Archive for December, 2007

Ritual Gloating Postmortems

December 13, 2007
ZNet | Venezuela
Ritual Gloating Postmortems
The Corporate Media v. Hugo Chavez
by Stephen Lendman; December 12, 2007

Dateline December 3, 2007 – The corporate media is euphoric after Venezuelans narrowly defeated Hugo Chavez’s constitutional reform referendum the previous day. The outcome defied pre-election independent poll predictions and was a cliffhanger to the end. Near-final results weren’t announced until 1:15AM December 3 with about 100,000 votes separating the two sides and a surprising 44% of eligible voters abstaining. On December 7, Venezuela’s National Electoral Council (CNE) released the final outcome based on 94% of ballots counted. A total of 69 amendment reforms were voted on in two blocks:


For Block A: No – 50.65%; Si (Yes) – 49.34%;


For Block B: No – 51.01%; Si (yes) – 48.99%.


Below is a sampling of corporate media gloating. They deserve a bit of slack as they’ve waited nine years for this moment, and they may not get another for some time. Venezuelans lost, they won, but Chavez may be right saying reform lost “por ahora (for now).” In a post-election comment on Venezuelan state TV channel VTV he added: Reform is slowed but alive, and “the Venezuelan people have the power and the right to present a request for constitutional reform before (my) term (in office) finishes, of which there is still five years.”


Under Venezuelan law, the National Assembly (NA) can pass new socially beneficial or other legislation any time provided it doesn’t conflict with constitutional law. The Constitution can only be changed by national referenda in one of three ways – if the President, NA or 15% of registered voters (by petition) request it. The  Constitution, however, prevents the President from seeking the same amendments twice in the same term, but they can become law through popular initiatives or a constituent assembly.


In addition, Chavez can use his constitutionally allowed Enabling Law authority until next summer when it expires. Under it, he can pass laws by decree in 11 key areas that include the structure of state organs, election of local officials, the economy, finance and taxes, banking, transportation, the military and national defense, public safety, and policies related to energy.


Chavez had this authority two previous times and used it in 2001 to pass 49 legal changes to make them conform to the Constitution in areas of land and banking reform and for more equitable revenue-sharing arrangements with foreign oil companies in joint-state ventures. He wanted it this time to accelerate democratic change at the grassroots and be able to transfer power to the people through communal councils. He may also use it to advance his social and economic model based on equitably distributing more of the national wealth through investments in health care, education and social security. If these type reform measures are proposed, he’ll get strong public support for them provided he keeps them simple and explains them properly and often.


In his post-election comments, Chavez stressed another reform proposal is coming “next year or in three years. It doesn’t have to be exactly the same. It can be in the same direction, but in a different form, improved and simplified, because I have to accept that the reform that we presented was very complex.”


The pre-election debate and propaganda assault made it more complex, and the opposition out-muscled reform supporters. With proper planning and implementation, that problem is correctable, and in the meantime, the NA can enact some reforms legislatively and Chavez can do it on his own by decree. Expect that to happen and for most Venezuelans to support it enthusiastically.


Already, members of Venezuela’s National Indigenous Movement (MNIV) want constitutional reform reinitiated, intend to mobilize, and may begin collecting signatures for a petition drive for it. They met to strategize on December 7 after which MNIV coordinator Facundo Guanipa announced that Venezuela’s small indigenous population near-unanimously supports Chavez’s reforms according to referendum data results.


For now, however, the gloaters have center stage and aren’t quoting OAS Secretary General Jose Miguel Insulza’s comment that “Quite a few myths on the Venezuelan democracy are falling down. It works like all democracies….I hope the US government can acknowledge, as all of us, that it was a fair, clean process.” 


Don’t count on it or from the dominant media, and start off with this writer’s favorite press adversary – the Wall Street Journal’s Mary Anastasia O’Grady, this time on a Journal-produced three minute video available online. She warms up fast with comments like the referendum, if passed, would have given Chave z”dictatorial power to rule for life,” and Venezuela has a “rigged electoral system.” Outrageous and false on both counts, of course, but this is typical O’Grady ranting.


Further, she claimed near-final tallies were available around 8:15PM, but the National Electoral Council (CNE) waited until 1:15AM to report them. In fact, reporting was delayed because the election was too close to call, and it was agreed in advance not to do it until 90% of the votes were counted. At that point, the result was announced. One other O’Grady gem was Chavez came to power in 1999 by “removing” the “old elite” implying that defeating them decisively and democratically was improper – vintage O’Grady with more from her ahead assured.


The Journal wasn’t through. An online op-ed read: “Venezuelans Rain on Hugo (and it’s) more than a setback for Venezuela’s messianic strongman. It is a victory for the ideal of liberty across Latin America….kudos….to the people of Venezuela (by preventing Chavez from) impos(ing) what amounted to a personal coup against that nation’s democracy. He tried to bully Venezuelans into voting for one-man rule and a hard model of socialism. They said no (and CNE waited until 1:15AM) when it became clear that there was no way to fudge the results.”


According to the Journal, Chavez’s package “would have eviscerated Venezuela’s civil liberties (and) end guarantees of private property.” A final jab was in the form of a warning that Chavez still controls the country’s political institutions and “remains a threat to (the) region. He’s in a race against time (to advance his) expansionist agenda (that) has the potential to undermine Colombia’s democracy, and has already destabilized Bolivia and Ecuador.” Phew, and Rupert Murdoch hasn’t yet taken over the paper he bought last summer when he finalized a deal for Dow Jones & Company.


Enter the New York Times and its man in Caracas, Simon Romero, whose style outclasses Journal writers but not his substance. His byline on December 3 read “Venezuela Hands Narrow Defeat to Chavez Plan” that would have granted him “sweeping new powers. Opposition leaders were ecstatic,” and Zulia State governor and Chavez 2006 presidential opponent, Manuel Rosales, said “Tonight, Venezuela has won.” His next day report trumpeted the setback saying the “vote sets roadblocks (and) has given new energy to (the) long-suffering opposition.” It’s “an expression of….government mismanagement (and) a warning to Mr. Chavez that he had finally overreached (in wanting to end presidential) term limits and greatly (centralize) his power.” It’s a “sharp rebuke (from voters to) let Mr. Chavez know (they’re reluctant) to follow him much farther up the path to a socialist future.”


Still more from Romero, along with Times op-ed writers, that “Reflection and Anger (came) After Defeat,” and Chavistas are “being consumed by recrimination and soul-searching” following voter rejection. “Chavez lash(ed) out at his opponents (and) dismissed (their victory) with an (unmentioned) obsenity,” and “Chavismo” needs “to embrace a more pluralistic path.”


That was a warm-up for op-ed writer Roger Cohen. He chimed in with a backhanded salute for “the humiliation of a 51 to 49 percent rejection to end term limits and undermine private property rights.” He stopped short of mentioning most West European and other parliamentary systems allow unlimited reelections, and the latter accusation if false. Then Cohen attacks calling Chavez a “strongman….a caudillo….a menace (and) his ‘socialismo’ equals ‘Hugoismo.’ ” He aimed to “accumulat(e) power through threats, slandering opponents as ‘traitors,’ (and) buying support with $150 million a day in oil money.”


It gets worse: “his crony bankers (are) pocketing millions by arbitraging the disparity between the official and black-market (bolivar) rates. Crime and drug-trafficking are thriving.” His socialism is “the Russian (equivalent of) ‘Soviets,’ (and) I salute the Venezuelan people” for imposing “The Limits of (a) 21st-Century Revolution.” On December 3, Cohen listed them in eight Venezuelan marketplace and political rules to show by his logic Chavez “can(‘t) turn back the clock far enough to change” them.


The Times wasn’t done, and on December 4 it lashed out editorially with “A Tale of Two Strongmen.” The other was Vladimir Putin after his December 2 parliamentary election victory. According to The Times, it was a “referendum on himself (in which he) cynically manipulated a huge victory….” Chavez wasn’t as lucky in his “latest and most outrageous power grab (so there’s) hope (Venezuelan) political competition….will now flourish.” The Times concedes he’s “still very powerful,” so “The international community will….have to keep up the pressure on (him because he) hasn’t suddenly become a democrat.”


The Washington Post had it’s post-election say with a similar slanderous agitprop editorial torrent – that “Mr. Chavez had proposed to make himself a de facto president for life….Polls before the vote showed only about a third of Venezuelans favored the amendments (and) Urban slum dwellers who have supported Mr. Chavez in the past had good reason for second thoughts: Thanks to his crackpot economic policies….the outcome will not restore full democracy (because Chavez) still controls the legislature, courts, national television and the state oil company, and he retains the authority to rule by decree.” False on all counts except that most democratically elected legislators and Chavez-appointed judges support Bolivarianism as embedded in the country’s Constitution they’re sworn to uphold.


The AP was also hostile calling Chavez “conflict-prone (with a) larger-than-life personality leav(ing) little room for compromise (that) ensur(es) more friction (in a) deeply polarized (country).” But “Sunday’s victory has energized the opposition (that can petition) for a recall referendum once Chavez reaches the midpoint of his six-year term in December, 2009.”


In the West as well, the Los Angeles Times was celebratory in calling Sunday’s defeat “a remarkable indictment of (Chavez’s) agenda.” But it headlined: “Chavez isn’t finished.” Even in defeat, he’ll be “able to pass many of his desired reforms legislatively” since he controls the NA and Supreme Court. The Times cited “images of huge (opposition) student marches,” but the “biggest factor (on) Sunday (was) Chavez’s own nonsensical economic policies, which have caused many of his impoverished supporters to wonder if he really knows what he’s doing.” They’re “like Soviet Russia or modern Cuba (and) Chavez’s socialist ideals are leading Venezuela to a precipice, and it’s the poor who will suffer most if it goes over the edge.”


Time magazine wondered “How Will Chavez Handle Defeat? (and) Why Venezuelans Turned on Chavez.” It reported “panic set in around 7PM Sunday evening,” but it wasn’t until 1:00AM that “el comandante” conceded defeat. In the view of Time writer, Jens Erik Gould, they worried more about a Chavez power grab and ability to seize private property than the proposed social benefits for the poor and popular grassroots power they’d get. But while “defeat may….slow the President down….he and his allies still have wide-reaching powers (so the) battle is far from over” with no doubt left which side Time  backs.


Business Week magazine was vocal about what was “Behind Chavez’s Defeat in Venezuela” in an article full of the usual kinds of errors, misstatements and pro-business slant. It said “rejection….may mean more stability for business and the economy” without ever mentioning business is booming, and the economy is one of the fastest growing ones in the world under Chavez’s “socialist vision.”


The article quoted the opposition saying if the referendum passed “We would have woken up in a dictatorship….a possible victory….undermined business confidence….defeat calls into question whether Chavez will be able to deepen his socialist revolution….the majority in Venezuela doesn’t share Chavez’s socialist vision….There is growing discontent with Chavez’s leadership.” Victory would have let Chavez “seize private property….curb private ownership….undermine Venezuela’s democratic and capitalist foundations, and allow Chavez to create a state styled on communist Cuba if passed.”


Anti-Chavez post-election rants could fill volumes. A few more follow below:


— the San Francisco Chronicle lamented that “Chave z(still) holds all the cards (and) The opposition has yet to find a leader that can match Chavez’s magnetic personality and charisma.”


— was also dismayed that one defeat won’t “likely….stop (Chavez’s) drive to socialize Venezuela’s economy….he may nationalize industries, seize property and weaken central bank independence.”


