Pope appeals for solidarity in tough economy
By FRANCES D'EMILIO, Associated Press Writer Frances D'emilio, Associated Press Writer
Thu Dec 25, 2:15 pm ET
VATICAN CITY – Pope Benedict XVI urged a world confronting a financial crisis, conflict, and increasing poverty not to lose hope at Christmas, but to join in "authentic solidarity" to prevent global ruin.
His message of salvation amid growing concern about the economic meltdown facing rich and poor nations alike was echoed across the continent in London, where Britain's Queen Elizabeth II called for courage in response to the rough times.
Speaking from the central balcony of St. Peter's Basilica to tens of thousands of pilgrims, tourists and Romans in the square below, the pope called his Christmas message known as "Urbi et Orbi" — Latin for "to the City and to the World" — a "proclamation of hope." And he stressed that it was "meant for all men and women."
As the global economy continues to spiral downward, Benedict said, "an increasingly uncertain future is regarded with apprehension, even in affluent nations."
"In each of these places, may the light of Christmas shine forth and encourage all people to do their part in a spirit of authentic solidarity," he said. "If people look only to their own interests, our world will certainly fall apart."
Wearing a crimson mantle against a damp chill, Benedict expressed hope that dialogue and negotiation would prevail to find "just and lasting solutions" to conflicts in the Holy Land and elsewhere in the Middle East.
He decried suffering in Africa, terrorism, and called for an end to "internecine conflict" dividing ethnic and social groups.
The pope singled out the plight of those in war-torn eastern Congo, in Sudan's Darfur region, in Somalia where he said "interminable" suffering is the tragic consequence of "the lack of stability and peace" — and in Zimbabwe where people have been "trapped for all too long in a political and social crisis which, sadly, keeps worsening."
Benedict condemned the "twisted logic of conflict and violence" in the Middle East, which he is likely to visit next year. He lamented that "the horizon seems once again bleak for Israelis and Palestinians."
"May the divine light of Bethlehem radiate throughout the Holy Land," he said. "May it spread throughout Lebanon, Iraq and the whole Middle East."
Following tradition, the pope recited holiday greetings in 64 languages, including Latin, the Church's official tongue.
In Bethlehem, crowds of tourists joined local Palestinian Christians in marking Christmas in Jesus' traditional birthplace. Merchants and innkeepers reported good business for the first time in years with tensions between Israelis and West Bank Palestinians appeared to be easing.
At the Church of the Nativity, Brad Shannon, 28, a mechanic from Atlanta Georgia, said he saved money all year to make the trip to Bethlehem with three friends.
"I came here to see the oldest church that is still in use," he said. "It's not every Christmas that you're surrounded with people from all over the world."
In Iraq, the government declared Christmas a holiday for the first time, a surprise for the country's Christian minority estimated to number only a few hundred thousand of the 26 million Iraqis who are overwhelmingly Muslim.
Christians have often been the target of attacks by Islamic extremists in Iraq, and in his homily at Christmas Mass at a Baghdad monastery, Chaldean Cardinal Emmanuel III Delly praised the establishment of Christmas as an official holiday as a step toward easing tensions. In a gesture of cooperation with the Christians, a senior Shiite cleric, Ammar al-Hakim, attended the Mass, flanked by bodyguards.
For the 146,000 U.S. troops serving in Iraq, the holiday was marked with special meals and chapel services — but most of all by thoughts of families at home and calls to loved ones.
Both the outgoing and incoming leaders of the United States were spending Christmas with family.
U.S. President George W. Bush and relatives including his father, former President George H.W. Bush, were celebrating the holiday at the Camp David presidential retreat in Maryland. President-elect Barack Obama and his family were vacationing in a beachfront rental home in his native Hawaii.
Both leaders remembered U.S. military serving away for home in holiday messages.
In the splendor of Buckingham Palace's Music Room, Queen Elizabeth acknowledged to her subjects that the economic crisis had given rise "to feelings of insecurity" and cast a pall over holiday celebrations.
