-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Today's Lesson from Money Mischief by Milton Friedman Although either silver or gold could legally be used as money, in practice only silver was so used until 1834 [in the US]. The reason was simple. There was and is a market for silver and gold outside the mint--for jewelry, industrial uses, coinage by other countries, and so on. In 1792 the ratio of the market price of gold to the market price of silver was almost exactly 15 to 1, the ratio Hamilton recommended. But shortly afterward the world price ratio went above 15 to 1 and stayed there . . . As a result, anyone who had gold and wanted to convert it to money could do better by first exchanging the gold for silver at the market ratio and then taking the silver to the mint, rather than taking the gold directly to the mint. To put it another way, look at the mint as if it were a two-way street at a 15 to 1 ratio. An obvious get-rich scheme would be to bring 15 ounces of silver to the mint, get 1 ounce of gold in return, sell the ounce of gold on the market, and with the proceeds buy more than 15 ounces of silver, pocket the profit, and keep going. Clearly, the mint would soon be overflowing with silver and out of gold. That is why the mint's commitment under the bimetallic standard was solely to buy silver and gold (that is, coin freely), although it also could, at its discretion, sell (redeem) one or the other or both metals. The end result was that the United States was effectively on a silver standard from 1792 to 1834. Gold was used for money only at a premium, not at par value. It was too valuable for that. Gresham's law was in full operation: cheap money drove out dear money. ===== Waco Showdown Over Government Privilege Claim "Oops. Another criminal act. Stamp that 'Top Secret, SCI.'" WASHINGTON — Attorneys for surviving Branch Davidians and relatives of those who died during the 1993 Waco siege contend the government is withholding important evidence by saying it is classified or falls under Privacy Act protection. The plaintiffs' lawyers expect to go to trial early next year in their wrongful-death civil lawsuit against the government. "There are a lot of documents which have been turned over to us, large portions of which have been blacked out," said lead counsel Michael Caddell, calling some of the evidence critical to his case. "And that, we'll be taking up with the court." Caddell said he anticipates filing motions asking U.S. District Judge Walter Smith in Waco, Texas, to examine the government's privilege claims and he intends to bring up the matter when the parties meet privately with the judge Oct. 15. Caddell's concern is shared by co-counsel James Brannon, who is representing the estates of the three children Davidian leader David Koresh had with his legal wife, Rachel Jones. The children, and others that Koresh fathered with different women, were among the approximately 80 people who died during the fiery end to the 51-day standoff on April 19, 1993. As for the lawyers' assertions, Justice Department spokesman Myron Marlin said: "This matter is currently under litigation and we will certainly respond to any complaint we receive in court" Caddell questioned the government's blacking out of passages from "virtually every" post-siege interview conducted with all FBI agents at Waco. "We're entitled to know everything that they heard or saw or did on April 19," Caddell said. And Brannon is challenging the government's refusal to provide the names of certain participants in the final assault. "They cannot hide behind any laws, any statutes to inflict wrongful deaths on American citizens and then say 'You can't ever find out who these people were,'" Brannon said, vowing to take the matter to the Supreme Court if necessary. Pointing to past misstatements by federal officials, including the now-recanted denial that the FBI lobbed potentially incendiary tear gas canisters, Caddell said: "At this point, you have to be suspicious when they are withholding things." Smith or a court-appointed special master should review the items the government wants to keep private, he said. Federal officials are finalizing production of an avalanche of siege-related documents for Smith's court, the special counsel appointed by Attorney General Janet Reno and a House committee, said Michael Bradford, U.S. attorney for the Eastern District of Texas. On Monday, Smith granted Bradford 30 more days to give the court every Waco-related government document. The documents had been due last Friday. "We're under deadlines from congressional subpoenas and court production deadlines and we've been working literally around the clock to try to get that accomplished," Bradford said. "It's a huge undertaking." The House Government Reform Committee is expecting more than 1 million documents, said committee spokesman Mark Corallo. Associated Press, October 5, 1999 Russian Imperialism Russian Rocket Attack on Independent Chechnya You think this is bad? Just wait until the Western states secede from the US DARGO, Russia - It was exactly 2:40 P.M., time for tea, so Shudi Tuchiyu strolled from his house out to the garden in the hazy afternoon sun. He could not have chosen a better moment, because just then a Russian 122mm Grad rocket ripped through the roof of his farmhouse, blowing out the windows and walls. Mr. Tuchiyu's home in Chechnya was leveled by a round from a multiple-barrel launcher deployed in the mountains just across the border in the republic of Dagestan. Dozens of rockets fired by the same battery chewed up cornfields all around this farming village, splintered trees and killed a farmer who was baling hay - part of what Russian officials insist are pinpoint attacks against ''terrorist'' positions in Chechnya. But here, the assault was clearly indiscriminate. Grads are unguided rockets intended to saturate a battle area quickly with lethal high explosives, and these landed all over the place. The bombardment supported charges by Chechen officials that Russian forces have been using armored, artillery and air attacks on border villages and bombing larger targets deeper inside Chechnya to terrorize civilians. Tens of thousands have fled Grozny, the Chechen capital, and other towns that have come under Russian attack, many heading west into the republic of Ingushetia, where local officials of the small republic say they can neither feed nor house them. The two-pronged Russian offensive - clearing the Chechen frontier of opposition while striking at oil depots, power stations, roads and bridges across the territory, is part of a strategy to contain guerrilla forces that invaded Dagestan last month with the stated aim of creating an Islamic republic. The invaders, led by a famed guerrilla commander, Shamil Basayev, are part of the same rebel force that outmaneuvered, embarrassed and defeated Russian troops in Chechnya in 1996, leaving the territory nominally still under Russian rule but virtually independent. Massed artillery was a main component of Russian battlefield tactics in that brutal two-year war and appears to be again in the present conflict. In western Chechnya, and here in the east as well, artillery and rocket barrages seem to have mainly a psychological goal - to keep guerrillas in the area off balance and to upset and intimidate their supporters. In Dargo, a village of 2,000 people, farmers are confused. They say they thought the war with Russia was long over, and they are beginning to resent the self-styled Islamic rebels, whom they once thought were heroes, for bringing them new troubles. ''The Islamists used to come around here, but we don't let them in,'' Mr. Tuchiyu said defensively. ''Does this look like a terrorist base to you?'' Reporters visited Dargo as part of a tour arranged by the beleaguered Chechen government of President Aslan Maskhadov, which denies it has any connection with Mr. Basayev's guerrillas. When the Grad attack took place, the journalists were being shown the nearby village of Benoi, which was hit by Russian artillery more than two weeks ago. International Herald Tribune, October 5, 1999 International Bureaucracy IMF Refuses to Take Responsibility for Its Russian Lending The old whore protests her innocence. Stan Fischer, first deputy managing director of the International Monetary Fund, last week wrote a spirited defence of the IMF's role in Russia. The basic problem, he said, was not the omission of some critical element from the reform package, such as tax or legal reform. Poor implementation, corruption and Russian leaders' lack of political will were to blame. The IMF protests its innocence too loudly. As the most influential external player in Russia, it contributed to the country's economic collapse in 1998 through badly designed policies. What is worse, the IMF has neither changed its strategy nor accepted any responsibility for its disastrous guidance. The IMF deserves some credit for technical improvements in central banking policy and budget planning in Russia. But Russia's transformation to a market economy was always going to be more complicated than the transition of eastern Europe. In a large economy such as Russia's, strict competition policies must play a much larger role than in small open economies. Competition combined with intelligent privatisation and investment channelled through a functional banking system and capital markets would have brought the growth Russia so desperately desired. But the IMF never emphasised competition policy and economic growth. Rather, it pursued a Latin American-type strategy in which emphasis was placed on reducing inflation and cutting budget deficits. This is where the IMF started to go wrong. Instead of insisting on real savings, it turned a blind eye to the fact that the government was achieving disinflation and budget savings by piling up arrears in its wage bill. The IMF failed to understand that a government in permanent breach of its labour contracts would undermine the rule of law. The IMF's second big mistake was to sanction a fixed exchange rate for the rouble. Most economists prescribe fixed exchange