— the state-run Voice of America (VOA) trumpeted George Bush’s post-election comment that Chavez’s defeat is a “vote for democracy;” it never mentioned his pre-election rant about Venezuela being undemocratic;


— CBS News headlined “Chavez’s Democratic Authoritarianism (so) Despite (electoral defeat), Venezuela’s President will continue toward absolute rule;”


— the Christian Science Monitor said “Venezuela’s Chavez Defiant, Despite Defeat….few believe the results will cause (him) to alter his course,”


— the Financial Times in a “Chronicle of a defeat foretold” sees Chavez’s support among the poor eroding as “Venezuelans are seeing things with greater realism;”


— the Economist sees his “aura of invincibility….forever damaged, the battle for succession seems bound to begin soon (and) Survival strategies no longer….involve unquestioning loyalty to the ‘commandante.’ The fighting back is just beginning;”


— CNN was also at the forefront of what Chavez at a post-election press conference called its manipulation campaign. He said Defense Minister Rangel Briceno was “very angry by (CNN’s) manipulating campaign….all over the world,” he’s preparing to sue the cable network, and “behind (it) is the evil face of the United States;”


— the BBC is notorious as a “guardian of power;” it headlined “White House….welcomes the defeat of Venezuelan President Hugo Chavez’s controversial reform….referendum….(and said) the people spoke their minds….that bodes well for the country’s future and freedom and liberty….(Venezuelans didn’t) want any further erosion in their democracy and their democratic institutions;” pro-Chavez voices or a clear explanation of the issues were nowhere in sight pre or post-election;


— the Chicago Tribune headlined “Chavez chastened, hardly capitulating (as) political leaders and analysts said it is too early to say whether the slim defeat….represents just a bump in the road….or the awakening of a durable and vibrant opposition;” and


— the London Guardian’s Seumas Milne headlined Chave zwas “Down but not out in Caracas” in writing for a paper with a long history of pro-state support and too little of it for its people. Milne, on the other hand, struck another note saying Bolivarianism suffered a setback (but) “it’s far from finished (and) Sunday wasn’t a crushing defeat.” It also “discredit(ed) the canard that the country is somehow slipping into authoritarian or even dictatorial rule….The referendum was a convincing display of democracy in action….The revolutionary process underway in Venezuela has delivered remarkable social achievements.” Halting or reversing them “would be a loss whose significance would go far beyond Venezuela’s borders (but) Chavez’s comments and commitments (show) there is no mood for turning back.”


Chavez is resilient and will rebound from one electoral setback. Don’t ever count him out or underestimate his influence over what co-director of the Center for Economic and Policy Research, Mark Weisbrot, says is “A historic transformation….underway in Latin America (following) more than a quarter century of neoliberal” rule. Long-time Latin American expert, James Petras, puts it this way: “The referendum and its outcome (while important today) is merely an episode in the struggle between authoritarian imperial centered capitalism (Chavez opposes) and democratic workers centered socialism (it’s hoped Bolivarianism will deliver).” The spirit of democracy thrives in Venezuela, and one electoral setback won’t derail it.


Stephen Lendman lives in Chicago and can be reached at


Also visit his blog site at and listen to The Steve Lendman News and Information Hour on Mondays at noon US central time.


From Oil Wars to Water Wars

December 13, 2007

From Oil Wars to Water Wars

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Posted on Dec 11, 2007

By Amy Goodman

The Nobel Peace Prize was awarded this week, in Oslo, Norway. Al Gore shared the prize with the United Nations’ Intergovernmental Panel on Climate Change, which represents more than 2,500 scientists from 130 countries. The solemn ceremony took place as the United States is blocking meaningful progress at the U.N. Climate Change Conference in Bali, Indonesia, and the Republicans in the U.S. Senate have derailed the energy bill passed by the House of Representatives, which would have accelerated the adoption of renewable energy sources at the expense of big-oil and coal corporations.

Gore set the stage: “So, today, we dumped another 70 million tons of global-warming pollution into the thin shell of atmosphere surrounding our planet, as if it were an open sewer. And tomorrow, we will dump a slightly larger amount, with the cumulative concentrations now trapping more and more heat from the sun.

“As a result, the Earth has a fever. And the fever is rising. The experts have told us it is not a passing affliction that will heal by itself. We asked for a second opinion. And a third. And a fourth. And the consistent conclusion, restated with increasing alarm, is that something basic is wrong. We are what is wrong, and we must make it right.”

He went on: “Last Sept. 21, as the Northern Hemisphere tilted away from the sun, scientists reported with unprecedented distress that the north polar ice cap is ‘falling off a cliff.’ One study estimated that it could be completely gone during summer in less than 22 years. Another new study, to be presented by U.S. Navy researchers later this week, warns it could happen in as little as seven years. Seven years from now.”

How will climate-change skeptics explain that one? (Already, big business is celebrating the break up of the polar ice cap, as a northern sea route from the Atlantic to the Pacific is opening, creating a cheaper route for more needless shipping.) It is hard to imagine the north pole, the storied, frozen expanse of ice and snow, completely gone in just a few years. Lost as well will be the vast store of archeological data trapped in the ice: thousands of years of the Earth’s climate history are told in the layers of ice that descend for miles there. Scientists are just now learning how to read and interpret the history. The great meltdown will surely have catastrophic effects on the ecosystem in the north, with species like the polar bear already edging toward extinction.

Rajendra Pachauri, an Indian scientist, accepted for the IPCC. He is a careful scientist with the political finesse to chair the work of the IPCC despite the enduring antagonism of the United States. He pointed to the disproportionate effect of climate change on the world’s poor:

“[T]he impacts of climate change on some of the poorest and the most vulnerable communities in the world could prove extremely unsettling …  in terms of: access to clean water, access to sufficient food, stable health conditions, ecosystem resources, security of settlements.”

Pachauri predicts water wars and mass migrations. “Migration, usually temporary and often from rural to urban areas, is a common response to calamities such as floods and famines.”

Gore invoked the memory of Mohandas Gandhi, saying he “awakened the largest democracy on earth and forged a shared resolve with what he called ‘Satyagraha’—or ‘truth force.’ In every land, the truth—once known—has the power to set us free.” Satyagraha, as Gandhi practiced it, is the disciplined application of nonviolent resistance, which is exactly what Ted Glick is doing back in Washington, D.C.

Glick heads up the Climate Emergency Council. On his 99th day of a liquids-only fast, the day after the Nobel ceremony, he joined with 20 people in the office of Senate Minority Leader Mitch McConnell for a sit-in. The Senate Republicans are now blocking a federal energy bill that would create funding for the development of renewable energy sources in the U.S., while stripping away billions of dollars worth of tax breaks for big oil and coal.

Glick told me: “We have to be willing to go to jail. Al Gore, himself, a couple of months ago talked about how young people need to be sitting in in front of the coal plants to prevent coal plants from being built. That’s true. Young people need to be doing that. Middle-age people need to be doing that. Older people need to be doing that. And Al Gore needs to be doing that. Let’s get serious about this crisis.”

While Glick was sitting in, news reports began to circulate about Republican presidential candidate Rudolph Giuliani’s law firm’s lobbying activities against the energy bill. According to Bloomberg news, Bracewell & Giuliani LLP was hired by energy giant Southern Co. to defeat the bill. At a $1,000-a-plate fundraiser last August, addressing members of the coal industry, Giuliani said, “We have to increase our reliance on coal.”

As Giuliani’s coffers get fat with money from big oil, gas and coal, Glick has lost more than 40 pounds, and the Earth’s temperature continues to rise.

Amy Goodman is the host of “Democracy Now!,” a daily international TV/radio news hour airing on 650 stations in North America.

December 13, 2007

Waterboarding Our Democracy

Posted on Dec 11, 2007

By Robert Scheer

When the CIA destroyed those prisoner interrogation videotapes, was it also destroying the truth about 9/11?  After all, according to the 9/11 Commission Report, the basic narrative of what happened on that day—and the definition of the enemy in this war on terror that George W. Bush launched in response to the tragedy—comes from the CIA’s account of what those prisoners told their torturers.  The commission was never allowed to interview the prisoners, or speak with those who did, and was instead forced to rely on what the CIA was willing to relay. 

On the matter of the existence of the tapes, we know the CIA lied, not only to the 9/11 Commission but to Congress as well.  Given that the Bush administration has for six years refused those prisoners any sort of public legal exposure, why should we believe what we’ve been told about what may turn out to be the most important transformative event in our nation’s history?  On the basis of what the CIA claimed the tortured prisoners said, President Bush launched a “Global War on Terrorism” (GWOT), an endless war that threatens to bankrupt our society both financially and morally. 

How important to the 9/11 Commission Report were those “key witnesses”?  Check out the disclaimer on Page 146 about the commission’s sourcing of the main elements laid out in its narrative:

Chapters 5 and 7 rely heavily on information obtained from captured al Qaeda members. … Assessing the truth of statements by these witnesses … is challenging.  Our access to them has been limited to the review of intelligence reports based on communications received from the locations where the actual interrogation took place.  We submitted questions for use in the interrogations, but had no control over whether, when, or how questions of particular interest would be asked.  Nor were we allowed to talk to the interrogators so that we could better judge the credibility of the detainees and clarify ambiguities in the reporting.  We were told that our requests might disrupt the sensitive interrogation process.

Videos were made of those “sensitive” interrogations, which were accurately described as “torture” by one of the agents involved, John Kiriakou, in an interview with ABC News.  Yet when the 9/11 Commission and federal judges specifically asked for such tapes, they were destroyed by the CIA, which then denied their existence. 

Of course our president claims he knew nothing about this whitewash, and he may be speaking the truth, since plausible deniability seems to be the defining leadership style of our commander in chief.  But what about those congressional leaders who were briefed on the torture program as early as 2002?  That includes Democrats such as Nancy Pelosi, who has specialized in heartfelt speeches condemning torturers in faraway places like China.

Pelosi press aide Brendan Daly told me that The Washington Post report on her CIA briefing was “overblown” because Pelosi, then the ranking Democrat on the House Intelligence Committee, thought the techniques described, which the CIA insists included waterboarding, were merely planned and not yet in use.  Pelosi claimed that “several months later” her successor as the ranking Democrat, Jane Harman, D-Calif., was advised that the techniques “had in fact been employed.” Harman wrote a classified letter to the CIA in protest, and Pelosi “concurred.” Neither went public with her concerns.

Harman told The Washington Post, “I was briefed, but the information was closely held to just the Gang of Four.  I was not free to disclose anything.” The “Gang of Four” is an insider reference to the top members of the House and Senate intelligence committees and not to the thugs who ran Mao’s China during the Cultural Revolution.

Not only did the congressional Gang of Four fail to inform the public about the use of torture by our government, but it also kept the 9/11 Commission in the dark.  Pelosi testified before the commission on May 22, 2003, but uttered not a word of caution about the methods used.  However, more than two years later, on Nov. 16, 2005, Pelosi stated correctly that on the basis of her “many years on the intelligence committee,” she knew that “[t]he quality of intelligence that is collected by torture is … uncorroborated and it is worthless.”

Having admired Pelosi for decades, I hope I am missing something here.  If she and the others in the know have another version of these events it’s time to come clean.  As matters now stand, they not only concealed torture but, more significantly, they abetted the waterboarding of our democracy.


December 13, 2007

Source: Mother Earth News

March/April 1983


Politician Ron Paul discusses national economics and federal banking money.

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As this issue of THE MOTHER EARTH NEWS(R) approaches deadline, over 12 million men and women in the United States are unemployed, and our cities are filled with thousands of homeless, hungry people. Asofthe endof1982, production had dropped for 17 months in a row, the longest consecutive fall since the Great Depression. And our national debt has exceeded $1 trillion. Furthermore, such tragedies are compounded by the fact that eastern-bloc Communist and Third World nations owe over $850 billion on loans … which, if not repaid, could cause some of our nation’s biggest banks-and perhaps even the international banking system itself-to collapse. And all this is happening in a country that just a short time ago had the world’s highest living standard and its strongest economy.

