The Great Debate–Puru Saxena Explains the Fed’s Interest Rate Hikes

Don’t miss the article titled The Great Debate by Puru Saxena which recently ran in The Daily Reckoning. In it, Saxena refutes the widespread belief is that the Federal Reserve is currently increasing interest-rates to “control” inflation. Here is an excerpt from his excellent article:

“The grim reality is that the modern day central banking IS inflation…and the quicker we get used to this idea, the better. The deflation scare is nothing more than a decoy, which the central banks use in order to continue with their money-printing (inflationary) program.
Still not convinced? Then, consider the greatest fabrication, the Japanese “deflation” scare.  For years now, we have been told repeatedly that the root cause of Japan’s economic problems is deflation. We have been forced into thinking that deflation is the culprit. Allow me to share a secret – the central banks want you to believe that deflation is a total disaster so that they can freely print more money, thereby creating inflation. After all, who benefits from the monetization of the economy?
Despite all the brainwashing, close inspection reveals that Japan never really had any deflation! The truth is that throughout the past 15 years, Japan’s money supply has continued to grow (inflation). Japan has witnessed inflation, and not deflation, since 1980. Sure, Japanese asset prices have fallen since 1990, but the cause is not deflation, as advertised by the establishment. In fact, a sharp rise in interest-rates was the trigger, which caused the Japanese stock and property bubbles to burst.

These days, we are being told that the Federal Reserve is raising interest-rates to “control” inflation. If the Federal Reserve were really curbing inflation, why would the American money supply continue to surge despite recent interest-rate hikes? Despite all the noise about inflation, the Federal Reserve has added roughly $1 trillion to the system over the last year. So, on one hand, the Federal Reserve continues to inflate, and on the other hand, it is raising rates. “But why would they do that?” you may ask. You see, the U.S. economy is in a mess, and a true contraction in the money supply (deflation) would send the whole world into a severe recession. Under this scenario, millions of companies and individuals would go bust and the entire financial system may collapse. Therefore, you can rest assured that the Federal Reserve will continue to inflate for as long as possible. It is shocking to note that the broad-based money supply (M3) has increased from $ 6.5 trillion to $10 trillion in five years – representing a 54% increase! Yeah, Greenspan did a fine job “managing” inflation!

As far as the current situation is concerned, I believe the Federal Reserve is raising interest-rates to prevent an outright collapse of the U.S. dollar…”

Visit The Daily Reckoning web site to read the rest of Mr. Saxena’s article. If you do not yet already subscribe to The Daily Reckoning (a free e-mail subscription), then I highly recommend it.

 

Odds ‘n Sods:

By popular demand, The Pre-1899 Specialist has removed the password restriction on his web site.  For those of you that have experienced trouble logging in, try it again now!  See:  http://www.antiquefirearms.org/blog.html

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Reader “C.G.” recommends a battery-powered zip stove for camping and short term outdoor survival . See: http://www.zzstove.com/index.html

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The Chinese city of Harbin (with 3.8 million residents) closed schools and was trucking in drinking water last week after shutting down its water system following a chemical plant explosion. The chemical contamination is working its way down the Songhua River, into Siberia. See: http://g.msn.com/0MN2ET7/2?http://msnbc.msn.com/id/10170448/from/ET/





Note from JWR:

I have again expanded the SurvivalBlog Glossary. It is now much more comprehensive–with many more technical entries. And for the benefit of our overseas readers, I have added a lot of acronyms that are already familiar to most Americans.



Letter from G.F.L. –Reply to L.C., Re: On Gold, Silver, and Barter

Mr. Rawles:
The following response is not intended to be insulting, but I fear it must inevitably come across as such. L.C.’s ignorance is so astonishing in its breadth and depth that I do not know how else to address it. I therefore apologize from the outset for what follows, but understand that this is all intended in the sincere hope of increasing understanding and not some sort of “I know more than you do” contest. 

L.C. wrote: “I was moderately concerned for the first time reading your blog this past week in regards to the post on Gold and Silver Barter. [On October 27th–see the SurvivalBlog archives] In there you referred to the American public as having ‘been robbed’ [by inflation and debasement of our currency.]” 