rates only for countries with a diversified export basket. For Russia, which earns half its hard currency from oil, gas and other energy exports, this prescription was irresponsible. The price volatility of oil almost guaranteed Russia would be vulnerable to speculative attacks on its currency. Could better policies have reduced capital flight? Yes. Help in creating stable and functional monetary institutions should be a natural task for an institution such as the IMF, but, in Russia, the Fund acquiesced in the creation of an uncontrollable and poorly regulated banking system. Now that the debt crisis has destroyed much of it, capital flight and the absence of the rule of law will continue to ensure that the prospects for economic recovery are nil. It is also unclear why the IMF and some other actors in Washington supported early liberalisation of Russia's capital account when economic textbooks suggest such a move was premature. Wall Street investment banks may have a legitimate interest in liberal capital markets worldwide, but the IMF's role should have been to ensure the careful sequencing of liberalisation. The IMF should not have turned a blind eye to the absence of the rule of law and the growth of mafia crime and corruption. Only the Organisation of Economic Co-operation and Development dared mention the problem - timidly, in a few sentences - in a recent report on Russia. Nobody at the IMF has accepted responsibility for the Fund's mistakes. To my knowledge, no one has been fired for gross incompetence. Mr Fischer claims Russia has achieved some relative successes. But he forgets the real aim of the mission: to steer Russia through the transition to a functioning market economy. Russia will continue to suffer from capital flight until the rule of law, functional political institutions and the foundations for long-term growth have been established. The absence of trustworthy Russian banks means that legal and illegal incomes will continue to be spirited abroad. And very soon, Europe will feel the effects of the breakdown of law and order. The Russian mafia is already active in Europe. Now that Finland holds the presidency of the EU, its central bank and politicians should share their insights into Russia to push the EU towards a new strategy. This should focus on building institutions, on policies designed to promote growth and structural adjustment, and on new criteria for IMF loans to Russia. The EU should also accept its share of the blame for the Russian disaster. It should have been more critical of what the IMF was trying to do there, and more directly engaged with Russia with more technical and financial support. The autumn of 1999 should be the starting point for a second and more intelligent western support programme for Russia. Without it, the prospects of a quick reversal of capital flight, sustainable growth and Russia's integration into the world economy will be even further away than they are today. The author is president of the European Institute for International Economic Relations at Potsdam University. The Financial Times, October 5, 1999 European Union Is the European Union Beginning to Unravel? French bestsellers forecast the coming war with Germany. PARIS - About two weeks ago, Chancellor Gerhard Schroeder told an audience at a political forum in Berlin he was concerned about some ''awful books being published in France'' that warn that Germany is a growing danger for Europe. Mr. Schroeder obviously had been getting reports about a number of writers here characterizing Germany as Europe's problem for the new century. Their unifying idea, roughly, is that France has to go beyond the now burnt-out notion of its once special relationship with Germany, and deal directly with the implications of a country whose course, at least in the authors' minds, is moving in an imperial, hegemonic direction. Until now, and Mr. Schroeder's reaction, the thesis seemed confined to books that had gotten little readership or mainstream media exposure, and to a few op-ed page articles in newspapers. But a book by the former head of the French intelligence agency, pushing the notion that Germany once again means trouble, jumped into first place on the national nonfiction best-seller list last Friday, barely a week after going on sale. Publication of the book by Pierre Marion, who served as President Francois Mitterrand's first foreign intelligence chief in 1981 and 1982, comes after remarks last month by Maurice Druon, the permanent secretary of the French Academy, that Germany's old and instinctive reach for empire would push it toward a kind of nonmilitary confrontation with France in about 10 years. What the books seem to reflect of a wider French view of a declining relationship between the two countries is the idea that there are increasingly few objective factors that would lead Germany to continue to share European political leadership with France. In the sense that all the books point to a decline in French influence, their premise is as abrasive, and unwelcome, in terms of French