The blame for this disastrous state of affairs has been laid at many doors. OPEC, the World Bank, Japanese imports, high interest rates, Reaganomics, and so on. But Ron Paul-a gentleman who has served in the HouseofRepresentatives in the 94th, 96th, 97th, and now the 98th Congress and is also a memberofthe House Banking Committee-thinks that these “causes” are all just symptoms of a much greater evil, and he’s been predicting our present economic chaos for years. Unlike most doomsayers, however, Paul claims to have a solution to our fiscal woes.

Recently, staffer Sara Pacher went to Washington, D. C. to talk to the Congressman, a gracious and articulate doctor who studied internal medicine at Detroit’s Henry Ford Hospital, and obstetrics and gynecology at the UniversityofPittsburgh … served as a flight surgeon in the U.S. Air Force … and has a private medical practice in Lake Jackson, Texas, where he lives with his wife Carol and their five children.

After spending a few hours with this advocate of individual freedom and sound currency, Sara concluded that it’s probably no coincidence that “In God We Trust” first appeared on American money in 1864, at the end of the Civil War … which was another period in our history when the government tried to passoffworthless “greenbacks” as valuable currency.<span ..”font-style: italic;”>

<span ..”font-style: italic;”></span>PLOWBOY: Most Americans are aware-many because the truth has touched their very lives-that our economy is facing its worst crisis in 50 years. Just how did we manage to get into such a mess?

PAUL: Well, in some ways, the story is a complicated one, but a major factor in our economic downfall-if not the most influential -has been the deliberate destruction of our money. You simply cannot have a healthy economy without a sound currency. Consider, if you will, how difficult it would be to build a house if your yardstick were to change its length each day: Can you imagine what kind of structure would result if a carpenter used a “standard” measure that was 16 ” one day, 32 ” the next, then 56 “, then 43 “? And that’s essentially what we’re trying to do … run an economy using a value measurement that continually fluctuates.

In the 1784 debate concerning the handling of our country’s currency, Thomas Jefferson said, “If we determine that a dollar shall be our unit, we must then say with precision what a dollar is.” But now, just like that poor carpenter with a changing yardstick, we don’t know from day to day what a dollar will be worth. And this lack of knowledge keeps us from projecting realistic economic calculations. You have to have a unit of measure if you’re to make such calculations, and we’ve destroyed the necessary system of measurement: our money.

PLOWBOY: And you believe the solution is to back our currency with gold?

PAUL: It’s very clear-at least to those of us who advocate hard money-that if you have something real, such as an ounce of gold, it remains the same from day to day … year to year … century to century. As we’ve seen-particularly in the past few years-gold’s value in terms of the dollar fluctuates, but that’s the dollar fluctuating, rather than the gold itself.

Karl Marx, in his 1848 Communist Manifesto, urged the “centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly”. Sixty-five years later, the United States followed his advice and passed the Federal Reserve Act of 1913, which made possible the massive inflation necessary to finance our entrance into World War 1.

Since 1913, we’ve gone on to destroy our money … to the point that in 1971-when Nixon “closed the gold window”-we totally separated the dollar from gold. And ever since then we’ve had very, very chaotic conditions . . . marked by a tripling of the money supply and a deterioration of the economy.

PLOWBOY: When Nixon took that step-that is, made it impossible for anyone to cash in U.S. dollars for gold-a number of people predicted just such an outcome. So why was the gold window closed.) Were we bankrupt?

PAUL: In effect, yes … but it wasn’t quite the same thing as, say, Mexico’s going bankrupt today. You see, in 1944 the U.S. attended an international conference and helped draw up the Bretton Woods Agreement. We said, “We’re rich. We have 745 million ounces of gold. We’re so rich, in fact, and we have so much gold backing our dollar, that there’s no way we could ever print too much money. Therefore, our dollar is as good as gold. From now on, just trust us. The metal is here, but it’s old-fashioned to swap it back and forth.”

That agreement, of course, allowed U.S. politicians to print unlimited supplies of paper money. In fact, they did just that for years … in order to finance such things as the Great Society and the Vietnam War. Finally, though-in 1971-other countries called our bluff and started cashing in their dollars … to the point that our gold supplies dropped to 263 million ounces. It was then that we had to renege on our promises. When Nixon closed the gold window, it was an admission that the 1944 Bretton Woods Agreement was dead, and that the gold standard was dead … and at that point the dollar took one more step toward its final destruction.

Still, we weren’t bankrupt then in the same sense that Mexico is today … but that’s coming. That last stage-when you have no redeemability of money-is the result of a total loss of trust. During one weekend last year, everyone lost trust in the Mexican peso and dumped it.

Back in 1979, though, as we moved into an age of runaway inflation, the United States did come close to experiencing what has happened in Mexico … that is, the rampant dumping of currency. That’s why our government had to change the rules, and cut back on the money supply and raise interest rates to save the dollar. Although we do have some remaining public trust in our currency, I claim it’s a false trust, and I’m afraid it won’t last. Sure, the government says it’ll protect your money, and a lot of people don’t really understand what’s been happening, so the system still works. But in a moral sense, at least, 1971 was the year we completely destroyed our currency.

In summary, then, the dollar still functions in the economic sense … but it may be that some weekend, some day in this decade, the world will finally reject our worthless paper and dump it. Then you could see gold go up to $5,000 an ounce in a very short time and silver to $100 or $200, and total chaos would follow. It’d be a real calamity, even worse than Mexico’s crisis. There, you see, we were able to go in and bail that country out, because-in terms of pesos our dollar was still strong and could be used to prop up the Mexican currency. But if the dollar fails, no one else will be able to do that for us.

PLOWBOY: I’ve heard that, under the Monetary Control Act of 1980, our government can actually use such currency bailouts to back our own money. Maybe you could explain how that law works.

PAUL: OK. The Monetary Control Act was the most significant change in the Federal Reserve System since 1913. It allowed reserve requirements to drop to zero, if desired … which means that a massive expansion of money became possible. It also put 15,000 institutions (instead of 3,000) under the Federal Reserve System … which, in effect, lets them go to the discount window and borrow from the government in case of emergencies. And most important, it permitted the Federal Reserve to use foreign bonds as backing for our own currency. And where does the Fed get these bonds? Well, believe it or not, it usually creates Federal Reserve notes out of thin air … exchanges them for foreign currencies … buys the bonds … puts them in the bank and calls them assets . . * and then prints more Federal Reserve notes that are “backed” by those deposits!

The Fed used to give me information on all that, and I’d keep tabs on what it was doing. But after the Mexico crisis, the agency’s people quit answering my questions. Finally, they did admit that we’ve purchased Mexican pesos with dollars, and-under the lawwe can monetize those . . . that is, use them as backing for our currency. So here we sit, talking about backing our money with gold … while the Fed backs our currency with next-to-worthless Mexican pesos! It’s actually able to do that!

PLOWBOY: I’m sure the Monetary Control Act hasn’t alleviated any international anxiety.

PAUL: No, there’s a growing worldwide loss of confidence in the international banking system. In fact, Secretary of the Treasury Regan has been talking about getting together with all the larger countries to try to come up with a new Bretton Woods-type agreement. And when officials start talking about convening international conferences, you know darn well they’re a little scared. They’re also afraid to tell you the truth … but there are already signs of concern among the public, despite the fact that much is being kept from them. We’ve seen gold and silver prices ‘jumping up again … and who knows what tomorrow will bring? I have to hope the “tricks” that the government is using will work for a little while … mainly to give us more time. But even if the current reinflation seems to improve our economy, we shouldn’t be deceived … because it will be only a temporary solution. Let’s say interest rates and unemployment go down in 1983. It’s all going to be the result of deception, and will have occurred because we’ve inflated the money supply some more.

PLOWBOY: But we have seen the dollar strengthen on the world market over the last two years.

PAUL: Yes, that was a result of the 1979 scare, when we cut back on the money supply and caused the highest real rates of interest seen in the last 2,000 years. The government, you see, tried to control the crisis by introducing the concept of monetarism. This is the view that the federal government should manage the nation , s money system and supply by limiting the increase in the number of dollars printed each year to between 3% and 5%. But that’s been a complete failure, and the administration has now totally rejected those limits. Last August, it switched tactics and went back to the old method of trying to get out of trouble by printing more and more greenbacks.

The plain truth is that the only thing that creates real wealth is hard work and effort. You can’t create wealth by printing money. After all, if you want a house, you have to build it, and if you want something to eat, you have to raise crops … or at least you have to produce something you can exchange for those things. Right now, though, the U.S. government requires Americans to accept paper money-cash without any intrinsic value-in payment for real work and real products.

PLOWBOY: So each time the Federal Reserve increases the money supply, it actually lowers the value of the dollars in our pockets and savings accounts.

PAUL: That’s right. I’ve likened it to diluting milk with water, an it might not be an accident that I use that analogy, since I was raised on a dairy farm. As we brought milk in from all the different farmers, you see, we’d run across somebody once in a while who’d try to rob us by diluting the milk with 5% to 10% water.

And I think that can be compared to what’s been done to our money … the moral nature of both actions is the same. If a farmer tries to steal by diluting milk, that person is a thief. And if you have a savings account, and a politician up here in Washington, in order to stay in office, votes for programs with no means to finance them other than printing up more money, that person-by lowering the value of the money you’ve saved-is stealing from you.

Of course, a lot of politicians who do such things don’t quite understand the nature of money, but the outcome is just as bad, regardless of whether the act results from ignorance or evil intent. Most public servants, in fact, avoid thinking too seriously about the whole question, because it’s very nice for them to have the tool of inflation to use in paying for the programs that keep them in office.

But, I guess, as despicable as debasing the currency is (and I honestly feel it’s the most immoral action a government can take, short of deliberate warfare), I would at least concede that many who participate are not doing harm intentionally. There are economists who actually think they can control the economy, and some people see inflation as a legitimate means of helping the poor … what they don’t see are the long-term consequences. But such actions are still immoral, even though there might be various motives among those who are responsible for them.

PLOWBOY: You say that politicians vote for inflationary programs in order to be reelected. Yet you fight such programs-in fact, the National Taxpayers Union named you “The Taxpayers’ Best Friend in Congress” for your work in cutting taxes and spendingand you seem to have no trouble being reelected.

PAUL: True, and that shocks a lot of people. My colleagues can’t believe it! Many of them worry about future elections on a day-to-day basis, and fight and struggle to keep their seats. Such individuals can’t see where I have a constituency, yet my opponent actually dropped out in the middle of the last election.

PLOWBOY: Since you endorse the gold standard, aren’t you automatically labeled as a right-wing conservative?

PAUL: By some people, maybe, but that’s not totally accurate. It’s true that many of our votes up here are economic market votes, and I vote for the free market, which puts me on the conservative side of the question. However, I consider myself a classical liberal-that is, a Jefferson type, an Andrew Jackson-who is not in favor of any special interest. I’m here to stand up for our freedom and to protect our individual liberties … and that platform is about as liberal as you can get.

And certainly, I don’t keep any secrets about how I vote. I oppose boondoggles and advocate the gold standard. Everybody in my district knows exactly where I stand on spending, social issues, military issues, welfare for business, and gold. So I think the American peopleat least those in my constituency-are a little more attuned to what’s happening than some politicians realize.

PLOWBOY: But politicians, obviously, aren’t the only ones who benefit from inflated money.

PAUL:No, anyone who’s on the receiving end benefits, whether he or she is an industrialist who gets a military contract or someone on welfare who can and won’t work … because both such individuals are recipients of this inflated currency. It’s the person still working for a living, or saving for his or her retirement, who’s getting robbed. These people are already being taxed . . . but the government can’t tax without limits, because there’s a point where people usually rebel. So the politicians and the special interest groups resort to this very, very convenient tool of inflation to take a little more from the pockets of working Americans.

And it’s got to be tempting to use this tool, because-in the early stages, at least-the public can’t quite see what’s happening. People are being robbed, and they don’t know it, because the ill effects aren’t obvious right away. But in the long run, as more and more people become increasingly dependent upon receiving from the government, the monetary system will be destroyed. Those who are still producing will lose their incentive, and-toward the end-production will drop off rapidly.