Mr. Rawles made a precisely correct observation. For example, if you have money in savings earning 1.5% interest [per year], but a deliberate policy of monetary inflation is eroding the buying power of your money at, say, 2.5% [per year], then, yes, it would be safe to conclude that you are being robbed (and note that I have not even considered taxes in this equation). Bear in mind that inflation, by definition, is almost universally a central bank creation that can usually only exist with a fiat currency. (Yes, there are exceptions to this rule, but they are fantastically rare).

L.C. wrote:
“My concern is that this is one of the few places where survivalists get the bad rap of being crazy.”
Those who truly understand what is going on in the world often are accused of being crazy by the less well informed – this is a common thread throughout recorded history. And sometimes the so accused ARE in fact crazy! But in many cases one finds that such people are not crazy, but merely far more perceptive than is the norm. There were those who foresaw where Hitler and his Thousand Year Reich were going long before Kristallnacht, and fled. They lived. Those who didn’t for the most part ended their lives in unspeakable, hellish agony in places like Auschwitz and Dachau. And yet, the folks who fled were no doubt regarded as “crazy” at the time. Tell me, which group would YOU rather have been in?
Much of what most survivalists believe is regarded as crazy by the mainstream. I would submit, however, that it is the mainstream that has it wrong, not the survivalists.

L.C. wrote:
“I want to point out something: whether it’s gold, a paper dollar, or a rock, the value of whatever item is determined by faith, not intrinsic value. Gold is only valuable to us because we decided that shiny stuff was so important that we were willing to trade long, hard days of work for a little bit of it.”
This is partially correct; just correct enough to cause folks like L.C. to come to the precisely wrong conclusion! It would take perhaps several books to cure this profound misunderstanding; let me just state that gold was (and is, amongst more enlightened individuals) considered valuable for reasons far beyond mere faith. It was chosen as money in what can only be described as a harshly Darwinian process of “natural selection” that weeded out all other contenders (save silver, and perhaps copper or copper alloy for small denominations). Space does not permit me to delve into detail; I leave that as an exercise for the class to look up on their own time.

L.C. wrote:
“At one point in our nation’s past we limited the currency in the market to be equal to the value of the gold the US Treasury has on hand – but there was a problem. By the 1950s, during our rebuilding of the country post-WWII, there was so much growth going on that we actually were outpacing the availability of gold in the market. We were slowly stifling our own economy because we could not produce more goods and services that there was physical gold in the market.”
Mr. Rawles addressed this pretty well, but I would like to add something here. Not all economic “growth” is beneficial in the long run. One can have healthy growth, and one can have growth that is more akin to a cancerous tumor. America’s “growth”, particularly over the last 40 years, is well and truly a cancer, which is in the end going to kill this once great nation.
And, no, we were not “stifling” our economy – that oft repeated myth has zero basis in fact or reality, and betrays a deep and profound ignorance of how money actually works.

L.C. wrote:
“Finally, common sense prevailed when we realized something: The American public did not need gold, they needed dollars. They can not use gold in the grocery, the feed store, or the mall. Dollars they can use.”
Nonsense! What the American public actually needs is a stable currency – which is precisely what gold is! Unless you happen to think that paying $1 million for a 1st Class postage stamp is a great idea. I suggest you spend some time educating yourself on the concept of hyperinflation. Weimar Republic Germany in the 1920s is a good place to start, and provides an excellent case in point as to why sane people with IQs higher than room temperature do not advocate a fiat currency.
As an aside, why could not one use gold in a grocery store? Prior to 1933, folks would do just that! There were $1, $2.50, $3, $5, $10, and $20 gold coin denominations that were all legal tender. The statements quoted from L.C.’s e-mail are not merely ignorant, but irrational. I am sorry for what I am about to say, L.C., but in all honesty if you had asserted something this idiotic within arms reach I’d have slapped you into next week, just on general principle.

L.C. wrote:
“People have more faith in the dollar than they do in the ounce of gold.” This may be true (to a point), but not in a good way. It basically means that people have more faith in a corrupt and evil politician’s empty promise, then the millennia proven security of gold. Hardly an example of sound reasoning! But then, the Sheeple believe many irrational and stupid things.

L.C. wrote:
“Let the economy grow!” Just like that, eh? Instant economy, just add water and dollars and watch it grow? Sorry, I couldn’t resist. Actually, that has just enough truth to be superficially correct! But, as I pointed out earlier, it is not a healthy growth. It is a cancer, and it will in no uncertain terms destroy us.

