed to use at least 15 billion gallons of biofuels by 2012, up from less than seven billion gallons in 2007.
(Read more from nytimes.com)

Text book case of the failures of central planning.

Response from my teacher, Austrian Economist, Patrick Barron.

Dear Sirs:
There are several fallacious concepts that drove the ethanol mandates. Number one is that it is in the best interest of the U.S. to become more energy independent. There is no reason, either economic or otherwise, that requires that the U.S. government deny its citizens access to the cheapest form of energy available anywhere in the world, which includes, of course, many unexploited regions within our own borders. Furthermore, it is unconscionable that the government so blatantly penalize the vast majority of its citizens for the undeserved benefit of the farm lobby by using its power of compulsion and coercion to force us to use an inferior (ethanol delivers only three-fourths of the energy value of gasoline) and harmful fuel (as explained by Mr. Wald in his informative article). Scrap the ethanol mandates, allow drilling and refining anywhere in the U.S., and you will find that the so-called energy problem goes away.

I just donated fifty bucks. Hope you do too.

Click here to donate.

Paul Anthony Samuelson (May 15, 1915 – December 13, 2009), first American Nobel Prize laureate (1970) has died, at the age of 94.

I was lucky to meet him at the M.I.T on the glorious day of November 9, 1989, the day of the fall of the Berlin Wall, the day that symbolized the end of the world system of the communist slavery.

We are all advised against speaking ill of the dead. I shall not. Paul Samuelson was a witty, humorous and very friendly and pleasant man. He was the only one I knew that rivaled Murray Rothbard in the elegance of wearing bow ties.

When I was learning economics in the USSR in the 1970s Samuelson was the only Western economist whose textbook was translated into Russian. I remember his famous graph depicting dynamics of per capita GNP in the Soviet Union and the United States according to which the USSR would surpass the US in the standard of living by 1990. He frankly admitted to me that that was mistake. “Who could know that it was all fake?”

His “Economics” was the most widely used college textbooks in the history of the world. First published in 1948, it was translated into 22 languages, and was selling over 50,000 copies a year making his author the richest economist after Ricardo.

. . . .

Robert M. Solow, a fellow Nobel laureate and colleague of Samuelson’s at M.I.T. pointed out that when economists “sit down with a piece of paper to calculate or analyze something, you would have to say that no one was more important in providing the tools they use and the ideas that they employ than Paul Samuelson”.

Samuelson was fully aware of his world-wide influence. He declared that “I don’t care who writes a nation’s laws — or crafts its advanced treatises — if I can write its economics textbooks”.

In his textbook he praised central planning and predicted the future higher standard of living in the communist world. Murray Rothbard reviewed the book in the following words:

“Samuelson’s Economics differs from its rivals largely in being bigger, more indigestible, and filled with the flip and unsupported wisecracks with which Samuelson is wont to dismiss deviant economic views.”

Paul Samuelson’s legacy is overwhelming – he will not write any more textbooks, but he will still command thoughts and deeds of academics and government officials. As Paul Krugman, his best and brightest student and admirer wrote: “It’s hard to convey the full extent of Samuelson’s greatness. Most economists would love to have written even one seminal paper — a paper that fundamentally changes the way people think about some issue. Samuelson wrote dozens: from international trade to finance to growth theory to speculation to well, just about everything, underlying much of what we know is a key Samuelson paper that set the agenda for generations of scholars. . . .” (Read more from blog.mises.org)

I worked with the ETT’s personally.

Sorry for the late notice.

Click here to donate to the Rand Paul campaign.

over, and over, and over . . .

I think this is a very inspiring talk. It taught me a lot about economics, life, and intellectual property. It’s inspiring because it makes me feel like we are capable of improving the world. We only need to not steal from one another.

Madame Speaker, I rise to introduce the Free Competition in Currency Act of 2009. Currency, or money, is what allows civilization to flourish. In the absence of money, barter is the name of the game; if the farmer needs shoes, he must trade his eggs and milk to the cobbler and hope that the cobbler needs eggs and milk. Money makes the transaction process far easier. Rather than having to search for someone with reciprocal wants, the farmer can exchange his milk and eggs for an agreed-upon medium of exchange with which he can then purchase shoes.

This medium of exchange should satisfy certain properties: it should be durable, that is to say, it does not wear out easily; it should be portable, that is, easily carried; it should be divisible into units usable for every-day transactions; it should be recognizable and uniform, so that one unit of money has the same properties as every other unit; it should be scarce, in the economic sense, so that the extant supply does not satisfy the wants of everyone demanding it; it should be stable, so that the value of its purchasing power does not fluctuate wildly; and it should be reproducible, so that enough units of money can be created to satisfy the needs of exchange.

Over millennia of human history, gold and silver have been the two metals that have most often satisfied these conditions, survived the market process, and gained the trust of billions of people. Gold and silver are difficult to counterfeit, a property which ensures they will always be accepted in commerce. It is precisely for this reason that gold and silver are anathema to governments. A supply of gold and silver that is limited in supply by nature cannot be inflated, and thus serves as a check on the growth of government. Without the ability to inflate the currency, governments find themselves constrained in their actions, unable to carry on wars of aggression or to appease their overtaxed citizens with bread and circuses.