You can compare an inflationary society to an alcoholic who needs that next drink in order to feel good. The new money makes everybody feel good at first. It may temporarily lower interest rates, for instance … but as soon as its effects wear off, the country will have to have another “shot” of inflation, or it’ll begin to go through painful withdrawal symptoms. So there’s absolutely no easy way to get out of the predicament we’re in.

PLOWBOY: I’ve heard some economists say that we face an “inflate or die” situation, and they talk about needing an inflation rate of 25% or 30% to turn our economy around effectively.

PAUL: Yes . . . in each cycle you have to inflate more in order to convince people that there’s enough money. In each cycle since World War 11, the inflation rate, interest rates, and unemployment rates have been progressively higher. But who can say how much inflation we’ll end up with? We might go into a sustained period of 30% or 40% inflation for several years. And we should never forget that Richard Nixon imposed price and wage controls in 1971 because the government was panicking at a 4.5%-per-annum rate of inflation. Now, we’d probably consider returning to that rate tantamount to reaching a state of nirvana, and ten years from now we can expect cheering in the media when the inflation rate falls below 50%. And our ever-worsening problems are all a result of our having printed too much paper money.

PLOWBOY: Psychologically, we’re already living as though inflation is a fact of life. Yet as you’ve often pointed out, from 1833 to 1933 wholesale prices increased only nine-tenths of 1%, while since 1971 they’ve gone up 148%!

PAUL: Those figures should give you a very strong message. In fact, if I ever had to use just one chart to try to demonstrate to the American people the danger we face, I’d choose the one [accompanying this interview] that traces and parallels gold and the dollar. There were, as you’ll notice, some separations and dips between the two in the past-such as during the Civil War-because we had an imperfect gold standard. But for the most part, the dollar and gold either stuck together or paralleled each other. They separated for a bit in 1933, when private ownership of gold was unconstitutionally prohibited. But our currency still had some connection with the metal … until 1971. And that’s the point at which you see the dramatic change, because all of a sudden the purchasing value of gold went straight up, and the purchasing power of the dollar went straight down.

In fact, since 1971 we’ve been sailing uncharted economic waters, because this is the first time in 1,500 years that the world economy has had to function without a single nation’s operating on a gold standard. We’re facing conditions that we’ve never experienced before … not since we’ve had our Constitution. Our present crisis is actually worse than the Civil War situation, and similar to the runaway inflation that hit this nation in colonial times. And it’s all due to the fact that we’re disobeying the constitutional law that nothing other than silver and gold can be legal tender. We’re finally approaching the climax. We don’t have to wonder whether or not a collapse will come, because economic law dictates that it will come. Between 1944 and 1971-when we said, “We’ll honor the dollar, but we’ll print all we want”-we defied economic law.

PLOWBOY: Aside from designating silver and gold as legal tender’ didn’t our Founding Fathers also pass a law stating that anyone who debased the currency could be put to death?

PAUL: Yes, and that piece of legislation is still on the books. It was a reflection of how strongly those men felt about the question of debasing money. You see, between 1781 and 1787-after we won our independencewe were loosely held together by the Articles of Confederation … and there was a depression, because all the dif ferent states had different money, and it was all paper and all inflated. So two of the most important jobs for the Federal Constitutional Convention (the body that wrote our present Constitution) were to create sound money and to pass an interstate commerce clause … not to regulate commerce, but to deregulate it, so nobody could put up trade barriers between states. And in 1792, when our forefathers passed the first Coinage Act, they ruled that nobody be allowed to mess with the money by diluting the metal, upon penalty of death … and that law has never been repealed. Now, of course, we’re more sophisticated about methods of debasing our currency: We have computers that can do it very rapidly!

PLOWBOY: Since the Constitution already seems to require hard money, why do you think we need to add an amendment in order to return to a gold standard?

PAUL: Well, even though the Constitution is very clear on the subject, the point has been abused, and we haven’t lived up to that law. It needs to be restated in the form of a precise amendment so that nobody can confuse its meaning.

PLOWBOY: And you believe that the destruction of our money was deliberate?

PAUL- Yes, it was deliberate on the part of those who stood to benefit … even though they constitute a very small minority. There may be only 15 members of Congress who really know how the monetary system operates. But most of those who benefit from the inflationary policy understand it, as do many intellectuals. You see, there’s considerable intellectual support for paper money. Some individuals look at the inflation of the money supply as a legitimate way to stimulate business. After all, if we “counterfeit” the money and throw it into circulation, nobody knows it’s counterfeit. It looks as if it’s stimulating things, because people are spending that money, and business picks up. But eventually people come to realize that the value of the currency drops as the supply increases.

And both conservatives and liberals are to blame for this state of affairs, although each group supports it for a different reason. The liberal needs to get rid of the sound dollar because he or she wants government to spend to do good for everybody. And a lot of basically well-motivated people think that this is a legitimate risk. They don’t realize that in the long run they’re going to destroy the poor people as well as the middle class.

On the other side, the conservative isn’t really quite ready for pay-as-yougo building of the military machine that’s needed to police the world. So you’ll find both conservatives and liberals endorsing foreign aid programs, propping up banking institutions and Third World nations, and so on. Such individuals are all in favor of destroying sound money, because that action gives them the power to do what they want to do.

The men and women who will be the strongest supporters of the gold standard will be average Americans who are willing to work for a living and take the responsibility of caring for themselves. In fact, during the few times in our history when gold has become the key issue, it has been the ordinary workers who championed gold

… not the industrialists, not the welfare people, not the bankers, not the government. It’s always the average person who’s willing to work and save who supports hard currency.

PLOWBOY: Isn’t gold sometimes called “the people’s money”?

PAUL: It is. And it will always win out when people understand the issues. Events are moving more quickly in that direction every day, too. In this decade, I’m convinced, gold will again be the great issue … just as soon as the American people realize that their friend is honest money, something the government can’t merely print as needed.

PLOWBOY: Yet a lot of people still don’t understand why we can’t rely on paper.

PAUL: And I tell them paper currency will work-on a long-term basis-as soon as we can get people to cherish paper jewelry. People do cherish gold, and if something is cherished, it can serve as money. This isn’t an idea that I, or a few economists, have concocted … history has demonstrated it over the centuries. The human being cherishes precious metals, and that’s a fact of life. It’s about as authentic a fact as that we need red corpuscles to carry oxygen in our blood. We need gold to circulate as money in an economy that requires money.

Now we can bring that about only if we have enough people in this country who will assume self-responsibility. If we want to live off the dole, we can’t support gold. But with a gold standard, we wouldn’t even have to have a balanced-budget amendment, because we can’t print gold, and people will accept only so much taxation … so limited government and sound money go together.

Actually, the gold standard is related to a freedom philosophy, to the free market, and to honesty in government. Paper money is the weapon that’s used by the people who want power … who want to be kingmakers and to control others, and who-in turn-are generally manipulated by special interest groups.

Economic controls, you see, are actually people controls, because as inflation gets worse, governments resort to such things as wage and price fixing to hide the effects. And I expect that before this crisis is over, wage/price controls will come in again, and the scapegoats will be the workers who are seeing their real spendable income diminish, and the honest business people who are trying to make a profit. Of course, such controls limit our freedom. That’s the great threat. The loss of sound money really boils down to a loss of liberty. The overriding issue here is freedom.

PLOWBOY: In your book The Case for Gold, you documented a comparison of the last ten years with the decade from 1880 to 1890, when the dollar was strongly connected to gold. That pairing-off makes a very impressive case for hard money!

PAUL: I thought so, too. I kept looking at that gold/dollar chart I mentioned earlier and seeing how badly things have gone for us, economically, in these past ten years … and then comparing the last decade to the ten years following the 1880 resumption of the gold standard. As you may recall, because of the Civil War we were off gold from 1861 to 1879. Then we reestablished the standard, and in the following decade economic growth was up … production was up … employment was up … the number of new farms was up … and price levels were down.

Many people are under the impression that if we go to a gold standard, we’ll be faced with years and years of chaos, and that we’ll have a great depression … but that’s not true. Naturally, there would have to be an adjustment period, but I believe we could see a revitalization of the economy within six months.

Unfortunately, I don’t think government will revert to gold swiftly and cleanly under today’s conditions, because not enough people endorse changing the whole role of the welfare state or the international role that allows us to protect other countries from themselves. So the government is likely to come up with a partial gold solution … and that’s very dangerous, because it probably won’t work, and it will discredit the whole idea of gold-backed currency.

However, if we supported our currency 100% with gold, limited the government, balanced our budget, and allowed the economy to operate freely … everything would be all right in a short period of time. At least that’s the lesson history teaches.

PLOWBOY: But the 1880’s were years of tremendous westward expansion, and we don’t have that new territory to explore now.

PAUL: Geographically, no. But we have all the frontiers we need. just look at computers! I think the frontier ahead of us is a thousandfold richer than it was in colonial times or in the nineteenth century. We have all kinds of things we could develop, including hydroelectric and solar power.

In that same vein, as an example of how government interferes with the frontier, lookat the history of wind power. Farms had windplants when there were no wires out in rural areas. But what did government do? It mandated that utility companies send electricity to the farmer at a discount rate. He or she couldn’t afford to pay for those lines, so the city people had to defray the cost of sending long lines way out in the country, and they said, “Isn’t it wonderful that the farmer now has electricity!” But what did it do to the market for wind-generating systems? It destroyed the incentive to develop it! [EDITOR’S NOTE: See “Wind Chargers: Building Tools From the Nation’s Past” on page 116 of this issue.] I think that if the market had been allowed to mature, wind power would have developed wonderfully by this time. Instead, we killed the market, and now-decades later-the government has to build windplants, run by bureaucrats, which are probably too big to be practical.

The same thing happened with solar power. People in Florida and California were using solar heat in the 1920’s. And again, the government interfered by mandating that natural gas prices be lower than the market value of the energy the fuel produced … making it advantageous for folks to shift from solar heat to natural gas.

The government has also, of course, subsidized the development of nuclear power. It does ail the research, pays for the insurance, and has even become responsible for waste disposal. Nuclear power was imposed upon the nation … we’ve never seen whether there’s actually a market for it.

So I think the frontiers are available, but a government that’s not responsible enough to give us good money can hardly be counted on to develop those frontiers. It’s just a matter of getting the government out of the way and letting people take care of their own needs.

PLOWBOY: What are the chances of getting an honest currency?

PAUL: Well, politicians rarely do what they should do in a responsible manner. They live only for the next election. Also, they are under the influence of the economic intellectual community, and the conventional economist is still an enemy of gold.

PLOWBOY: Why is that?

PAUL: I think it’s sometimes, at least, the result of an ego trip. Many economists like to believe-just as Communists do-they can plan an economy that’ll work better than one that simply adjusts itself to supply and demand. I’m inclined to think that in a polite, academic way they’re little dictators. They figure that if they design an economy and control the money, they have some superiority over others … while the person who really believes in freedom has no desire to feel above anybody else.

Besides, bad ideas have a way of lasting a really long time. In the 1920’s, practically every economist in the country endorsed gold. When the Great Depression came, however, many said that the gold standard and the free market caused it . . . though what actually caused and perpetuated that tragedy was Federal Reserve inflation, combined with economic intervention on the part of both Republican and Democratic administrations. Yet the economists, flocking together just like sheep, all became Keynesians.

Now, the market is proving that Keynesianism (the advocacy of governmental management of currency and budgeting to stabilize the economy and maintain higher employment) doesn’t work, and that paper won’t work. Therefore, you could see an equally rapid change in the other direction … and we must eventually have an intellectual endorsement of gold. Right now, it’s hard for the average person out there, who knows something’s wrong, to get information and to be reassured that he or she isn’t a kook. That’s the reason I’ve established the Foundation for Rational Economics and Education. I think its work is probably more important than my little political activities up here in Washington.