"People are touched by events which have their roots far across the world," she said. "Whether it is the global economy or violence in a distant land, the effects can be keenly felt at home."
But the queen stressed that "when life seems hard the courageous do not lie down and accept defeat; instead they are all the more determined to struggle for a better future."
Copyright © 2008 The Associated Press.
Thursday, December 25, 2008
Pope appeals for solidarity in tough economy
Where'd the bailout money go? Shhhh, it's a secret
Where'd the bailout money go? Shhhh, it's a secret
By MATT APUZZO, Associated Press Writer Matt Apuzzo, Associated Press Writer
Mon Dec 22, 9:52 am ET
WASHINGTON – It's something any bank would demand to know before handing out a loan: Where's the money going?
But after receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending the money or they simply refuse to discuss it.
"We've lent some of it. We've not lent some of it. We've not given any accounting of, 'Here's how we're doing it,'" said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to the public. We're declining to."
The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest?
None of the banks provided specific answers.
"We're not providing dollar-in, dollar-out tracking," said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.
Some banks said they simply didn't know where the money was going.
"We manage our capital in its aggregate," said Regions Financial Corp. spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout.
The answers highlight the secrecy surrounding the Troubled Asset Relief Program, which earmarked $700 billion — about the size of the Netherlands' economy — to help rescue the financial industry. The Treasury Department has been using the money to buy stock in U.S. banks, hoping that the sudden inflow of cash will get banks to start lending money.
There has been no accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money — not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that's happening and there are no consequences for banks who don't comply.
"It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry," said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout.
But, at least for now, there's no way for taxpayers to find that out.
Pressured by the Bush administration to approve the money quickly, Congress attached nearly no strings on the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent.
"Those are legitimate questions that should have been asked on Day One," said Rep. Scott Garrett, R-N.J., a House Financial Services Committee member who opposed the bailout as it was rushed through Congress. "Where is the money going to go to? How is it going to be spent? When are we going to get a record on it?"
Nearly every bank AP questioned — including Citibank and Bank of America, two of the largest recipients of bailout money — responded with generic public relations statements explaining that the money was being used to strengthen balance sheets and continue making loans to ease the credit crisis.
A few banks described company-specific programs, such as JPMorgan Chase's plan to lend $5 billion to nonprofit and health care companies next year. Richard Becker, senior vice president of Wisconsin-based Marshall & Ilsley Corp., said the $1.75 billion in bailout money allowed the bank to temporarily stop foreclosing on homes.
But no bank provided even the most basic accounting for the federal money.
"We're choosing not to disclose that," said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.
Others said the money couldn't be tracked. Bob Denham, a spokesman for North Carolina-based BB&T Corp., said the bailout money "doesn't have its own bucket." But he said taxpayer money wasn't used in the bank's recent purchase of a Florida insurance company. Asked how he could be sure, since the money wasn't being tracked, Denham said the bank would have made that deal regardless.
Others, such as Morgan Stanley spokeswoman Carissa Ramirez, offered to discuss the matter with reporters on condition of anonymity. When AP refused, Ramirez sent an e-mail saying: "We are going to decline to comment on your story."
Most banks wouldn't say why they were keeping the details secret.
"We're not sharing any other details. We're just not at this time," said Wendy Walker, a spokeswoman for Dallas-based Comerica Inc., which received $2.25 billion from the government.
Heine, the New York Mellon Corp. spokesman who said he wouldn't share spending specifics, added: "I just would prefer if you wouldn't say that we're not going to discuss those details."
The banks which came closest to answering the questions were those, such as U.S. Bancorp and Huntington Bancshares Inc., that only recently received the money and have yet to spend it. But neither provided anything more than a generic summary of how the money would be spent.
Lawmakers say they want to tighten restrictions on the remaining, yet-to-be-released $350 billion block of bailout money before more cash is handed out. Treasury Secretary Henry Paulson said the department is trying to step up its monitoring of bank spending.
