Category Archives: Economy and Meltdown

No. 510: February 2013 CPI, PPI, Real Retail Sales and Earnings, Production

(SGS Subscription required) • Budget-Deficit Negotiations Purportedly Revert Back to Using Fraudulent Reductions to CPI Inflation
• Topping Expectations, Monthly Inflation Hit 0.7% for Both PPI and CPI-U
• February Year-to-Year Inflation: 2.0% (CPI-U), 1.9% (CPI-W), 9.6% (ShadowStats)
• Retail Sales Gained 0.4%, Instead of 1.1%, Adjusted for Headline Inflation
• Pending Downside Production Benchmark Revisions Are Likely, Despite February’s Gain

17 Signs Of A Full-Blown Economic Depression Raging In Southern Europe

Submitted by Michael Snyder of The Economic Collapse blog,

When you get into too much debt, eventually really bad things start to happen.  This is a very painful lesson that southern Europe is learning right now, and it is a lesson that the United States will soon learn as well.  It simply is not possible to live way beyond your means forever.  You can do it for a while though, and politicians in the U.S. and in Europe keep trying to kick the can down the road and extend the party, but the truth is that debt is a very cruel master and at some point it inevitably catches up with you.  And when it catches up with you, the results can be absolutely devastating.

Greece, Italy, Spain and Portugal all tried to just slow down the rate at which their government debts were increasing, and look at what happened to their economies.  In each case, GDP is shrinking, unemployment is skyrocketing, credit is freezing up and manufacturing is declining.  And you know what?  None of those countries has even gotten close to a balanced budget yet.  They are all still going into even more debt.  Just imagine what would happen if they actually tried to only spend the money that they brought in?

I have always said that the next wave of the economic collapse would start in Europe and that is exactly what is happening.  So keep watching EuropeWhat is happening to them will eventually happen to us.

The following are 17 signs that a full-blown economic depression is raging in southern Europe…

#1 The Italian economy is in the midst of a horrifying “credit crunch” that is causing thousands of companies to go bankrupt…

Confindustria, the business federation, said 29pc of Italian firms cannot meet “operational expenses” and are starved of liquidity. A “third phase of the credit crunch” is underway that matches the shocks in 2008-2009 and again in 2011.

In a research report the group said the economy was caught in a “vicious circle” where banks are too frightened to lend, driving more companies over the edge. A thousand are going bankrupt every day.

#2 During the 4th quarter of 2012, the unemployment rate in Greece was 26.4 percent.  That was 2.6 percent higher than the third quarter of 2012, and it was 5.7 percent higher than the fourth quarter of 2011.

#3 During the 4th quarter of 2012, the youth unemployment rate in Greece was 57.8 percent.

#4 The unemployment rate in Spain has reached 26 percent.

#5 In Spain there are 107 unemployed workers for every available job.

#6 The unemployment rate in Italy is now 11.7 percent.  That is the highest that it has been since Italy joined the euro.

#7 The youth unemployment rate in Italy has risen to a new all-time record high of 38.7 percent.

#8 Unemployment in the eurozone as a whole has reached a new all-time high of 11.9 percent.

#9 Italy’s economy is starting to shrink at a frightening pace

Data from Italy’s national statistics institute ISTAT showed that the country’s economy shrank by 0.9pc in the fourth quarter of last year and gross domestic product was down a revised 2.8pc year-on-year.

#10 The Greek economy is contracting even faster than the Italian economy is…

Greece also sank further into recession during the fourth quarter of 2012, with figures on Monday showing the economy contracted by 5.7pc year-on-year.

#11 Overall, the Greek economy has contracted by more than 20 percent since 2008.

#12 Manufacturing activity is declining just about everywhere in Europe except for Germany

Research group Markit said its index of activity in UK manufacturing – where 50 is the cut off between growth and decline – sank from 50.5 in January to 47.9 in February. It left Britain on the brink of a third recession in five years after the economy shrank by 0.3 per cent in the final quarter of 2012.

Chris Williamson, chief economist at Markit, said: ‘This represents a major setback to hopes that the UK economy can return to growth in the first quarter and avoid a triple-dip recession.’