Under today’s condit ions- which are the conditions that always exist when you have inflation-we can’t get adequate support for hard currency. I think, then, that the chances of our government’s opting for gold right now are nil. An educational effort that could turn things around might be possible … say, in 1985, when things become a lot worse than they are now but are not yet totally chaotic. Even that’s a slim chance, however.

The most likely time to restore sound money would be during or following a collapse … and that’s very dangerous. After Germany experienced its 1921 collapse, the nation quickly restored its currency. In fact, by 1924 the money was pretty good again. But the social consequences of that trauma were so great that they created a fertile field for Hitler. Within ten years, resentment and hatred had built up for those individuals in the business community who had protected themselves from the crash … especially the Jews. Of course, the hatred was turned in the wrong direction, because the real evil was inflation. The destruction of the wealth of the middle class was a result of an inflationary government policy, not of any actions taken by Jewish business people. But that feeling led, as you know, to the rise of Nazism.

Again, we’ve never before lived under monetary conditions similar to those we’re experiencing today … so we could encounter political conditions that we’ve never faced before, either. We really live in great danger, and yet we’re not supposed to talk about it. We’re allowed to say-under our breath-only that the economy is in a hell of a mess. We aren’t permitted to get on the air and tell the nation the truth, though I think a lot of people would accept the truth if they could hear it.

PLOWBOY: Meanwhile, we’ve become a nation of speculators.

PAUL: Yes, we live in an age of speculation instead of true investment. And interestingly enough, governments often turn on the speculator and say that he or she creates the problem … when federal policy actually creates the speculator, who’s simply trying to survive. If government hadn’t destroyed the system and the money, we would invest. We’d be buying and building plants instead of speculating and earning interest on government securities.

Of course, if we did go back to the gold standard, all that speculation would come to a halt, and some people would be hurt. For example, let’s say you’re buying land, expecting it to go up 20% a year so that you can sell it at a profit. If we return to a hard currency, the property’s value will not go up 20% … real estate will probably be very stable after that. So you’d want to buy land to make use of it . . . not to speculate on it.

PLOWBOY: I’ve heard it argued that if our dollars were backed by gold, the Common Market countries combined would have about twice as much of the precious metal in reserve as we do, and they could use that to buy dollars and control the U.S. economy.

PAUL: But we wouldn’t have to think about dollars and gold as being different! On a 100% gold standard, they’m one and the same thing. And if those countries wanted to spend their gold in this country, they could put it in our treasury, and we would issue them Federal Reserve notes. Now those nations would have to spend the currency, so the whole exchange would be a boon to our economy. We’d have more gold, and other nations could purchase our products.

PLOWBOY:Another argument is that South Africa and Russia could keep us hostage’ . . . that if we needed gold to increase our economic growth, they might hold it back.

PAUL: Well, that’s a fallacy, too. You don’t need an increase in money to have economic growth. With a gold dollar, a car might cost $600 instead of $6,000, but the exact amount of the medium of exchange used wouldn’t matter. Let’s say you had a fixed amount of gold, and production went up 10% … then prices would drop somewhat. But any amount of gold will work, as long as you allow the prices to adjust. That’s why you wouldn’t want rigid prices, because you don’t know exactly what the gold level might be.

Others fear that South Africa or Russia might dump their gold. But suppose the Russians did try to do that. It would take them 100 years to produce and save enough gold to double our money supply. And they’re not going to do it, because they want to sell their gold gradually … they need to spend it for goods.

The very real danger, of course, is much closer to home in the form of the Federal Reserve, which tripled our money supply in the 1970’s. That’s where the real risk is! With a tripled money supply, you’re holding a piece of paper that nobody trusts. The Russians’ gold wouldn’t be any danger at all, because it would still have value. People would just use it, and the prices would adjust.

PLOWBOY: You keep talking about prices adjusting, but I’ve always thought the main purpose of establishing a gold standard would be to create stable prices.

PAUL: No, even though gold does tend to stabilize prices, that’s not why we want a gold standard. What we want is a freely adjusting market , which means that prices can go up and down according to the supply and demand status of particular products. If there’s good economic growth, prices will drop. So you never want to aim at some preconceived notion that prices should be at a certain level.

In fact, this is the single biggest difference between hard-money advocates and the Keynesians/monetarists, who seek a goal of stable prices but-instead-create the most vicious upswings and distortions. Our goal is to have honest, trustworthy money … which would result in economic growth and relatively stable prices. Currency has to have quality … whereas paper money can only react to the money supply and the interest rates. Under the gold standard, interest rates traditionally range between 3% and 5%.

PLOWBOY: And how would this change affect banking? I understand that you believe there should be a separation of banking and the state.

PAUL: My ultimate goal would be to allow the marketplace to handle banking. The government would be involved only in prohibiting fraud. That is, you couldn’t really deceive your depositors. If you claimed to be holding their deposits, you’d have to do so. But the marketplace should handle the amount of credit that’s extended. Such a system would be very competitive, though, and today’s big bankers wouldn’t welcome that competition.

PLOWBOY: It seems, then, that you’re up against some very powerful forces.

PAUL: Oh yes, but I believe that I have the people and truth on my side, so I feel very confident.

PLOWBOY: But if we do adopt the gold standard-which you seem to think is inevitable, though it may be some years away-how would this transition be handled?

PAUL: Well, it’s not likely to come about in a deliberate way, and we’ll certainly have to be on our toes if there’s a total collapse. But let’s not be* so negative. Let’s think about what we could and should do right now. First, we should immediately take steps toward reducing the size of government by 50%.

PLOWBOY: Wasn’t a similar cutback accomplished once before?

PAUL: Yes, after World War 11 we reduced spending, over a period of three years, by 75%. We’d also have to balance the budget immediately and make it illegal to monetize debt … that is, if the government spends more than it takes in, it can’t print the money. It would have to borrow it.

In addition to that, we’d have to reduce taxes drastically, including those on savings and dividends. If you have sound money, you want to encourage people to save and invest. Instead, we’re now withholding taxes on savings and making it more and more disadvantageous for people to save. As a result, the level of savings is very low right now, but there’s no reason in the world why we can’t have a 20% to 25% savings rate. And that’s where true capital comes from … not out of a printing press.

So if we reduce the size of government … eliminate taxes on savings … and-then- establish a gold standard so that all of our paper is 100% redeemable, we’d rapidly get out of this dangerous situation. There’s no doubt in my mind whatsoever.

Now when we talk in generalities, people are inclined to agree that, yes, we ought to reduce the size of government. But let me give you a more specific idea of what I’m talking about: I’m saying-for instance-that we should have no more government farm programs … period. I mean no subsidies whatsoever. After all, today we’re subsidizing tobacco, and then turning around and spending millions of dollars to advertise how terrible smoking is … that kind of nonsense! And we pay farmers millions of dollars not to grow wheat, and if they do grow too much, we artificially keep the price up so people have to pay more for it. It’s absurd!

I think we’d have to get rid of all such programs in order to get back to a sound currency. But as I’ve said, we’re just not quite ready to do that, so we’re back to the risky alternative of waiting for the collapse and hoping we have enough votes to turn the tide then.

There is, however, another option, and that’s to introduce competition … by allowing another currency to be developed in par allel to our paper money.

PLOWBOY: How would that work?

PAUL: Look at it this way: If we wanted to get rid of the U.S. Postal Service, we wouldn’t have to abolish it tomorrow. We could simply legalize more competition, so that private industry could massively compete with that institution in delivering first class mail inexpensively and efficiently. What would likely happen is that the Postal Service would gradually dwindle, and private industry would take over. It wouldn’t be a radical abolition … we’d probably go through a transition of maybe one to five years, during which the present post office system would be phased out.

It’s the same with money. Politically and economically, it would be very difficult just to cut off today’s system and have a perfect one in place tomorrow. But we can pass some laws that will introduce competition and allow another currency to be used.

Some people think such a move would result in total chaos, but we’re dealing with different currencies internationally all the time. We have fluctuating rates that are measured every minute. It’s amazing how it all works!

And we are also well able to adjust to two currencies! It doesn’t take the average American tourist long to figure out another country’s exchange rate … and it would be the same if we had two internal currencies.

In fact, we had this situation during the Civil War years. We went off the gold standard and printed greenbacks, but gold still circulated. Today, however, it’s illegal to have a competing currency, so we need to pass a law that would let people really deal in gold and silver. Then if someone owed a debt that was determined in ounces, he or she would have to pay it in ounces. In order to do that, though, we’d have to repeal the legal tender laws. They would be the biggest obstacle.

PLOWBOY: I don’t think all of our readers are aware of what those laws involve.

PAUL: Put simply, legal tender laws protect the government’s money monopoly. One was passed during the Civil War, guaranteeing that, when the government began to pay its debts, it could do so in greenbacks. Now some of its creditors had gold-clause contracts, which specified repayment in gold. And such individuals wanted to be paid in the precious metal, of course, since it had gone up tremendously in value against the paper dollars … so the government’s legal tender law was declared unconstitutional by the Supreme Court. At that point, though, the administration stacked the deck by changing Supreme Court justices … tried the same suit all over again … and got the ruling reversed to say that the government could pay off all of its debts with greenbacks. And ever since that time we’ve had legal tender laws, insuring that nobody has the protection of the gold standard. So those laws would have to be repealed.

In the meantime, there’s one very practical step that could be taken … and it’s something that might even be accomplished this year. If one out of every two of your subscribers would write to Washington, we could probably get a law called the American Eagle Gold Coin Act passed, and I think that piece of legislation would be very helpful. It was the only recommendation made by the recent U.S. Gold Commission that was favorable to gold. [EDITOR’S NOTE: The United States Gold Commission was created by Act of Congress in 1980. It studied, and rejected, the case for the gold standard.]

Essentially, this act would authorize the U.S. Treasury to mint one-ounce and half-ounce gold coins to compete with the South African Krugerrand and such. It even goes one step further and says

that if these gold coins are to serve as money someday, they shouldn’t be taxed. So if you were to exchange an American gold coin for dollars, and if it had gone up in value since you first purchased it, you wouldn’t have to pay taxes on the profit! That fact alone would be a real encouragement for people to purchase our coins instead of Canadian Maple Leaves, Krugerrands, and Mexican gold pesos. I think Americans would like to have that option.

At present, the politicians here don’t feel that there are enough people who really care about the act, but if a member of Congress were to get 500 letters on this subject, he or she would be totally convinced that there was a real movement going on.

Now the American Eagle Gold Coin Act is not the same as a gold standard, you realize … far from it! But it would be a transition, introducing a lot more people to the idea of holding gold. The coins could provide an emergency medium of exchange during a time of crisis, too, and be a tremendous aid in getting the American people to understand what hard money is.

PLOWBOY: Is that act coming up in this session of Congress?

PAUL: It’s been introduced in the Senate, and I’ve introduced it in the House, and we’ve already had hearings on it. But not enough pressure is being exerted for it right now. And that’s why I’m saying that all we need is public demand, because we can get acrossthe-board support for it. The pro-gold people would say it’s good for gold … the anti-gold people say we don’t need gold anymore, so we might as well get it out of the Treasury … and those who despise the policies of South Africa would be glad to be able to purchase American coins. So the act is attractive to a lot of people across the political spectrum … but we do need a little more pressure if we’re to get it through.

PLOWBOY: Aside from writing to their Senators and Representatives about the American Eagle Gold Coin Act and/or about going back on the gold standard, what else should citizens do?

PAUL: Oh, there’s a lot they have to do. First, they ought to know what’s happening economically and politically. If half of what I say is true, we’re in for big trouble! I hope I’m all wrong, but I’m scared to death that I’m right. Americans have to educate themselves about economics … there’s plenty to learn! And they need to know why a free market is better than a controlled economy … and why freedom is better than slavery … and why gold is better than paper. Then, once they’re well informed, they should inform others … their family and friends.