"What we've been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we're doing this," Paulson said at a recent forum in New York. "So we're building this organization as we're going."
Warren, the congressional watchdog appointed by Democrats, said her oversight panel will try to force the banks to say where they've spent the money.
"It would take a lot of nerve not to give answers," she said.
But Warren said she's surprised she even has to ask.
"If the appropriate restrictions were put on the money to begin with, if the appropriate transparency was in place, then we wouldn't be in a position where you're trying to call every recipient and get the basic information that should already be in public documents," she said.
Garrett, the New Jersey congressman, said the nation might never get a clear answer on where hundreds of billions of dollars went.
"A year or two ago, when we talked about spending $100 million for a bridge to nowhere, that was considered a scandal," he said.
___
Associated Press writers Stevenson Jacobs in New York and Christopher S. Rugaber and Daniel Wagner in Washington contributed to this report.
(This version CORRECTS SUBS 9th graf to correct program name to Troubled Asset, sted Assets. Moving on general news and financial services. AP Video.)
Copyright © 2008 The Associated Press. All rights reserved.
On the Death of Deep Throat by Patrick J. Buchanan
On the Death of Deep Throat
by Patrick J. Buchanan
12/23/2008
"De mortuis nil nisi bonum."
Of the dead, nothing but good.
So said Dean Acheson of Sen. Joe McCarthy on his death in 1957. "Tailgunner Joe" had bedeviled the secretary of state for his lassitude toward communist penetration of State in President Truman's time.
But the passing of Mark Felt, associate director of the FBI in the later Nixon years, lately exposed as "Deep Throat," the source for the Woodward-Bernstein stories, calls forth some rebuttal to the tributes lavished upon Felt as the honest lawman who saved our republic.
When the Watergate break-in was traced to the Committee to Reelect the President, Felt was put in charge of the FBI investigation. Almost immediately, he began to leak to Woodward.
Felt, it is said, was justified, as the White House was interfering with his investigation. False.
This is a moral cloak belatedly cast over more base motives.
The truth: Felt was a bitter man. Having risen through the ranks under J. Edgar Hoover, whose black-bag jobs he had overseen, Felt expected to be rewarded by being named director on Hoover's death. Nixon had passed him over for an outsider, L. Patrick Grey.
By secretly colluding with the Post, Felt was ingratiating himself with an establishment that loathed Nixon, even as he exacted revenge for having being denied by Nixon the post he had coveted.
Had Nixon or aides restricted Felt, the Post would have had an explosive story. But the Post never charged the White House with interfering with the FBI investigation that summer or fall, because it was not interfering.
What Bob Woodward and Carl Bernstein ran with were such shockers as that Nixon's men had hired a trickster to ape the Democrats' Dick Tuck, and said trickster had sent dozens of pizzas to a Muskie rally.
The FBI had ferreted out the Artful Dodger, and the Post led with the atrocity. "FBI Finds Nixon Aides Sabotaged Democrats," screamed the four-column headline at the top of page one.
Indeed, if what Felt did was honorable, why did he lie and deny it repeatedly when asked if he was leaking to the Post? Why did he lie in his memoir in 1979, when, well into retirement, he emphatically denied he was Deep Throat? Was Felt so noble he could save our republic, yet refuse, to the point of lying in his memoirs, to take any credit?
Answer: Felt knew what he did was dishonorable, corrupt -- and unnecessary. For honest FBI agents were steadily making progress toward proving that higher-ups at CREEP were involved in aiding those caught in the Watergate break-in.
Felt had another reason for lying about his role as snitch for the Post. Former colleagues would be disgusted, for his was not only a breach of law, but of faith and trust, a dishonoring of his oath as an FBI agent.
One wonders what went through the mind of Felt, when, on trial in Manhattan in 1980 for those FBI black-bag jobs against the Weather Underground that had bombed the Pentagon and Capitol, ex-President Nixon walked into the courtroom to testify in Felt's defense?