The eurozone manufacturing index also read 47.9. Germany scored 50.3 but Spain hit 46.8, Italy 45.8 and France 43.9.

#13 The percentage of bad loans in Italian banks has risen to 12.2 percent.  Back in 2007, that number was sitting at just 4.5 percent.

#14 Bank deposits experienced significant declines all over Europe during the month of January.

#15 Private bond default rates are soaring all over southern Europe…

S&P said the default rate for Italian non-investment grade bonds jumped to 9.5pc last year from 5.7pc in 2012 as local banks shut off funding. It was even worse in Spain, doubling to 14.3pc.

The default rate in France rocketed from 0.8pc to 8.7pc, the latest in a blizzard of bad news from the country as the delayed effects of tax rises, fiscal tightening, and the strong euro do their worst.

#16 Lars Feld, a key economic adviser to German Chancellor Angela Merkel, recently said the following

“The sustainability of Italian public finances is in jeopardy. The euro crisis will therefore return shortly with a vengeance.”

#17 Things have gotten so bad in Greece that the Greek government plans to sell off 28 state-owned buildings – including the main police headquarters in Athens.

One of the few politicians in Europe that actually understands what is happening in Europe is Nigel Farage.  A video of one of his recent rants is posted below.  Farage believes that “the Eurozone has been a complete economic disaster” and that the worst is yet to come…

Most people believe that the eurozone has been “saved”, but that is not even close to the truth.

In fact, it becomes more likely that we will see the eurozone break up with each passing day.

So who would leave first?

Well, recently there have been rumblings among some German politicians that Greece should be the first to leave.  The following is from a recent Reuters article

Greece remains the biggest risk for the euro zone despite a calming of its economic and political crisis and may still have to leave the common currency, a senior conservative ally of German Chancellor Angela Merkel said.

But there is also a chance that Germany could eventually be the first nation that decides to leave the euro.  In fact, a new political party is forming in Germany that is committed to getting Germany out of the euro.  The following is a brief excerpt from a recent article by Ambrose Evans-Pritchard

A new party led by economists, jurists, and Christian Democrat rebels will kick off this week, calling for the break-up of monetary union before it can do any more damage.

“An end to this euro,” is the first line on the webpage of Alternative für Deutschland (AfD). “The introduction of the euro has proved to be a fatal mistake, that threatens the welfare of us all. The old parties are used up. They stubbornly refuse to admit their mistakes.”

They propose German withdrawl from EMU and return to the D-Mark, or a breakaway currency with the Dutch, Austrians, Finns, and like-minded nations. The French are not among them. The borders run along the ancient line of cleavage dividing Latins from Germanic tribes.

However this all plays out, the reality is that things are about to get much more interesting in Europe.

No debt bubble lasts forever.  The Europeans are finding that out right now, and the U.S. won’t be too far behind.

But for the moment, most Americans assume that everything is going to be okay because the Dow keeps setting new all-time record highs.

Well, enjoy this little bubble of debt-fueled false prosperity while you can, because it won’t last for long.

A massive wake up call is coming, and it will be exceedingly painful for those that are not ready for it.

Greek Economic Riot - Photo by Ggia

 
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Which Is More American – War, Or Peace?

It seems an obvious question but from the top down, based on the great and good leaders of the United States of America, it appears from their State of the Union speeches that ‘War’ indeed trumps ‘Peace’. Of course, whether this is a reflection of the ultimate in Keynesian policy dreams of manufacturing ammunition just to be thrown away in non-inflationary ways (or to drive energy demand) is still in discussion.

 

9/11 Commission Deceived: An Unintentional Work of Fiction Based on Cheney’s Torture Program

 

Preface:  This is not a partisan post. We have repeatedly documented that Obama is as bad or worse than the Bush administration.

In the run up to the Iraq war – and for several years thereafter – the program of torture carried out by the Bush administration was specifically specifically aimed at establishing a false justification for war. Dick Cheney is the guy who pushed for torture, pressured the Justice Department lawyers to write memos saying torture was legal, and made the pitch to Congress justifying torture. (The former director of the CIA said Cheney oversaw American torture policies).