Then they must all take the steps necessary to protect themselves … with knowledge and survival goods. They need to know how to feed, clothe, and house themselves and how to continue trading if the system breaks down.

In addition, people have to get involved in politics. A lot of individuals are turned off by the system, and I am sometimes, too! It’s a terrible business … except that I’m very thankful that I can still play the game. Frankly, I didn’t expect that I’d find enough people who would endorse my views to send me here. But I’m grateful that I’ve had the opportunity to speak out and that others can have their views represented through what I do. It’s quite different from living in Poland, where I wouldn’t have this chance.

In short, as bad as U.S. politics may seem on the surface, we can still educate ourselves, be concerned, be involved, run for office, and write letters that can influence Congress. We still have freedoms left, and that’s very important. If we neglect them, we could lose them. After all, as we destroy our monetary system, we may well also lose other rights. There’s a lot more at stake than our monetary assets. In fact, I could probably protect my financial future better than I’m doing now by concentrating on the practice of medicine, but I happen to value the system 1 live under much more than that.

Do you realize that probably fewer than 1% of the people in the U.S. ever write their Congressman or -woman? Yet if just 3% of those who believe in hard money would take some action, we could get a gold standard established … and still restore some sanity to the world’s economy.

EDITOR’S NOTE: If you’d like to receive Freedom Report, the free newsletter published by the Foundation for Rational Economics and Education, Inc., send your name and address to FREE, Dept. TMEN, P.O. Box 1776, Lake Jackson, Texas 77566. To find out more about Dr. Paul’s views on the gold standard, you might want to read his bookGold, Peace, and Prosperity: The Birth of a New Currency (available for $5. 00 postpaid from the same address). And for an in-depth study of the same subject, order The Case for Gold by Ron Paul and Lewis Lehrman ($8.95 postpaid).

Hezbollah mystique undiminished

December 12, 2007
Hezbollah mystique undiminished

By Zeina Awad


In 2006, Israel bombed Lebanese cities for 34 days
in an attempt to destroy Hezbollah [GALLO/GETTY]

As political turmoil continues in Lebanon, observers say Hezbollah, the Shia movement, is re-arming and pursuing fresh recruits for its armed wing. Hezbollah has not denied this.

The movement was launched in 1982 in response to Israel’s occupation of southern Lebanon. Backed by Iran and supported for much of its history by Syria, Hezbollah fighters carried out a series of suicide attacks against Israeli soldiers.

By the late 1990s, Hezbollah had developed into a political party and was funding schools, hospitals and social programmes for Lebanon’s often impoverished Shia population.

While the movement adapted to Lebanon’s political sphere, its armed wing, the Islamic Resistance, continued to attack Israeli forces occupying southern Lebanon until they pulled out on May 25, 2000.

Last year, Hezbollah fighters captured two Israeli soldiers and killed several more in a cross-border raid.

In retaliation, Israel bombarded Lebanon for 34 days in an attempt to destroy Hezbollah.

However, in the aftermath of the war, Hezbollah now enjoys increased popularity, with more fighters signing up.

One such recruit spoke to Al Jazeera on condition of anonymity.

Mohammed, a 22-year-old architecture student, joined after the war. He was following in the footsteps of his brother and father, both resistance fighters.

Q: How did you get involved with Hezbollah?

First, when I was in university, I started to work with them [Hezbollah], participating in events and celebrations. Then it evolved to this point.

Special report

We, as Muslims, when we see oppression, we can’t accept it. That’s why I decided to get involved … I am not married and I am young. It is fairer for someone like me to be martyred. This is why I joined Hezbollah.

Q: What is Hezbollah for you?

The resistance, Hezbollah, is like the mother and the father.

We in the south [of Lebanon] were raised on the border of occupied Palestine. Only the resistance took care of us and defended us … I can tell you that Hezbollah is everything a person from the south dreams of when they dream of being defended.

We had a big problem in the south, we were forgotten by the government. Israel could attack us at anytime, but now Hezbollah is defending the people.

Q: How much did the war of July 2006 affect you?

What happened last July affected me deeply. People’s steadfastness, the steadfastness of the men who had no idea what their fate would be … they were fighting so that my people can return to their homes.

Parents look after their children, and Hezbollah looks after the people of Lebanon.

These guys were 23, 24, 25 – in the prime of their lives with a big future ahead of them … They always knew that they had a bigger duty – the duty to defend their country.

Their sacrifices, the things we were seeing on TV – innocent women and children dying. They [Israel] said they were targeting fighters but they weren’t only targeting fighters.

I got to a point where I refused to sit on the sidelines.

These fighters, maybe their mothers or sisters or family members were killed and they were reacting to that loss. It is my duty as a citizen to defend my mother and my family.

Q: If you want to defend your land, why don’t you join the Lebanese army?

The Lebanese army doesn’t have weapons. It is not allowed to carry weapons because there is an international arrangement not to properly arm it.*

The Lebanese army has a mandate to protect this country, but the Americans and the Israelis are trying to change this mandate.

Q: If the Lebanese military was properly armed, would you join the army?

If the Lebanese army had weapons there would not have been a resistance because the army would be protecting Lebanon. The resistance was born because people were trying to defend their villages.

I work with the resistance because there is no proper army, but if there was an army then I would think of joining it.

If the army had weapons then everyone would go back to their lines and the resistance would have to rethink its defence strategy. This is what [Hassan] Nasrallah [the Hezbollah secretary-general] said. He said once we have a government then come back and talk to us.

Q: If the idea is to defend Lebanon and advance it, why don’t you put your efforts into rebuilding Lebanon?

Rebuilding my country is an honour as well. I work and I study. I fulfil these duties just as I fulfil my military duties.

There are two sides to the struggle – the military jihad and the other [social] jihad. Those who God gave the ability to participate in both should do so.

I will continue my life as normal and once my duty calls me I will go.

Q: If one day all occupied lands are liberated, what will your personal struggle become?

I would want to raise a family and send my children to university. There are many jihads in life, and the biggest jihad is the jihad of the Self.

For a person to be able to carry out the military jihad – to bear the pressure of knowing that he is going and he may never come back – his jihad of self is key.

His religion and his spirituality get him closer to God and away from earthly temptations. This will get him to a point where he can carry out his military jihad.

Our akeedah [belief in our cause], as I told you, is a fundamental thing. The akeedah is what allowed a single fighter in a village to fight 30, 40, 50 Israeli soldiers. Why? Because he won’t go back, he won’t give up. He would rather be martyred than humiliated. This is in the blood of the martyrs and this is why we have all these victories.

Q: How do you remember your life as a child growing up

I used to live in Tyre, like all the children in the south we used to hear Israeli jet fighters all the time, and we used to get scared.

single fighter … won’t give up. He would rather be martyred than humiliated. This is in the blood of the martyrs and this is why we have all these victories.

Once, when I was 11, we were playing football and a bomb fell very close to me. I remember I stayed up all night crying. When I was 10 they bombed a Palestinian refugee camp near us and we didn’t sleep nights on end.

We were forced to grow up before our time.

When you live in fear, it affects everything – your life, your studies. We were able to come and go freely but we were constantly scared.

I have been living in Beirut for 13 years … Beirut was safer, but you could still hear Israeli planes overhead, although it was nothing like the south.

In the south, Israeli warplanes used to show up anytime and do whatever they wanted … their soldiers kidnapped farmers and killed people.

Lebanon, as a whole, is under threat from Israel … Farmers can’t access their land, people can’t go to their homes because of cluster bombs.

The threat is there and it will remain there as long as Israel is our neighbour.

Q: How do your parents feel about you  and your brother being Hezbollah fighters?

It is normal for every mother to worry about her sons, but my mother knows this is our duty and we can’t run away from it.

She cries, she is sad, she misses us, she wishes our circumstances were different and we weren’t forced to go through this, that we don’t have any wars, but duty comes first.

She is convinced that whatever God wants, will happen. If I get martyred, she will only cry over my absence and because she will be separated from me.

Parents look after their children, and Hezbollah looks after the people of Lebanon.

The Lebanese army has in the past been supplied with weapons by the US. International observers, including the International Institute for Strategic Studies, say it remains poorly equipped. One of the agreements of the Taif Accord, signed in 1989 and which helped bring an end to the Lebanese civil war, was that all non-military armed groups – including Hezbollah – should be disarmed.

Russia withdraws from arms treaty

December 12, 2007
Russia withdraws from arms treaty

The pullout means Russia can now move troops around the country without notifying Nato [AFP]


In a statement, the ministry said: “Such a step has been caused by the exceptional circumstances connected to the content of the treaty which concern the security of Russia and demand that we take immediate measures.”


Russian troops can now be moved around the country without notifying Nato.



Restoring military might

Signed in 1990 and modified in 1999, the CFE places precise limits on the stationing of troops and heavy weapons from the Atlantic coast to Russia’s Ural mountains.

Vladimir Putin, Russia’s president, who has made a priority of restoring Russian military might, signed a decree ordering Moscow’s suspension of the treaty last month.

The foreign ministry said that Russia was no longer “constrained by the limitations placed on arms deployments on its flanks”.

However, it said: “We have no current plans to accumulate massive armaments on our neighbours’ borders.”

In theory, Russia can return to the treaty at anytime, but analysts say that is unlikely, given mounting East-West distrust.

Rising tensions

The demise of the CFE comes on top of tensions around US plans to install a missile-defence shield in Nato members Poland and the Czech Republic.

Russia has also threatened to leave another major treaty, the Intermediate Range Nuclear Forces treaty.

At the heart of Russia’s complaints regarding the CFE is Nato’s failure to ratify the amended 1999 version of the treaty, taking into account the huge changes wrought by the 1991 collapse of the Soviet Union.

Nato countries say they cannot ratify the 1999 version because Russian troop presence in the ex-Soviet states of Georgia and Moldova violates the treaty, a charge Moscow rejects.

In addition, Moscow has been pushing for changes to CFE limits on moving troops to the European western flank of the vast country.

Anatoly Antonov, a director at the foreign ministry, said: “Imagine that President Bush cannot move his forces from  California to the New York region. It’s ridiculous.”

‘Treaty dead’

Observers said the long list of problems made the CFE unlikely to get back on track.

Pavel Felgenhauer, a military analyst, said: “The treaty is dead.”

Felgenhauer said: “It is practically inevitable that Russia will begin moving weapons west, primarily to borders of Baltic states.”

“It makes a lot of economic sense to move forces from Siberia to Leningrad district, because it’s two or three times more expensive to keep them in Siberia.

“It will also send a powerful signal to the West. It’s a win-win situation for Russia.”

Bombed if you do, Bombed if you Don’t By Ron Paul

December 12, 2007

Bombed if you do, Bombed if you Don’t By Ron Paul

Dandelion Salad

By Ron Paul
12/11/07 “ICH

The latest National Intelligence Estimate has been greeted by a mixture of relief and alarm. As I have been saying all along, Iran indeed poses no quantifiable imminent nuclear threat to us or her neighbors. It is with much alarm, however, that we see the administration continue to ratchet up the war rhetoric as if nothing has changed.

Indeed nothing has changed from the administration’s perspective, as they have had this latest intelligence report for some time. Only this week has it been made known to the public. They want it both ways with Iran. On the one hand, they discredit the report entirely, despite it being one of the most comprehensive intelligence reports on the subject, with over 1,000 source notes in the document. On the other hand, when discrediting it fails, they claim that the timing of the abandonment of the weapons program, just as we were invading Iraq, means our pressure must have worked, so we must keep it up with a new round of even tougher sanctions. Russia and China are not buying this, apparently, and again we are finding ourselves on a lonely tenuous platform on the world stage.