When Felt was convicted, Ronald Reagan pardoned him, declaring that if the Carter amnesty was proper for those who had defected to Canada rather than serve in Vietnam, it was right to pardon those who risked their careers to protect the nation.
After exposure as Deep Throat, Felt wrote in a 2006 memoir, "The bottom line is that we did get the whole truth out, but isn't that what the FBI is suppose to do?"
No, Mr. Felt, that is not what the FBI is supposed to do.
Do we really want, here in America, our premier investigative and police agency to get the truth out that it decides to get out?
Would it have been right for Hoover to get the "whole truth out" on JFK's liaisons with suspected German spies, Mafia molls and Marilyn Monroe, and destroy his presidency? Would it have been right for the FBI to get the "whole truth out" of Hoover's secret files, and ruin all the public careers the FBI could have destroyed?
Isn't that what the old KGB did to its enemies?
In the early '60s, Robert Kennedy authorized Hoover to bug and tap Dr. Martin Luther King. When the FBI turned up film of King with loose women, LBJ's White House moved the photos to the Washington press.
Felt knew of this. The Post knew of this. The Washington press corps knew of this. Why didn't Felt and the Post blow the whistle on this squalid deed? Was it not so egregious as sending pizzas to Muskie's rally?
In that Scoundrel Time, the liberal establishment -- the press, the politicians and the police bureaucrats -- colluded to destroy Nixon, even as they covered for JFK and LBJ.
Nixon, you see, was not one of them. Is it not always thus?
--------------------------------------------------------------------------------
Mr. Buchanan is a nationally syndicated columnist and author of Churchill, Hitler, and "The Unnecessary War": How Britain Lost Its Empire and the West Lost the World, "The Death of the West,", "The Great Betrayal," "A Republic, Not an Empire" and "Where the Right Went Wrong."
Mark Felt, Watergate's `Deep Throat,' dies at 95
Mark Felt, Watergate's `Deep Throat,' dies at 95
By LOUISE CHU, Associated Press Writer Louise Chu, Associated Press Writer
Fri Dec 19, 4:00 pm ET
SAN FRANCISCO – W. Mark Felt, the former FBI second-in-command who revealed himself as "Deep Throat" 30 years after he helped The Washington Post unravel the Watergate scandal, has died. He was 95.
Felt died Thursday at his home in Santa Rosa under hospice care after suffering from congestive heart failure for several months, said family friend John D. O'Connor, who wrote a Vanity Fair article disclosing Felt's secret in 2005.
The shadowy central figure in one of the most gripping political dramas of the 20th century, Felt insisted his alter ego be kept secret when he leaked damaging information to Post reporter Bob Woodward.
The scandal led to President Richard Nixon's resignation in 1974, two years after the break-in at the headquarters of the Democratic National Committee in the Watergate office building in Washington.
While some — including Nixon and his aides — speculated that Felt was Deep Throat, he steadfastly denied the accusations until finally coming forward in May 2005.
"I'm the guy they used to call Deep Throat," Felt told O'Connor for the Vanity Fair article, creating a whirlwind of attention. Weakened by a stroke, he wasn't doing much talking — he merely waved to the media from the front door of his daughter's Santa Rosa home.
Critics, including those who went to prison for the Watergate scandal, called him a traitor for betraying the commander in chief. Supporters hailed him as a hero for blowing the whistle on a corrupt administration trying to cover up attempts to sabotage opponents.
In a phone interview Friday, Woodward said despite the criticism and Felt's own ambivalence, it is clear that Felt should be remembered as a man who did the right thing.
"This is a man who did his duty to the Constitution," Woodward told The Associated Press.
Just last month, Woodward and onetime partner Carl Bernstein visited Felt in his home. It was the first time Bernstein had met him. Woodward said Felt had flashes of lucidity and still cut the appearance of an FBI agent, sitting straight and stiff and dressed in a red blazer.