The type of torture used by the U.S. on the Guantanamo suspects is of a special type. Senator Levin revealed that the the U.S. used Communist torture techniques specifically aimed at creating false confessions (see this, this, this and this).

According to NBC News:

  • Much of the 9/11 Commission Report was based upon the testimony of people who were tortured
  • At least four of the people whose interrogation figured in the 9/11 Commission Report have claimed that they told interrogators information as a way to stop being “tortured.”
  • One of the Commission’s main sources of information was tortured until he agreed to sign a confession that he was not even allowed to read
  • The 9/11 Commission itself doubted the accuracy of the torture confessions, and yet kept their doubts to themselves

In fact, the 9/11 Commission Report was largely based on third-hand accounts of what tortured detainees said, with two of the three parties in the communication being government employees.

As the 9/11 Commission Report itself states:

Chapters 5 and 7 rely heavily on information obtained from captured al Qaeda members. A number of these “detainees” have firsthand knowledge of the 9/11 plot. Assessing the truth of statements by these witnesses-sworn enemies of the United States-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 interrogations take 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.

In other words, the 9/11 Commissioners were not allowed to speak with the detainees, or even their interrogators. Instead, they got their information third-hand.

The Commission didn’t really trust the interrogation testimony. For example, one of the primary architects of the 9/11 Commission Report – Ernest May – said in May 2005:

We never had full confidence in the interrogation reports as historical sources.

New York Times investigative reporter Philip Shenon Newsweek noted in a 2009 essay in Newsweek that the 9/11 Commission Report was unreliable because most of the information was based on the statements of tortured detainees:

The commission appears to have ignored obvious clues throughout 2003 and 2004 that its account of the 9/11 plot and Al Qaeda’s history relied heavily on information obtained from detainees who had been subjected to torture, or something not far from it.

 

The panel raised no public protest over the CIA’s interrogation methods, even though news reports at the time suggested how brutal those methods were. In fact, the commission demanded that the CIA carry out new rounds of interrogations in 2004 to get answers to its questions.

 

That has troubling implications for the credibility of the commission’s final report. In intelligence circles, testimony obtained through torture is typically discredited; research shows that people will say anything under threat of intense physical pain. [That’s what top military interrogators say.]

 

And yet it is a distinct possibility that Al Qaeda suspects who were the exclusive source of information for long passages of the commission’s report may have been subjected to “enhanced” interrogation techniques, or at least threatened with them, because of the 9/11 Commission….

 

Information from CIA interrogations of two of the three—KSM and Abu Zubaydahis cited throughout two key chapters of the panel’s report focusing on the planning and execution of the attacks and on the history of Al Qaeda. [Remember the names “KSM” and “Abu Zubaydah” – we’ll get back to them below.]

 

Footnotes in the panel’s report indicate when information was obtained from detainees interrogated by the CIA. An analysis by NBC News found that more than a quarter of the report’s footnotes—441 of some 1,700—referred to detainees who were subjected to the CIA’s “enhanced” interrogation program, including the trio who were waterboarded.

 

Commission members note that they repeatedly pressed the Bush White House and CIA for direct access to the detainees, but the administration refused. So the commission forwarded questions to the CIA, whose interrogators posed them on the panel’s behalf.

 

The commission’s report gave no hint that harsh interrogation methods were used in gathering information, stating that the panel had “no control” over how the CIA did its job; the authors also said they had attempted to corroborate the information “with documents and statements of others.”

 

But how could the commission corroborate information known only to a handful of people in a shadowy terrorist network, most of whom were either dead or still at large?

 

Former senator Bob Kerrey of Nebraska, a Democrat on the commission [one of the 9/11 Commissioners], told me last year he had long feared that the investigation depended too heavily on the accounts of Al Qaeda detainees who were physically coerced into talking. …

The Washington Post documents that Abu Zubaydah was literally crazy – as he head suffered a serious head injury years before 9/11 – and that the FBI agent involved in interrogating Abu Zubaydah and reviewing documents at his house (Daniel Coleman) said that everyone knew that Abu Zubaydah was an unreliable source for information.