The truth is Iran is being asked to do the logically impossible feat of proving a negative. They are being presumed guilty until proven innocent because there is no evidence with which to indict them. There is still no evidence that Iran, a signatory of the Nuclear Non-Proliferation Treaty, has ever violated the treaty’s terms – and the terms clearly state that Iran is allowed to pursue nuclear energy for peaceful, civilian energy needs. The United States cannot unilaterally change the terms of the treaty, and it is unfair and unwise diplomatically to impose sanctions for no legitimate reason.

Are we to think that Iran hasn’t noticed the duplicitous treatment being received by so-called nuclear threats around the globe? If they have been paying attention, and I think they have, they would see that if countries do have a nuclear weapon, they tend to be left alone, or possibly get a subsidy, but if they do not gain such a weapon then we threaten them. Why wouldn’t they want to pursue a nuclear weapon if that is our current foreign policy? The fact remains, there is no evidence they actually have one, or could have one any time soon, even if they immediately resumed a weapons program.

Our badly misguided foreign policy has already driven this country’s economy to the brink of bankruptcy with one war based on misinformation. It is unthinkable that despite lack of any evidence of a threat, some are still charging headstrong into yet another war in the Middle East when what we ought to be doing is coming home from Iraq, coming home from Korea, coming home from Germany and defending our own soil. We do not need to be interfering in the internal affairs of other countries and waging war when honest trade, friendship, and diplomacy are the true paths to peace and prosperity.

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

White House, Press Spinning Iran’s Centrifuges By Ray McGovern

December 11, 2007

White House, Press Spinning Iran’s Centrifuges By Ray McGovern

By Ray McGovern
12/09/07 “

Those who know about the centrifuges used to refine uranium tell me they must spin at an almost unrivaled velocity—almost unrivaled, because Bush administration statements are being spun at equivalent speed by White House and corporate media spiders. Without Spinmeister Karl Rove and former spokesman Tony Snow, it is amateur hour at the White House. And the theater would be as funny as The Daily Show, were the subject not so serious.

Judging from President George W. Bush’s words and body language he is far from giving up on ways to “justify” attacking Iran’s nuclear program—weapons-related or not. He appears convinced he must honor the pledge he has made to Israel’s current leaders to eliminate what they have called an “existential threat” to Israel. This came through in a particularly pointed way on October 17, when an agitated president ad-libbed about the possibility of World War III, complaining loudly, “We’ve got a leader in Iran who has announced he wants to destroy Israel.”

Not at all helpful to the president was the judgment of U.S. intelligence that the Iranians halted their nuclear weapons-related program in 2003, a judgment the administration made public this week. The White House knew only too well that that this bombshell could not be kept secret very long—the more so since Congress’ intelligence committees, Pentagon brass, and senior CIA officials reportedly made it quite clear they would go public if the White House did not publish a sanitized version of the key judgments of the latest National Intelligence Estimate.

On Oct. 26, National Intelligence Director Mike McConnell launched a trial balloon, declaring he would no longer declassify and release summaries of National Intelligence Estimates, but that balloon was quickly shot down.

So what can Cheney and Bush do now to “justify” striking Iran? Several months ago, about the time new intelligence established there was no active nuclear weapons program in Iran, there were signs in the rhetoric coming from the president and Gen. David Petraeus that the argument was going to hinge on claims that the Iranian Revolutionary Guards were supplying the wherewithal to kill our troops in Iraq. Petraeus was clearly ready to play that game, but his superior, Admiral “we’re-not-going-to-do-Iran-on-my-watch” William Fallon would not play along. And neither would the Joint Chiefs of Staff.

Defense Secretary Robert Gates is now back from a brief visit to Iraq and his caution so far on this issue suggests he is paying more heed to Fallon than to Petraeus. In other words, there is no sign that Gates wants to abet using Iranian meddling in Iraq as a pretext for a military strike on Iran. Gates’ well-deserved chameleon-like reputation counsels caution here, since a word from Cheney or Bush could conceivably make Gates a fervent champion of this pretext for war. But people do mature; Gates is smart; and I doubt he would want to be so closely associated with starting a regional war, if not WW III.

Spinning Enrichment

So where does that leave the beleaguered president? This week’s spinning by the White House and subservient media suggests the administration still thinks it can make a case for war, by obfuscating the nuclear program in Iran. This has become clearer as administration mouthpieces blur the distinction between uranium enrichment for a civilian energy use (permitted to signatories of the nuclear non-proliferation treaty) and the much more demanding requirements of a nuclear weapons program.

The spinners have resurrected the discredited argument that Iran’s nuclear program must be for weapons, because Iran’s oil and gas should suffice to meet all its energy requirements. Thus, the administration’s Pravda, also known as the editorial page of the Washington Post, on Dec. 5: “Iran’s massive overt investment in uranium enrichment meanwhile proceeds…even though Tehran has no legitimate use for enriched uranium.”

And thus another major administration mouthpiece, also known as the New York Times, on Dec. 6, in an op-ed, “In Iran We Trust?” by Valerie Lincy and Gary Milhollin: “Why, by the way, does Iran even want a nuclear energy program, when it is sitting on an enormous pool of oil that is now skyrocketing in value.”

This is a familiar canard; i.e., that Iran’s claim that its nuclear program is for electricity production is given the lie by its own large oil and natural gas reserves, so uranium enrichment must be for nuclear weapons development. Condoleezza Rice took that line over a year and a half ago (shades of those (in)famous aluminum tubes that she said could “only” be used in a nuclear application but turned out to be for conventional artillery). At about the same time Dick Cheney complained that since the Iranians are “already sitting on an awful lot of oil and gas. Nobody can figure why they need nuclear as well to generate energy.”

It all makes me think of Harry Truman’s complaint: “They must think we were born yesterday!” Rice and Cheney have selective memories—or take us for fools. Back in 1976—with Gerald Ford president, Dick Cheney his chief of staff, Donald Rumsfeld secretary of defense—the Ford administration bought the Shah’s argument that Iran needed a nuclear program to meet its future energy requirements. That argument, of course, is even more valid today, with the price that can be obtained for oil and the specter of Peak Oil.

Cheney and Rumsfeld persuaded a hesitant President Ford to offer Iran a deal that would have meant at least $6.4 billion for U.S. corporations like Westinghouse and General Electric, had not the Shah been unceremoniously dumped three years later. The offer included a reprocessing facility for a complete nuclear fuels cycle—essentially the same capability that the U.S. and Israel now insist Iran cannot be allowed to acquire.

A pity that our domesticated media seem unable to catch the disingenuousness.

Ray McGovern works with Tell the Word, the publishing arm of the ecumenical Church of the Saviour in Washington, D.C. During his 27-year career as a CIA analyst, he chaired some National Intelligence Estimates and produced/briefed the President’s Daily Brief.

This article appeared first on

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

December 6, 2007





Presidential directive delays indefinitely the scheduled release of presidential documents (authorized by the Presidential Records Act of 1978) pertaining to the Reagan-Bush administration. Link

Bush and Cheney begin process of radically broadening scope of documents and information which can be deemed classified. Link


The National Security Agency (NSA) sets up Project Groundbreaker, a domestic call monitoring program infrastructure. Link


Bush administration order authorizes NSA monitoring of domestic phone and internet traffic. Link


US Supreme Court rules that medical necessity is not a permissible defense against federal marijuana statutes. Link


In immediate aftermath of 9-11 terror attacks, Department of Justice authorizes detention without charge for any terror suspects. Over one thousand suspects are brought into detention over the next several months. Link (pdf)


Attorney General John Ashcroft announces change in Department of Justice (DOJ) policy. According to the new policy DOJ will impose far more stringent criteria for the granting of Freedom of Information Act requests. Link


NSA launches massive new database of information on US phone calls. Link


The USA Patriot Act becomes law. Among other things the law: makes it a crime for anyone to contribute money or material support for any group on the State Department’s Terror Watch List, allows the FBI to monitor and tape conversations between attorneys and clients, allows the FBI to order librarians to turn over information about patron’s reading habits, allows the government to conduct surveillance on internet and email use of US citizens without notice. The act also calls for expanded use of National Security Letters (NSLs), which allow the FBI to search telephone, email and financial records of US citizens without a court order, exempts the government from needing to reveal how evidence against suspected terrorists was obtained and authorizes indefinite detention of immigrants at the discretion of law enforcement and immigration authorities.

NJ Superior court judge and civil liberties scholar Anthony Napolitano, author of A Nation of Sheep, has described the law’s assault on first and fourth amendment principles as follows, “The Patriot Act’s two most principle constitutional errors are an assault on the Fourth Amendment, and on the First. It permits federal agents to write their own search warrants [under the name “national security letters”] with no judge having examined evidence and agreed that it’s likely that the person or thing the government wants to search will reveal evidence of a crime… Not only that, but the Patriot Act makes it a felony for the recipient of a self-written search warrant to reveal it to anyone. The Patriot Act allows [agents] to serve self-written search warrants on financial institutions, and the Intelligence Authorization Act of 2004 in Orwellian language defines that to include in addition to banks, also delis, bodegas, restaurants, hotels, doctors’ offices, lawyers’ offices, telecoms, HMOs, hospitals, casinos, jewelry dealers, automobile dealers, boat dealers, and that great financial institution to which we all would repose our fortunes, the post office. Link 1 | Link 2


Executive order limits release of presidential documents. The order gives incumbent presidents the right to veto requests to open any past presidential records and supercedes the congressionally passed law of 1978 mandating release of all presidential records not explicitly deemed classified. Link



FBI and Department of Defense (DOD), forbidden by law from compiling databases on US citizens, begin contracting with private database firm ChoicePoint to collect, store, search and maintain data. Link


Secret executive order issued authorizing NSA to wiretap the phones and read emails of US citizens. Link


Transportation Security Adminstration (TSA) acknowledges it has created both a “No Fly” and a separate “Watch” list of US travelers. Link


Department of Justice authorizes the FBI to monitor political and religious groups. The new rules permit the FBI to broadly search or monitor the internet for evidence of criminal activity without having any tips or leads that a specific criminal act has been committed. Link


Supreme Court upholds the right of school administrators to conduct mandatory drug testing of students without probable cause. Link


Homeland Security Act of 2002 establishes separate Department of Homeland Security. Among other things the department will federally coordinate for the first time all local and state law enforcement nationwide and run a Directorate of Information and Analysis with authority to compile comprehensive data on US citizens using public and commercial records including credit card, phone, bank, and travel. The department also will be exempt form Freedom of Information Act disclosure requirements. The Homeland Security department’s jurisdiction has been widely criticized for being nebulously defined and has extended beyond terrorism into areas including immigration, pornography and drug enforcement. Link 1 | Link 2



Draft of Domestic Security Enhancement Act (aka Patriot Act 2), a secret document prepared by the Department of Justice is leaked by the Center for Public Integrity. Provisions of the February 7th draft version included:

Removal of court-ordered prohibitions against police agencies spying on domestic groups.

The FBI would be granted powers to conduct searches and surveillance based on intelligence gathered in foreign countries without first obtaining a court order.

Creation of a DNA database of suspected terrorists.

Prohibition of any public disclosure of the names of alleged terrorists including those who have been arrested.

Exemptions from civil liability for people and businesses who voluntarily turn private information over to the government.

Criminalization of the use of encryption to conceal incriminating communications.

Automatic denial of bail for persons accused of terrorism-related crimes, reversing the ordinary common law burden of proof principle. All alleged terrorists would be required to demonstrate why they should be released on bail rather than the government being required to demonstrate why they should be held.

Expansion of the list of crimes eligible for the death penalty.

The United States Environmental Protection Agency would be prevented from releasing “worst case scenario” information to the public about chemical plants.

United States citizens whom the government finds to be either members of, or providing material support to, terrorist groups could have their US citizenship revoked and be deported to foreign countries.