Felt had argued with his children over whether to reveal his identity or to take his secret to the grave, O'Connor said. He agonized about what revealing his identity would do to his reputation. Would he be seen as a turncoat or a man of honor?
"People will debate for a long time whether I did the right thing by helping Woodward," Felt wrote in his 2006 memoir, "A G-Man's Life: The FBI, `Deep Throat' and the Struggle for Honor in Washington." "The bottom line is that we did get the whole truth out, and isn't that what the FBI is supposed to do?"
Ultimately, his daughter, Joan, persuaded him to go public; after all, Woodward was sure to profit by revealing the secret after Felt died. "We could make at least enough money to pay some bills, like the debt I've run up for the kids' education," she told her father, according to the Vanity Fair article. "Let's do it for the family."
The revelation capped a Washington whodunit that spanned more than three decades and seven presidents. It was the biggest mystery of Watergate, the subject of the best-selling book and hit movie "All the President's Men," which inspired a generation of college students to pursue journalism.
In the movie, the enduring image of Deep Throat is of a testy, chain-smoking Hal Holbrook telling Woodward, played by Robert Redford, to "follow the money."
It was by chance that Felt came to play a pivotal role in the drama.
Back in 1970, Woodward struck up a conversation with Felt while both were waiting in a White House hallway. Felt apparently took a liking to the young Woodward, then a Navy courier, and Woodward kept the relationship going, treating Felt as a mentor as he tried to figure out the ways of Washington.
Later, while Woodward and Bernstein relied on various sources in reporting on Watergate, the man their editor dubbed "Deep Throat" helped to keep them on track and confirm vital information. The Post won a Pulitzer Prize for its Watergate coverage.
The nickname "Deep Throat" was a double entendre: Felt was providing information on the condition of complete anonymity, known as "deep background," and his actions coincided with a popular 1972 porn movie.
Woodward had phoned Felt within days of the June 1972 burglary at the Watergate.
"He reminded me how he disliked phone calls at the office but said that the Watergate burglary case was going to `heat up' for reasons he could not explain," Woodward wrote after Felt was named. "He then hung up abruptly."
Felt helped Woodward link former CIA man Howard Hunt to the break-in. He said the reporter could accurately write that Hunt, whose name was found in the address book of one of the burglars, was a suspect. But Felt told him off the record, insisting that their relationship and Felt's identity remain secret.
Worried that phones were being tapped, Felt arranged clandestine meetings worthy of a spy novel. Woodward would move a flower pot with a red flag on his balcony if he needed to meet Felt. The G-man would scrawl a time to meet on page 20 of Woodward's copy of The New York Times and they would rendezvous in a suburban Virginia parking garage in the dead of night.
In his memoir published in April 2006, Felt said he saw himself as a "Lone Ranger" who could help derail a White House cover-up.
Felt wrote that he was upset by the slow pace of the FBI investigation into the Watergate break-in and believed the press could pressure the administration to cooperate.
"From the start, it was clear that senior administration officials were up to their necks in this mess, and that they would stop at nothing to sabotage our investigation," Felt wrote in his memoir.
Some critics said Felt, a J. Edgar Hoover loyalist, was bitter at being passed over when Nixon appointed an FBI outsider and confidante, L. Patrick Gray, to lead the FBI after Hoover's death. Gray was later implicated in Watergate abuses.
Felt wrote that he wasn't motivated by anger. "It is true that I would have welcomed an appointment as FBI director when Hoover died. It is not true that I was jealous of Gray," he wrote.
Felt was born in Twin Falls, Idaho, and worked for an Idaho senator during graduate school. After law school at George Washington University he spent a year at the Federal Trade Commission. Felt joined the FBI in 1942 and worked as a Nazi hunter during World War II.
Ironically, while providing crucial information to the Post, Felt also was assigned to ferret out the newspaper's source. The investigation never went anywhere, but plenty of people, including those in the White House at the time, guessed that Felt, who was leading the investigation into Watergate, may have been acting as a double agent.