This is confirmed by the the New Yorker. Pulitzer Prize winning journalist Ron Suskind writes that interrogator Coleman advised a top FBI official at the time:

“This guy is insane, certifiable, split personality.”

Indeed, the government has since backed away from all claims that Abu Zubaydah had any role in Al Qaeda or 9/11. For example – in September 2009 – the U.S. government admitted in writing in a court proceeding that Abu Zubaydah had never been a member or associate or supporter of al-Qaeda, was not involved in 9/11, and had no prior knowledge of 9/11:

The Government has not contended in this proceeding that Petitioner [Abu Zubaydah] was a member of al-Qaida or otherwise formally identified with al-Qaida.

 

Respondent [The United States Government] does not contend that Petitioner was a “member” of al-Qaida in the sense of having sworn a bayat (allegiance) or having otherwise satisfied any formal criteria that either Petitioner or al-Qaida may have considered necessary for inclusion in al-Qaida. Nor is the Government detaining Petitioner based on any allegation that Petitioner views himself as part of al-Qaida as a matter of subjective personal conscience, ideology, or worldview.

 

The Government has not contended in this proceeding that Petitioner had any direct role in or advance knowledge of the terrorist attacks of September 11, 2001.

 

***

 

The Government has not contended that Petitioner had any personal involvement in planning or executing either the 1998 embassy bombings… or the attacks on September 11, 2001.

Kevin Ryan – who has interviewed 9/11 Commissioner Lee Hamilton, Abu Zubaydah’s attorney and other knowledgeable people – documents how central Abu Zubaydah is to the 9/11 Commission Report (footnotes omitted; see original for documentation)

The 9/11 Commission (falsely) called Zubaydah an “al Qaeda lieutenant.” The Joint Congressional inquiry did the same, calling him “al-Qa’ida leader Abu Zubaydah,” and the “Bin Ladin lieutenant captured in March 2002.” As late as 2006, the Justice Department’s Inspector General report on the 9/11 attacks called Zubaydah a “Bin Laden lieutenant.”

 

When Zubaydah was captured, in March 2002, U.S. government officials touted him as the biggest catch of the War on Terror, at least until the capture of Khalid Sheik Mohammed (KSM). FBI Director Robert Mueller stated that Zubaydah’s capture would help deter future attacks. White House spokesman Ari Fleischer said that Zubaydah could provide a treasure-trove of information about al-Qaeda. Secretary of Defense Donald Rumsfeld claimed that Zubaydah was “a man who knows of additional attacks”, who has “trained people to do this”, and was a big fish who had a fountain of knowledge.

The extensive allegations against Zubaydah went on and on, and included that he was:

  • along with KSM, one of “Al Qaeda’s top operational managers” – “Counterterrorism Czar”Richard Clarke, in his book Against All Enemies
  • “sinister” and “there is evidence that he is a planner and a manager as well. I think he’s a major player.” – Former State Department director of counter-terrorism, Michael Sheehan
  • “extremely dangerous” and a planner of 9/11. – State Department legal advisor John B. Bellinger III in a June 2007 briefing.
  • a trainer, a recruiter, understood bomb-making, was a forger, a logistician, and someone who made things happen, and made “al-Qaeda function.” – Former CIA station chief, Bob Grenier
  • “a close associate of UBL’s [i.e. Bin Laden], and if not the number two, very close to the number two person in the organization. I think that’s well established.” -Donald Rumsfeld
  • “a very senior al Qaeda official who has been intimately involved in a range of activities for the al Qaeda.” – Donald Rumsfeld
  • a “very senior al Qaeda operative.” – Donald Rumsfeld
  • a “key terrorist recruiter and operational planner and member of Osama bin Laden’s inner circle.” – White House spokesman Ari Fleischer
  • someone whose capture was a “very serious blow” to al-Qaeda and therefore one of al-Qaeda’s “many tentacles” was “cut off.” – White House spokesman Ari Fleischer
  • one of the top operatives plotting and planning death and destruction on the United States.” –President George W. Bush
  • one of al-Qaeda’s top leaders” who was “spending a lot of time as one of the top operating officials of al Qaeda, plotting and planning murder.” –President George W. Bush
  • “al Qaeda’s chief of operations.” – President George W. Bush
  • “one of the top three leaders” in al-Qaeda. – President George W. Bush
  • someone whose interrogation “led to reliable information”, a “prolific producer” of information, with whom originated roughly 25 percent of the information on al Qaeda that came from human sources. – [National Security Agency Director] Michael Hayden
  • one of three individuals “best positioned to know about impending terrorist atrocities.” – Michael Hayden