Although the bill itself has never (yet) been advanced in congress due to public exposure, some of its provisions have become law as parts of other bills. For example The Intelligence Authorization Act for Fiscal Year 2004 grants the FBI unprecedented power to obtain records from financial institutions without requiring permission from a judge. Under the law, the FBI does not need to seek a court order to access such records, nor does it need to prove just cause. Link 1 | Link 2


Executive order issued which radically tightens the declassification process of classified government documents, as well as making it far easier for government agencies to make and keep information classified. The order delayed by three years the release of declassified government documents dating from 1978 or earlier. It also allowed the government to treat all material sent to American officials from foreign governments — no matter how routine — as subject to classification, and expanded the ability of Central Intelligence Agency (CIA) to shield documents from declassification. Finally it gave the vice president the power to classify information. Link 1 | Link 2


In a ruling seen as a victory for the concentration of ownership of intellectual property and an erosion of the public domain, the Supreme Court in Eldred v. Ashcroft held that a 20-year extension of the copyright period (from 50 years after the death of the author to 70 years) called for by the Sonny Bono copyright Extension not violate either the Copyright Clause or the First Amendment. Link


In Demore v. Kim, the Supreme Court ruled that even permanent residents could be subject to mandatory detention when facing deportation based on a prior criminal conviction, without any right to an individualized hearing to determine whether they were dangerous or a flight risk. Link


The FBI changes its traditional policy of destroying all data and documents collected on innocent citizens in the course of criminal investigations. This information would, according to the bureau, now be permanently stored. Two years later in late 2005 Executive Order 13388, expanded access to those files for “state, local and tribal” governments and for “appropriate private sector entities,” which are not defined. Link 1 | Link 2


As authorized by the Patriot Act, the FBI expands the practice of national security letters. NSLs, originally introduced in the 1970s for espionage and terrorism investigations, enabled the FBI to review in secret the customer records of suspected foreign agents. This was extended by the Patriot Act to include permitting clandestine scrutiny of all U.S. residents and visitors whether suspected of terrorism or not. Link



The FBI begins keeping a database of US citizens based on information obtained via NSLs. Link


John Ashcroft invokes State Secrets privilege to forbid former FBI translator Sibel Edmunds from testifying in a case brought by families of victims of the 9-11 attacks. Litigation by 9-11 families is subsequently halted. Link 1 | Link 2


Supreme Court upholds Nevada state law allowing police to arrest suspects who refuse to provide identification based on police discretion of “reasonable suspicion.” Link



Supreme court rules that police do not need to have probable cause to have drug sniffing dogs examine cars stopped for routine traffic violations. Link 1 | Link 2


Supreme Court rules that the federal government can prosecute medical marijuana users even in states which have laws permitting medical marijuana. Link


The Patriot Act, due to expire at the end of 2005, is reauthorized by Congress. Link

Winter 2005

Senate blocks reauthorization of certain clauses in Patriot Act. Link



Senate passes amended version of Patriot Act, reauthorization, with three basic changes from the original including: recipients of secret court orders to turn over sensitive information on individuals linked to terrorism investigations are not allowed to disclose those orders but can challenge the gag order after a year, libraries would not be required to turn over information without the approval of a judge, recipients of an FBI “national security letter” — an investigator’s demand for access to personal or business information — would not have to tell the FBI if they consult a lawyer. New bill also said to extend Congressional oversight over executive department usage guidelines. Shortly after bill is signed George Bush declares oversight rules are not binding. Link 1 | Link 2


Supreme court rules that evidence obtained in violation of the “knock and announce” rules can still be permitted in court. Link


US Congress and Senate approve the Military Commissions Act, which authorizes torture and strips non- US citizen detainees suspected of terrorist ties of the right of habeas corpus (which includes formal charges, counsel and hearings). It also empowers US presidents at their discretion to declare US citizens as enemy combatants and subject to detention without charge or due process. Link 1 | Link 2 | Link 3


John Warner Defense Authorization Act is passed. The act allows a president to declare a public emergency and station US military troops anywhere in America as well as take control of state based national guard units without consent of the governor or other local authorities. The law authorizes presidential deployment of US troops to round-up and detain “potential terrorists”, “illegal aliens” and “disorderly” citizenry. Link 1 | Link 2



National Security Presidential Directive 51 (NSPD-51) establishes a new post-disaster plan (with disaster defined as any incident, natural or man-made, resulting in extraordinary mass casualties, damage or disruption) which places the president in charge of all three branches of government. The directive overrides the National Emergencies Act which gives Congress power to determine the duration of a national emergency. Link 1 | Link 2


In “Bong Hits for Jesus” case Supreme court rules that student free speech rights do not extend to promotion of drug use. Link


Executive Order 13438: “Blocking Property of Certain Persons Who Threaten Stabilization Efforts in Iraq, issued. The order asserts the government’s power to confiscate the property “of persons determined to have committed, or to pose a significant risk of committing, an act or acts of violence that have the purpose or effect of threatening the peace or stability of Iraq or the Government of Iraq or undermining efforts to promote economic reconstruction and political reform in Iraq or to provide humanitarian assistance to the Iraqi people.”


The Violent Radicalization and Homegrown Terrorism Act passes the House of Representatives 400 to 6 (to be voted on in the Senate in 2008). The act proposes the establishment of a commission composed of members of the House and Senate, Homeland Security and others, to “examine and report upon the facts and causes of violent radicalization, homegrown terrorism, and ideologically based violence in the United States” and specifically the role of the internet in fostering and disseminating extremism. According to the bill the term ..violent radicalization’ means the process of adopting or promoting an extremist belief system for the purpose of facilitating ideologically based violence to advance political, religious, or social change, while the term ‘ideologically-based violence’ means the use, planned use, or threatened use of force or violence by a group or individual to promote the group or individual’s political, religious, or social beliefs.” Link 1 | Link 2 | Link 3

OPEC’s tough call: Raise or hold oil supply

December 3, 2007

International Herald Tribune

OPEC’s tough call: Raise or hold oil supply

Monday, December 3, 2007

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After a year of dizzying gains for energy markets, a rapid fall in oil prices lately is posing a dilemma for OPEC, the oil-producing cartel.

Should OPEC make industrialized countries happy by increasing the oil supply, a move that would probably send prices down further? Or should it keep production at a steady level at a time of economic turbulence, when demand could easily taper off?

As they prepare to meet in Abu Dhabi this week to set output levels for the winter, officials from the Organization of the Petroleum Exporting Countries are mindful of the many uncertainties that complicate their task. Oil prices flirted with $100 a barrel just two weeks ago, but fears of slowing economic growth have since pushed them down by more than 10 percent. Oil futures settled at $88.71 a barrel, down $2.30, on Friday, after their steepest weekly decline in more than two years.

This year, as the oil markets have grown more volatile and unpredictable, OPEC officials and energy analysts have noted an increasing disconnection between the price and supply of oil. They attribute the large price swings more to financial speculation than to market fundamentals, and say that the price surge in recent months seemed increasingly at odds with the outlook for the United States economy.

“There is absolutely ample supply,” Ali al-Naimi, Saudi Arabia’s oil minister, said Friday at an energy conference in Singapore. “The price movement has nothing to do with the fundamentals of the market.”

Saudi Arabia, the cartel’s de facto leader, is wary of increasing supplies this winter. At the conference, Naimi repeated his view that there was a “mismatch” between today’s high prices and oil supplies. “Anyone that tells you otherwise is wrong,” he said.

OPEC members are worried that today’s sky-high prices have the potential to reduce consumption. But the members are also unsure whether they need to raise their output, since doing so at a time when the economy slows might hasten a sharp price drop, which is what producers fear most.

“The economic situation has finally dawned on the energy markets,” said John Kilduff, an energy analyst at MF Global, a brokerage of exchange-traded futures and options. “OPEC is right to be concerned about falling into a production trap if they respond too aggressively.”

One option that will be discussed at Wednesday’s meeting is a possible increase of 500,000 barrels a day in the group’s overall output, which now stands at about 30.6 million barrels a day. Some OPEC members, including Nigeria, have voiced support for such a move, but Saudi Arabia would probably not back it.

“It’s a very fine line they are trying to tread,” said David Kirsch, an analyst at PFC Energy, a consulting firm in Washington. “They really have to be concerned about the downside risks to the market. The big fall in prices really took a big production increase off the table. It confirmed that the fundamentals do not support high prices.”

Yet OPEC could still be forced to act, particularly if oil prices rebounded sharply in the days ahead of the meeting. Among the wild cards are renewed tensions in Northern Iraq between Turkey and Kurdish separatists, and Iran’s tough stance on its nuclear program.

As a group, OPEC’s 13 members account for 40 percent of the world’s daily oil exports, making them the only producers capable of raising their output in a meaningful manner. Together, they now have about 2.5 million barrels a day of spare capacity, according to analyst estimates, mostly in Saudi Arabia. This gives the Saudi kingdom, the world’s top oil exporter, the most clout to set the tone within OPEC.

Some OPEC insiders are particularly concerned about the risks associated with slowing demand next year, especially following the credit and housing market crisis in the United States, which consumes roughly a quarter of the world’s oil. Globally, oil demand is expected to grow between 1.5 million and 2 million barrels a day next year.

At the same time, new supplies are slowly making their way on the market. New oil and natural-gas liquid production from OPEC nations could reach 2 million barrels a day next year, and another 1.1 million barrels a day are expected to come from non-OPEC sources, like Russia or Norway, according to estimates by Deutsche Bank. Some OPEC specialists say these factors could substantially alter the balance between supply and demand after years of market tightness.

At a recent meeting in Riyadh, OPEC leaders cited a variety of reasons for the spike in oil prices. Those included a weak dollar, refining shortfalls in the United States, runaway demand in Asia and speculative investments in commodities.

Abdalla Salem el-Badri, OPEC’s secretary general, said that oil producers were not happy with current prices because they might lead to lower demand in the long term.

“We know what high oil prices mean for us,” Badri said in a recent interview. “We really have no interest in high oil prices. And we really have no interest in low oil prices. We want stable prices.”

But he indicated that OPEC was not in a rush to increase supplies until bottlenecks in the refining industry, especially in the United States, were resolved.

“We will add more oil if we know oil will go to the refineries, but we won’t add if they go to commercial stocks,” Badri said, referring to longer-term inventories of oil.

The meeting last month in Riyadh among OPEC’s heads of states also highlighted new signs of tension within the organization. Some countries, led by traditional price hawks like Iran and Venezuela, said they considered current price levels as fair. They criticized the dollar’s weakness and suggested that OPEC should uncouple the price of oil from the United States dollar.

The weakening value of the dollar, which erodes the purchasing power of oil producers, means that OPEC has fewer incentives to seek lower oil prices. On Friday, the euro was at $1.4677 after touching $1.4967 recently, the unified European currency’s strongest level since its debut in 1999.

“A weaker dollar means that OPEC is likely to be more aggressive in its pursuit of higher rather than lower prices,” Frédéric Lasserre, the head of commodity research at Société Générale in Paris, said in a recent report.

Industrialized nations would like to see OPEC increase its output. Nobuo Tanaka, the executive director of the International Energy Agency, which represents 26 oil-consuming nations, said, “The current price level is sending a message to producers: We would wish for some additional barrels sooner rather than later.”

Since 2000, OPEC’s policy has been to fine-tune its supplies to align closely with oil demand but without allowing oil companies and refiners to build too many oil inventories. That policy of careful management has helped the cartel raise prices following the oil collapse of the late 1990s.

But the policy isn’t foolproof. The last time OPEC tried to act to push prices down, it had little impact. After its last meeting, in September, OPEC members agreed to increase production by 500,000 barrels a day. That measure failed to curb prices.

“The high level of disagreement and potential tension shown at the previous output discussions in September suggests that there is absolutely nothing cut-and-dried about the forthcoming negotiations,” Barclays Capital said in a research note last week.