The Watergate tapes captured White House chief of staff H.R. Haldeman telling Nixon that Felt was the source, but they were afraid to stop him.
Nixon asks: "Somebody in the FBI?"
Haldeman: "Yes, sir. Mark Felt ... If we move on him, he'll go out and unload everything. He knows everything that's to be known in the FBI."
Felt left the FBI in 1973 for the lecture circuit. Five years later he was indicted on charges of authorizing FBI break-ins at homes associated with suspected bombers from the 1960s radical group the Weather Underground. President Ronald Reagan pardoned Felt in 1981 while the case was on appeal — a move applauded by Nixon.
Woodward and Bernstein said they wouldn't reveal the source's identity until he or she died, and finally confirmed Felt's role only after he came forward.
O'Connor said Thursday his friend appeared to be at peace since the revelation.
"What I saw was a person that went from a divided personality that carried around this heavy secret to a completely integrated and glowing personality over these past few years once he let the secret out," he said.
Felt is survived by two children, Joan Felt and Mark Felt Jr., and four grandchildren. His wife, Audrey Felt, died in 1984.
O'Connor said the family would hold a private ceremony early next week and a public memorial service in January, after the holidays.
___
Associated Press writers Matthew Barakat and Brian Melley contributed to this report.
(This version CORRECTS, based on updated information, that Felt died under hospice care at his home, instead of at a hospice.))
Eartha Kitt, sultry 'Santa Baby' singer, dies
Eartha Kitt, sultry 'Santa Baby' singer, dies
12/25/2008 5:47 PM, AP
Eartha Kitt, a sultry singer, dancer and actress who rose from South Carolina cotton fields to become an international symbol of elegance and sensuality, has died, a family spokesman said. She was 81.
Andrew Freedman said Kitt, who was recently treated at Columbia Presbyterian Hospital, died Thursday of colon cancer.
Kitt, a self-proclaimed "sex kitten" famous for her catlike purr, was one of America's most versatile performers, winning two Emmys and nabbing a third nomination. She also was nominated for several Tonys and two Grammys.
Her career spanned six decades, from her start as a dancer with the famed Katherine Dunham troupe to cabarets and acting and singing on stage, in movies and on television. She persevered through an unhappy childhood as a mixed-race daughter of the South and made headlines in the 1960s for denouncing the Vietnam War during a visit to the White House.
Through the years, Kitt remained a picture of vitality and attracted fans less than half her age even as she neared 80.
When her book "Rejuvenate," a guide to staying physically fit, was published in 2001, Kitt was featured on the cover in a long, curve-hugging black dress with a figure that some 20-year-old women would envy. Kitt also wrote three autobiographies.
Once dubbed the "most exciting woman in the world" by Orson Welles, she spent much of her life single, though brief romances with the rich and famous peppered her younger years.
After becoming a hit singing "Montonous" in the Broadway revue "New Faces of 1952," Kitt appeared in "Mrs. Patterson" in 1954-55. (Some references say she earned a Tony nomination for "Mrs. Patterson," but only winners were publicly announced at that time.) She also made appearances in "Shinbone Alley" and "The Owl and the Pussycat."
Her first album, "RCA Victor Presents Eartha Kitt," came out in 1954, featuring such songs as "I Want to Be Evil," "C'est Si Bon" and the saucy gold digger's theme song "Santa Baby," which is revived on radio each Christmas.
The next year, the record company released follow-up album "That Bad Eartha," which featured "Let's Do It," "Smoke Gets in Your Eyes" and "My Heart Belongs to Daddy."
In 1996, she was nominated for a Grammy in the category of traditional pop vocal performance for her album "Back in Business." She also had been nominated in the children's recording category for the 1969 record "Folk Tales of the Tribes of Africa."
Kitt also acted in movies, playing the lead female role opposite Nat King Cole in "St. Louis Blues" in 1958 and more recently appearing in "Boomerang" and "Harriet the Spy" in the 1990s.