As the myth of Zubaydah grew, it was reported that he was –

  • “worth a ton of guys at Gitmo.”
  • a “senior bin Laden official” and the “former head of Egypt-based Islamic Jihad.”
  • “played a key role in the East Africa embassy attacks.”
  • listed as a “trusted aide” to bin Laden with “growing power.”
  • in control of al-Qaeda.
  • an aide of bin Laden who ran training camps in Afghanistan and “coordinated terror cells in Europe and North America.”
  • a “key terrorist recruiter, operational planner, and member of Osama Bin Laden’s inner circle.”
  • bin Laden’s CEO”, and “a central figure in Al Qaeda
  • Bin Laden’s “travel planner.”
  • “one of a handful of men entrusted with running the terrorism network in the event of Osama bin Laden’s death or capture.”
  • a senior bin Laden lieutenant who was believed “to be organizing al Qaida resources to carry out attacks on American targets.”
  • the fourth ranking member of al Qaeda behind Bin Laden, Ayman al-Zawahiri, and Muhamed Atef.
  • someone who knew the identities of “thousands” of terrorists that passed through al Qaeda training camps in Afghanistan
  • a colleague of Richard Reid, the shoe-bomber.
  • one of bin Laden’s top planners of terrorist operations who knew of al Qaeda plots and cells.
  • the “connection between bin Laden and many of al-Qaida’s operational cells.”
  • the source of information that UAL Flight 93 was intended to hit the White House.

Because we now know that Zubaydah was never an al Qaeda operative, or even an al Qaeda associate, we are forced into the stunning realization that all of this was false. The questions that should arise from that realization include: How much of what we know about al Qaeda, and how much of the War on Terror, was built on the torture testimony of a man who clearly could not have known anything about al Qaeda at all? [We’ve already documented that Cheney, Rumsfeld and the boys are guilty of war crimes for falsely using 9/11 as a justification for the Iraq war, and noted that Cheney admits that he lied about 9/11.]

 

***

 

But as we know now, the CIA reportedly told Abu Zubaydah during his interrogation that they discovered he was not an al-Qaeda fighter, partner, or even a member. Still, KSM and Bin Alshibh were caught and tortured too.

 

***

 

Given the apparent “mistakes” related to Zubaydah being represented as an al Qaeda leader, there appears to be some serious revision required in the official account of 9/11. However, realistically, at this late date the information attributed to Zubaydah cannot likely be untangled from the official myth behind the War on Terror and the associated actions of the U.S. government. That’s because the torture of Zubaydah was used in support of unprecedented policy changes and actions.

  • President Bush personally used the perceived value of Zubaydah’s capture and torture to justify the use of the CIA’s torture techniques as well as the detention of suspects in secret CIA prisons around the world.
  • The U.S. government used the questionable intelligence obtained from Zubaydah in order to justify the invasion of Iraq. Officials stated that the allegations that Iraq and al-Qaeda were linked through training people on the use of chemical weapons came from Zubaydah. There was no independent verification of these claims.
  • Zubaydah’s torture testimony was also used to justify the use of military tribunals, moving the trial of alleged al Qaeda suspects out of the open civil courts. President Bush asked Congress in a speech in September 2006 to formulate special rules in order to try Abu Zubaydah via military commission in Guantanamo Bay. In fact, in late April 2002 less than one month after Abu Zubaydah’s capture, Justice Department officials stated Abu Zubaydah “is a near-ideal candidate for a tribunal trial.” Ironically, Zubaydah may be the only leading suspect to never face trial.
  • In addition to justifying the use of illegal torture techniques, the Bush administration used Zubaydah’s capture as justification to accelerate its domestic spying program. The claim was that it would allow quick action on the phone numbers and addresses seized during Zubaydah’s capture.