At this country’s founding, there was no government controlled national currency. While the Constitution established the Congressional power of minting coins, it was not until 1792 that the US Mint was formally established. In the meantime, Americans made do with foreign silver and gold coins. Even after the Mint’s operations got underway, foreign coins continued to circulate within the United States, and did so for several decades.

On the desk in my office I have a sign that says: “Don’t steal – the government hates competition.” Indeed, any power a government arrogates to itself, it is loathe to give back to the people. Just as we have gone from a constitutionally-instituted national defense consisting of a limited army and navy bolstered by militias and letters of marque and reprisal, we have moved from a system of competing currencies to a government-instituted banking cartel that monopolizes the issuance of currency. In order to reintroduce a system of competing currencies, there are three steps that must be taken to produce a legal climate favorable to competition.

The first step consists of eliminating legal tender laws. Article I Section 10 of the Constitution forbids the States from making anything but gold and silver a legal tender in payment of debts. States are not required to enact legal tender laws, but should they choose to, the only acceptable legal tender is gold and silver, the two precious metals that individuals throughout history and across cultures have used as currency. However, there is nothing in the Constitution that grants the Congress the power to enact legal tender laws. We, the Congress, have the power to coin money, regulate the value thereof, and of foreign coin, but not to declare a legal tender. Yet, there is a section of US Code, 31 USC 5103, that purports to establish US coins and currency, including Federal Reserve notes, as legal tender.

Historically, legal tender laws have been used by governments to force their citizens to accept debased and devalued currency. Gresham’s Law describes this phenomenon, which can be summed up in one phrase: bad money drives out good money. An emperor, a king, or a dictator might mint coins with half an ounce of gold and force merchants, under pain of death, to accept them as though they contained one ounce of gold. Each ounce of the king’s gold could now be minted into two coins instead of one, so the king now had twice as much “money” to spend on building castles and raising armies. As these legally overvalued coins circulated, the coins containing the full ounce of gold would be pulled out of circulation and hoarded. We saw this same phenomenon happen in the mid-1960s when the US government began to mint subsidiary coinage out of copper and nickel rather than silver. The copper and nickel coins were legally overvalued, the silver coins undervalued in relation, and silver coins vanished from circulation.

These actions also give rise to the most pernicious effects of inflation. Most of the merchants and peasants who received this devalued currency felt the full effects of inflation, the rise in prices and the lowered standard of living, before they received any of the new currency. By the time they received the new currency, prices had long since doubled, and the new currency they received would give them no benefit.

In the absence of legal tender laws, Gresham’s Law no longer holds. If people are free to reject debased currency, and instead demand sound money, sound money will gradually return to use in society. Merchants would have been free to reject the king’s coin and accept only coins containing full metal weight.

The second step to reestablishing competing currencies is to eliminate laws that prohibit the operation of private mints. One private enterprise which attempted to popularize the use of precious metal coins was Liberty Services, the creators of the Liberty Dollar. Evidently the government felt threatened, as Liberty Dollars had all their precious metal coins seized by the FBI and Secret Service in November of 2007. Of course, not all of these coins were owned by Liberty Services, as many were held in trust as backing for silver and gold certificates which Liberty Services issued. None of this matters, of course, to the government, which hates competition. The responsibility to protect contracts is of no interest to the government.

The sections of US Code which Liberty Services is accused of violating are erroneously considered to be anti-counterfeiting statutes, when in fact their purpose was to shut down private mints that had been operating in California. California was awash in gold in the aftermath of the 1849 gold rush, yet had no US Mint to mint coinage. There was not enough foreign coinage circulating in California either, so private mints stepped into the breech to provide their own coins. As was to become the case in other industries during the Progressive era, the private mints were eventually accused of circulating debased (substandard) coinage, and with the supposed aim of providing government-sanctioned regulation and a government guarantee of purity, the 1864 Coinage Act was passed, which banned private mints from producing their own coins for circulation as currency.

The final step to ensuring competing currencies is to eliminate capital gains and sales taxes on gold and silver coins. Under current federal law, coins are considered collectibles, and are liable for capital gains taxes. Short-term capital gains rates are at income tax levels, up to 35 percent, while long-term capital gains taxes are assessed at the collectibles rate of 28 percent. Furthermore, these taxes actually tax monetary debasement. As the dollar weakens, the nominal dollar value of gold increases. The purchasing power of gold may remain relatively constant, but as the nominal dollar value increases, the federal government considers this an increase in wealth, and taxes accordingly. Thus, the more the dollar is debased, the more capital gains taxes must be paid on holdings of gold and other precious metals.

Just as pernicious are the sales and use taxes which are assessed on gold and silver at the state level in many states. Imagine having to pay sales tax at the bank every time you change a $10 bill for a roll of quarters to do laundry. Inflation is a pernicious tax on the value of money, but even the official numbers, which are massaged downwards, are only on the order of 4% per year. Sales taxes in many states can take away 8% or more on every single transaction in which consumers wish to convert their Federal Reserve Notes into gold or silver.

In conclusion, Madame Speaker, allowing for competing currencies will allow market participants to choose a currency that suits their needs, rather than the needs of the government. The prospect of American citizens turning away from the dollar towards alternate currencies will provide the necessary impetus to the US government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government’s ability and incentive to inflate the currency, and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system. I urge my colleagues to consider the redevelopment of a system of competing currencies and cosponsor the Free Competition in Currency Act. (from dailypaul.com)