public debate as it might be in Germany. Much of the interest in Mr. Marion's book, ''Memoires de l'Ombre'' (''Memoires From the Shadows'') published by Flammarion, seems largely to do with its contemptuous portrayal of the former president, which has been heightened by an attempt by lawyers for Mr. Mitterrand's daughter, Mazarine Pingeon, to stop its distribution. But beyond the book's unusual characterization of the late president as an ill-informed man of vast self-indulgence, cynically ignorant of modern economics, science, or technology, its readers are being offered the accusation that the aftermath of World War II ''masked the permanent will of our neighbors to impose their way of life, thought, and running things.'' Mr. Marion argues that Mr. Mitterrand was seduced by Chancellor Helmut Kohl - ''rolled in flour for cooking'' - with the idea that a reunified Germany would reinforce the construction of Europe. In fact, Mr. Marion says, the unification of Europe is accelerating German domination, and France faces being submerged in a developing federal system controlled by the Germans. This jibes, in part, with the arguments against European unification of a faction of the French right-wing calling itself ''sovereignists.'' Where Mr. Marion becomes more original is in saying that if the choice is German domination of Europe or American domination of NATO, ''we should adopt an attitude allowing us, when the time comes, to obtain American support.'' Probably the most meaningful issue raised by the book and two others that pursue parallel themes - ''La Prochaine Guerre avec l'Allemagne'' (''The Next War With Germany'') by Philippe Delmas and ''Voyage au Bout de l'Allemagne - l'Allemagne est Inquietante'' (''Voyage to the End of Germany - Germany Is Worrying'') by Alain Griotteray - is not so much the substance of their arguments, but how much French elites are moving away from a largely benign view of Germany, and toward one that is more actively wary. Mr. Marion insisted, in an interview, that this is happening and that it is healthy because ''since de Gaulle, there's been complicity within the French political world to run from the issue.'' Mr. Griotteray, a former National Assembly deputy who like Mr. Druon and Mr. Marion is over 75 years old, writes harshly but probably accurately that being uneasy about Germany in France has meant ''being considered a Jew unable to forget the Holocaust or an old soldier obsessed by memories of the war.'' He asks, Is Germany worrying these days? The answer is yes. His argument is rather like Mr. Marion's. The current Greater Germany, Mr. Griotteray says, is only a more peaceful but no less dangerous version of Eternal Germany. ''Once reunified, powerful and compact,'' he says, ''Germany can consider that it's time to bring Europe together into a great federation whose reins would naturally be in its hands.'' Mr. Delmas makes a far more probing investigation. A director of Airbus Industrie and an adviser to former Foreign Minister Roland Dumas, he argues that the unification of West and East Germany deepened rather than resolved an identity crisis for the two German peoples, and that this has been made more complicated by the country's resistance to and struggle with economic change. A bigger, stronger, Germany faces decisions affecting Europe that go beyond its political traditions and level of self-confidence, Mr. Delmas says. ''While it's far from having found its internal balance and own identity, Germany has to affirm itself to the outside world.'' What must particularly irritate Mr. Schroeder about Mr. Delmas's position is his view that Germany is fragile, indeed too weak to serve alone as a basis for European construction, but that its power nonetheless has to be ''domesticated through a collective effort.'' The response of France to the situation? Ask Mr. Delmas: ''The only road open to it is proposing to Germany the constitution of a common power,'' which, Mr. Delmas says, is no more an unthinkable enterprise than creating the euro. Mr. Schroeder's special adviser for French affairs, Brigitte Sauzay, a Frenchwoman, says all this represents a very small percentage of French opinion, essentially the ''nervous French bourgeoisie.'' But she acknowledges that Germans are hurt by it. ''They think, 'We've made big efforts. We've been the best kid in the class all these years, and they still think we're bad.' '' ''Naturally, these are all exaggerated concerns; Germany isn't dangerous,'' said Friedbert Pflueger, the Christian Democratic chairman of the Bundestag's Foreign and Security Policy Committee. ''The young generation absolutely cannot imagine confrontation. We have common institutions and the euro. But Delmas, Marion, and Druon are not just nobodies. We should take such concerns seriously and not give them occasion to grow through trying to act big.'' International Herald Tribune, October 5, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credeence to Holocaust denial and nazi's need not apply. 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