How can the 9/11 Commission Report stand when one of the main sources for information was crazy, was tortured with a specific technique aimed at extracting false confessions, was never allowed to speak (first or second-hand) to the Commissioners, and was not even affiliated with Al Qaeda or 9/11?

The Other Main Source of Information Was Also Unreliable

The other main source for the Commission – KSM – the self-confessed “mastermind” of 9/11, also confessed to crimes which he could not have committed.

He later said that he gave the interrogators a lot of false information – telling them what he thought they wanted to hear – in an attempt to stop the torture. We also know that he was heavily tortured specifically for the purpose of trying to obtain false information about 9/11 – specifically, that Iraq had something to do with it.

So the two main sources for the 9/11 Commission investigation were wholly unreliable.

Government Cover-Up of Unreliability of Witnesses

Moreover, certain government personnel went to great lengths to cover up how unreliable the information was.

For example, the CIA videotaped the interrogation of 9/11 suspects, falsely told the 9/11 Commission that there were no videotapes or other records of the interrogations, and then illegally destroyed all of the tapes and transcripts of the interrogations.

9/11 Commission co-chairs Thomas Keane and Lee Hamilton wrote:

Those who knew about those videotapes — and did not tell us about them — obstructed our investigation.

The chief lawyer for Guantanamo litigation – Vijay Padmanabhan – said that torture of 9/11 suspects was widespread. And Susan J. Crawford – the senior Pentagon official overseeing the military commissions at Guantánamo – told Bob Woodward:

We tortured Qahtani. His treatment met the legal definition of torture.

Indeed, 90 of the 92 videotapes that the CIA destroyed related to Abu Zubaydah.

Postscript: The 9/11 Commissioners publicly expressed anger at cover ups and obstructions of justice by the government into a real 9/11 investigation:

  • The Commission’s co-chairs said that the CIA (and likely the White House) “obstructed our investigation”
  • The Senior Counsel to the 9/11 Commission (John Farmer) – who led the 9/11 staff’s inquiry – said “At some level of the government, at some point in time…there was an agreement not to tell the truth about what happened“. He also said “I was shocked at how different the truth was from the way it was described …. The tapes told a radically different story from what had been told to us and the public for two years…. This is not spin. This is not true.”

And the Co-Chair of the official Congressional Inquiry Into 9/11 – and former head of the Senate Intelligence Committee – has called for a new 9/11 investigation.

Very high-level intelligence officials have also called the Commission’s findings into doubt:

  • A 27-year CIA veteran, who chaired National Intelligence Estimates and personally delivered intelligence briefings to Presidents Ronald Reagan and George H.W. Bush, their Vice Presidents, Secretaries of State, the Joint Chiefs of Staff, and many other senior government officials, and who has for years been a tireless anti-war advocate and critic of imperial foreign policy (Raymond McGovern) said “I think at simplest terms, there’s a cover-up. The 9/11 Report is a joke”
  • Former Deputy Secretary for Intelligence and Warning under Nixon, Ford, and Carter (Morton Goulder), former Deputy Director to the White House Task Force on Terrorism (Edward L. Peck), and former US Department of State Foreign Service Officer (J. Michael Springmann), as well as a who’s who of liberals and independents) jointly call for a new investigation into 9/11
  • Former Federal Prosecutor, Office of Special Investigations, U.S. Department of Justice under Presidents Jimmy Carter and Ronald Reagan; former U.S. Army Intelligence officer, and currently a widely-sought media commentator on terrorism and intelligence services (John Loftus) says “The information provided by European intelligence services prior to 9/11 was so extensive that it is no longer possible for either the CIA or FBI to assert a defense of incompetence”

Some other examples of obstruction of justice into the 9/11 investigation include:

  • An FBI informant hosted and rented a room to two hijackers in 2000. Specifically, investigators for the Congressional Joint Inquiry discovered that an FBI informant had hosted and even rented a room to two hijackers in 2000 and that, when the Inquiry sought to interview the informant, the FBI refused outright, and then hid him in an unknown location, and that a high-level FBI official stated these blocking maneuvers were undertaken under orders from the White House. As the New York Times notes:

    Senator Bob Graham, the Florida Democrat who is a former chairman of the Senate Intelligence Committee, accused the White House on Tuesday of covering up evidence ….The accusation stems from the Federal Bureau of Investigation’s refusal to allow investigators for a Congressional inquiry and the independent Sept. 11 commission to interview an informant, Abdussattar Shaikh, who had been the landlord in San Diego of two Sept. 11 hijackers.

