Monthly Archives: July 2011

Panetta makes 9/11 gaffe in Iraq

open quoteNewly appointed US Defence Secretary Leon Panetta told American troops in Baghdad on Monday that 9/11 was the reason they were in Iraq, before he was quickly corrected by his spokesman.

“The reason you guys are here is because of 9/11. The US got attacked and 3,000 human beings got killed because of Al-Qaeda,” Panetta told about 150 soldiers at the Camp Victory US base.

“We’ve been fighting as a result of that,” he said.

The administration of former US President George W. Bush had hastily linked Saddam Hussein, the ousted Iraqi dictator, to the 9/11 attacks.

That was one of the justifications for the 2003 US-led invasion, but the argument has since been widely dismissed.close quote (Read more from news.yahoo.com)

I’m not surprised when they say stupid things. I’m surprised on the rare occasions when they don’t.

Utah takes steps to recognize gold and silver as legal tender

open quoteIt may not fold as conveniently as dollar bills, but the Utah House took a first step Friday to recognize gold and silver as legal tender.

It voted 47-26 to pass HB317 by Rep. Brad Galvez, R-West Haven, and sent it to the Senate. The measure would recognize as legal tender gold and silver coins issued by the federal government — not just their face value, but also their value in gold and silver or to a collector.

It also would order the state to study whether Utah should establish an alternative form of legal tender, such as one backed by silver and gold.

“This is a step in preparedness, a step in security,” Galvez said, “that allows us to be able to help hold up our economy as the dollar continues to shrink.”close quote (Read more from sltrib.com)

Debunking the Liquidity Trap

Liquidity Trap is a euphemism for institution carrying irresponsible loans who don’t want to go bankrupt. They seek to be rescued (with your savings) from the dreaded liquidity trap. It is at the heart of Keynesianism.

They say there isn’t enough money. People will stop spending. When people stop spending, businesses will go under. When businesses go under, more people will be out of work. And so on in a vicious, self-reinforcing spiral.

This Mises daily article helped me understand the nonsense of this idea, which Keynesians discuss with much subtelty: mises.org/daily/3697

Here’s my short version.

The only time people will stop spending altogether is when they no long want goods and services provided by others. In other words, never.

Price fluctuation can absorb any amount of hording of cash. If people are filling their mattresses with dollars, prices will simply drop. Opportunities will be created for those who choose to buy things.

Most people will save their money in banks. If we lived in a free society, and the interested rate was settled on the free market, the increased savings would create more opportunities for people who want to borrow money. This would be manifest in low interest rates.

High savings create lots of opportunities to borrow and thus low interest rates. Low savings make it hard to borrow and thus high interest rate.

One very important, uniquely Austrian point, is that this harmonizes savings with interest rates. It harmonizes future planning of people (who are saving) with opportunities for entrepreneurs to begin long-term projects.

Keynesianism treats all production equally — long term, short term, building computers, digging ditches — as if humans produced and traded blobs of meaningless GDP. The Austrians identify short and long production processes and their need to be harmonized with savings (which reflect whether people are planning for the short or long term). This distinction gets messed up with the Fed sets the interest rate or rescues institutions from the so-called “Liquidity Trap.”

Alarming rise in clashes between settlers and Palestinians in West Bank

open quote IDF commanders concerned situation in territories may deteriorate further with diplomatic crisis looming in September when Palestinians make bid for UN recognition.

The IDF is alarmed by the increase in clashes in the West Bank between Palestinian villagers and settlers in nearby outposts and by the growing harassment of senior army officers and civil servants by right-wing extremists.

. . . .

Last week settlers burned a Palestinian field in the West Bank village of Burin, destroying more than 400 trees, after two Palestinians had stolen a car belonging to a settler from the nearby Yitzhar settlement.

Police arrested a number of suspects – the arson was video-taped from a distance by a Palestinian B’Tselem activist. But the court released the suspects for lack of evidence.

On the same day, Yitzhar’s secretariat sent a threatening letter to the mayor of the nearby village of Hawara, issuing a 24-hour ultimatum to return the stolen car and turn in the thieves. Otherwise, the letter warned, “it will be impossible to stop the residents’ rage.”

On June 7 the mosque in al-Mueir village was set on fire – the fourth mosque arson in a year and a half. The arsonists painted “price tag” on the mosque wall. Police believe the act was the settlers’ response to the Israel Lands Administration’s decision to evacuate structures in a nearbly illegal outpost.

Meanwhile, the defense establishment is planning moves that are likely to heat up the atmosphere even further. The state has pledged to the High Court of Justice to evacuate three buildings in the illegal Migron outpost by July 24. By July 20 outgoing Justice Ayala Procaccia is due to hand down the verdict in the case of a petition to tear down nine structures in the Ofra settlement.

The state has also promised to remove settlers’ facilities set up illegally on private Palestinian lands in three locations by the end of August.close quote (Read more from haaretz.com)