A lesson for Al-Qaeda

The Mujahadeen-e-Khalq (MEK) is a militant group which participated in the overthrow of the Shah in 1979 as well as attacks against American targets prior to 1979. Subsequently they came into opposition with the Islamic government there, and carried out attacks until 2001.

The MEK is still recognized as a terrorist group in Canada. However it has recently been announced that this designation is going to be removed in the US. At least part of the reason for this change is that MEK is now working with Mossad to kill Iranian scientists. Additionally, the MEK has lobbyists working Congress and have paid for speeches by at least one ex-state governor.

As often happens, the lesson is there is a political path off the terror list that does not necessarily include renouncing terror.

The GS Trader

In response to this.

Once there was a GS Trader,
Who ordered o'er the intervader;
No, no, I mean a GS Get
Who tried to use the internet;
(Dear me, now I'm not quite
Sure if even now I've got it right).

Howe'er it was, he got his bid
Emplaced upon the intergrid,
The more he tried to get it filled
The harder crashed the interbuild.
(I think it's time to stop this rhyme,
Of HFT and micro-time).

-- with apologies to Ogden Nash

Why the Canadian political situation seems so familiar, part 2

Just to update the recent developments in Canadian politics since last time.

Today newspapers across Canada were abuzz with the news that Justin Trudeau, son of former PM Pierre Trudeau, has thrown his hat into the ring (no pun intended).

Justin Trudeau tries to take the majority government of Doom from Frodo. 

But Frodo won't surrender it, leading to tragedy.

As many feared, Stephen Harper managed to acquire the dreaded Majority Government of Doom.

Victory is mine! Two thumbs . . . err, one eye up!

And Michael Ignatieff suffered a devastating fall from grace.

Michael Ignatieff after the last election.

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I have been running this blog for a little over two years. When I started it, my focus was intended to be on methods of approaching interpretations of geological (primarily climatological) data. Somewhere along the line, the blog became more about economics/politics.

I have begun publishing the political/economic material on www.floatingpath.com, but will continue with the geological/mining/ industry/heavy mathematics here.

I have signed up for twitter and once I figure out how to link everything together, can keep anyone who wishes apprised of postings on either site.

If your interest has only been economic/political commentary, thanks for reading and I'll see you on the floating path. For everyone else, I'll see you over here or over there.

Japanese Financial Services Minister found dead, suicide suspected

This story has captured my imagination this morning.

The World Complex brings you a possible reconstruction of events leading up to the tragedy.

Image copyright Dave Sim. Text modified by The World Complex.

The gold standard according to David Olive

In this article, David Olive denigrates the Republican Party of the US (the GOP) not because of its warmongering, or its catering to Israel, or even its anti-(Mexican) immigrant bias. No, he attacks the GOP because it wants to bring back the gold standard.

The Republicans cannot be in favour of a gold standard (Ron Paul notwithstanding). The entire significant political establishment of the US is opposed to a gold standard. No politician can make a serious run at the leadership of either party and support a return to the gold standard. It can't happen. So put it out of your mind.

Ryan himself is too smart to speak of a revived gold standard, which suffers a lingering “barbaric” reputation among economists. In a recent poll cited by University of Chicago professor Richard Thayler, noted in the latest Atlantic, not one economist endorses a return to the gold standard.

The datum that "not one economist endorses a return to the gold standard" tells us much about the state of economics today. At the same time, considering the role that economists play in government finance, it is a message about the likelihood of a gold standard. There is none. For as long as the system holds.

For the rest of the article he recounts the tired old arguments against a gold standard that we have all seen before--its disastrous prevention of government intervention, its volatility, and its rarity. He tell us:

A return to the gold standard is wildly impractical. Requiring the Fed to hold gold in equal amount to currency outstanding would force it to set a fixed price at which it would exchange currency for gold. 

This is an obvious canard. As has been abundantly documented elsewhere, during the gold standard, neither the governments of the US nor Britain had anywhere near enough gold to cover all currency in circulation. Paper money was convertible, but the majority of people had no interest in such a conversion, provided they had confidence in the system.

It is much the same today. Paper money has value because people have faith in it. However, unlike a gold standard, if you suddenly lose faith in government's management of the economy, you have no real way to protect yourself. Perhaps you would exchange your national currency for some nice American currency? But then you have to have faith in the US government. Around the world, it is true, most people do. But such trust can end.

David Olive doubts that the Fed Governors would have the wisdom to set the gold price to the correct level. He writes:

Set the price too high, and monstrous inflation would result. Set it too low, and the result is the even greater catastrophe of deflation, the defining malaise of Japan’s 20-year-long economic stagnation. Just as one cannot time any financial market with precision, so it is with fixing gold at a price deemed ideal.

And yet he seems to have complete faith in the Fed's ability to set interest rates! Doesn't he wonder what happens if interest rates are set too high--or too low? If they can set interest rates, they can set a gold price--it's a political decision anyway.

As for volatility, the following chart (sourced here) shows us where price volatility really began.

Prior to about 1970 there are spikes in commodity prices related to wars and (in 1815, the "year without a summer") to natural disasters. It's true that after the WWII/Korean War spike, the price level did not decline. But since Nixon closed the gold window there has been no looking back.

Republicans in Tampa this week invoked cherished values of freedom, patriotism and self-reliance. But what they stand for is anarchism.

Well, after the last century with the murder of over 100 million people by their own or other governments, maybe it wouldn't hurt to consider something different.

Deep down I think Mr. Olive's problems with the gold standard comes from its thwarting of government's  authority. Under a gold standard, if the citizenry decided to take issue with government economic policy, they could send a strong message by converting their currency to gold.

The authoritarians intent on forcing democracy on the rest of the world want these populations captive to their governments--and a gold standard, which would give citizens power over their governments, has no role in this world.