  • The chairs of both the 9/11 Commission and the Official Congressional Inquiry into 9/11 said that Soviet-style government “minders” obstructed the investigation into 9/11 by intimidating witnesses
  • The 9/11 Commissioners concluded that officials from the Pentagon lied to the Commission, and considered recommending criminal charges for such false statements
  • As reported by ACLU, FireDogLake, RawStory and many others, declassified documents shows that Senior Bush administration officials sternly cautioned the 9/11 Commission against probing too deeply into the terrorist attacks of September 11, 2001

 

 

Guest Post: "What In The World Is A Bitcoin?"

Submitted by Simon Black of Sovereign Man blog,

Earlier in the week, we wrote about an Argentine car rental agency that had started accepting Bitcoins as a means to bypass local capital controls.

We received a lot of questions about the article, the most common of which was “What in the world is a BITCOIN?”

Let’s start by looking at our current monetary system.

In most countries, a small tiny banking elite exercises total control over that nation’s money supply. And we’re just supposed to trust them to be good guys.

Yet central bankers around the world have conjured trillions of dollars out of thin air, debasing the money’s value. It’s a concept any six-year old can understand. If money grew on trees, it wouldn’t be worth very much.

This is one of the key reasons why people buy gold. You can’t just conjure gold out of thin air. It takes years of exploration and investment to pull it out of the ground.

In the information age, though, we have an alternative.

Bitcoin is digital currency. It doesn’t actually exist in our physical world… only in computers.

If this sounds esoteric and far-fetched, it’s not. The vast majority of our monetary system today is already digital.

A very small percentage of all the currency circulating in the world exists in physical notes and bills. The rest of it is merely accounting entries in bank databases. Most financial transactions are just a reshuffling of these database entries. Physical currency seldom changes hands.

Bitcoin is similar in this respect… nothing physical exists. But there are some key advantages.

For one, Bitcoin is not controlled by any government or central bank. And two, it’s private.

In the world of conventional finance, governments can see every time you use your credit card, withdraw cash at an ATM, or make a wire transfer.

Yet with Bitcoin, they don’t have this ability. And this is a key reason why Bitcoin has become so popular, especially in places like Argentina where people are getting squashed by their government.

A few days ago I wrote about an Argentine car rental agency that had begun accepting Bitcoins. My friend Sir Charles of PricedinGold.com was at their office; he snapped a photo and sent me some really great information.

The 1-day rental rate for a basic car was 380 Argentine pesos. At the government’s official rate, that works out to be $74 USD. In Bitcoins, the same car rents for 1.13 BTC… which is approximately $54 USD. This is nearly 30% cheaper!

The benefit for the rental agency is the ; they can avoid all the costly fees, bureaucracy, and debilitating capital controls associated with a normal transaction. Plus, they can hold Bitcoins instead of the rapidly depreciating Argentine peso.

If you think that these sorts of tactics– mind-numbing financial bureaucracy, confiscatory taxes, and capital controls– can’t happen where you live, think again.

I was just having a conversation this morning on the topic with Jim Rickards, author of the best-selling Currency Wars and one of the speakers at our upcoming Offshore Tactics Workshop.

Jim reminded me that, aside from Roosevelt confiscating gold back in the 1930s, the US government also imposed a confiscatory windfall profits tax on oil gains back in the 1970s. In addition, for most of the 20th century, capital controls were the rule around the world, not the exception.

To be fair, Bitcoin is not without its challenges. But the prospect of digital currencies presents an elegant alternative to fiat destruction.

If you want to find out more about Bitcoin, this website provides a lot of great introductory information