On television, she was the sexy Catwoman on the popular "Batman" series in 1967-68, replacing Julie Newmar who originated the role. A guest appearance on an episode of "I Spy" brought Kitt an Emmy nomination in 1966.
"Generally the whole entertainment business now is bland," she said in a 1996 Associated Press interview. "It depends so much on gadgetry and flash now. You don't have to have talent to be in the business today.
"I think we had to have something to offer, if you wanted to be recognized as worth paying for."
(This version CORRECTS number of Kitts' Grammy nominations to 2, not 1.))
Wednesday, December 24, 2008
Tuesday, December 23, 2008
Counterfeiting Versus Monetary Policy
Diana Ross - Upside Down - Diana Ross
Source: http://www.ibdeditorials.com/IBDArticles.aspx?id=314838957476528
By WALTER E. WILLIAMS | Posted Monday, December 22, 2008 4:20 PM PT
Congress is on a spending binge. With all the calls for bailouts, economic stimulus and other assorted handouts, there is a real risk of inflation in our future. If we do have a rapid inflation, it's likely that Congress, as they did in the financial meltdown, will blame it on everybody except itself.
Before Congress begins to shirk its responsibility, let's understand what inflation is.
Several prices rising are not inflation. Only when prices across the board rise is there inflation. But just as in the case of diseases, describing a symptom does not necessarily tell us the cause. That is the same with inflation; it is a symptom of something else.
Nobel laureate and noted monetary theorist Milton Friedman explained, "Inflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output." Put another way, inflation results from an increase in the supply of money relative to the demand for money.
That being the case, who is responsible for inflation? It's not you or I because if we privately increased the supply of money to finance profligate spending, we would be charged with counterfeiting and go to prison.
The Federal Reserve Bank, our central bank, is the only entity legally permitted to increase the supply of money, to finance Congress' profligate spending. The Federal Reserve Bank is supposed to be independent, but it typically accommodates the wishes of Congress and the White House.
Central banks are villains in most countries; ours is just not as bad as others. In 1946, Hungary's central bank gave it the world's highest inflation rate. Prices doubled every 16 hours, creating an annual inflation rate of 13 quadrillion percent.
Last October, Zimbabwe's central bank produced history's second highest rate of inflation. Prices doubled every 25 hours, giving it an annual inflation rate of 80 billion percent.
By comparison, Germany's inflation rate, which brought about the social disruption responsible for Hitler's rise to power, was a mere 30,000% that saw prices doubling every four days.
You say, "Williams, that couldn't happen here." Except during the Revolutionary War and the War of 1861, our inflation has never exceeded 20%, but keep in mind that any hyperinflation was once 20%.
Knowing the dangers posed by central banks, we might ask whether our country needs the Federal Reserve Bank. Whenever I'm told we need this or that government program, I always ask what we did before.
It turns out that we did without a central bank from 1836, when President Andrew Jackson closed the Second Bank of the United States, to 1913 when the Federal Reserve Act was written. During that interval, we prospered and became one of the world's major economic powers.
The justifications for the Federal Reserve Act of 1913 was to prevent bank failure and maintain price stability.
Simple before and after analysis demonstrates that the Federal Reserve Bank has been a failure.
In the century before the Federal Reserve Act, wholesale prices fell by 6%; in the century after they rose by 1,300%.
Maximum bank failures in one year before 1913 were 496 and afterward 4,400.
During the 1930s, inept money supply management by the Federal Reserve Bank was partially responsible for the depth and duration of the Great Depression.
It is not wise for us to permit a few people on the Federal Reserve Board to have life and death power over our economy.
My recommendation for reducing some of that power is to repeal legal tender laws and eliminate all taxes on gold, silver and platinum transactions.
That way there would be money substitutes and the government money monopoly would be reduced, as would be the ability to tax — some people would say steal from — us through inflation.
Williams is a syndicated columnist and professor of economics at George Mason University.