L.C. wrote:“To imply that we have been fooled is to imply conspiracy and breeds distrust.” Well, yes, your point, please? The irrefutable facts are that we have been fooled, there is ample evidence to suggest at least an indirect conspiracy of philosophy (if not out and out corruption), and overwhelming proof that smart, sane folks should be distrustful, just as Germans should have been distrustful in the 1930s, and Russians from 1919 onwards. Folks in this day and age that are distrustful act so based on solid historical and economic facts. Those who choose to ignore history and basic reality will suffer accordingly – unfortunately, so will the rest of us. Truth is truth and reality is reality. We are being cheated in no uncertain terms. Calling attention to this fact does not itself breed distrust – it is the committing of this massive fraud in the first place that is responsible for that. Sticking your head in the sand does not resolve the fundamental problem, or make it go away. I should not have to explain this to an adult, but obviously…
Based on these statements, L.C., I would surmise that, had you lived in Germany in 1933, you would have swallowed Hitler’s National Socialist party line hook, line, and sinker. After all, you wouldn’t have wanted to “imply conspiracy” or “breed distrust” (though, admittedly, that might have been a good move, sparing you a trip to Auschwitz. On the other paw, you might have lived just long enough to get carpet bombed by B-17s…)

L.C. wrote:
“We may differ here, but I believe that is completely possible to work within the system until there is no system. When there is no system, I will be beside the other readers here making the best of the barter system.”
“May differ” is a grand understatement of the highest order. Further, one may possess all sorts of beliefs, none of which having any factual or rational basis. And the barter system is fantastically inefficient; indeed, the term “barter economy” is truly an oxymoron.

L.C. wrote:
“…Until then, I will happily use my U.S. Dollars to purchase those items, never once believing I have been duped.”
Ignorance is well and truly Bliss! It is not so much a question of not believing you have been duped, but rather whether or not you are capable of comprehending the fact of having been duped. Do not feel bad that you cannot at this point understand, for this colossal scam is subtle indeed – probably less than 1 in 10,000 can properly diagnose the problem. A hint: the dollars you used to purchase items today do not go as far as the dollars you used 5 years ago (or 25 years ago, for that matter). And don’t get me started on the pure fraud that is the Consumer Price Index!

L.C. wrote: “To summarize, whether it is gold, paper currency, diamond, or potato – the value of any item is what we’re willing to trade in labor or tangibles to obtain it.”
Absolutely true! But it is not the whole truth, by any stretch.

L.C. wrote:
“The U.S. Dollar’s value is not, and should not be based on our perceived value of gold, since gold has no value of its own other than what we assign it.”
Very, very, VERY wrong on all counts. Why this is so requires a book, not a sound bite, to address. Again, a homework assignment for the class.

L.C. wrote:
“Gather your junk silver and gold for WTSHTF, but don’t believe in it more than the dollar. Oh, and don’t worry about the feds coming to take away your gold – since we’re not on the gold standard then they don’t need it.” Actually, the government will confiscate anything they deem of value, whether it is gold, dollars, stocks/bonds, gasoline, food, etc. The whole concept of government is founded solely upon the principle of organized theft, and nothing else. There are no exceptions to this rule in all of recorded human history.
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The central problem here is that L.C. is so profoundly ignorant that he doesn’t know enough to know any better – hence is utter “certainty” in his pronouncements from on High – a certainty that can only exist in those who know literally nothing about the subject being discussed (or, perhaps more accurately, know just enough to be dangerous). Or, put another way, his statements are a priceless example of the “Law of Logical Argument”, wherein “Anything is possible if you don’t know what you are talking about.”
Reminds me of a woman who insisted (quite shrilly, I might add) that inflation was, and I quote, “caused by the CPI” ( Consumer Price Index), which is exactly like saying that my speedometer “caused” my car to drive at 65 miles per hour, and just as irretrievably stupid.
Fortunately, L.C. is, in my estimation, simply ignorant, not stupid. Very ignorant and misled, perhaps, but at least it is a curable condition. But how to undo a lifetime of Keynesian economics indoctrination! Where does one even begin?
Well, let us begin at the beginning. What, exactly, is “money,” anyway? Now, if you look in a dictionary it will tend to describe it in terms of coins or paper used as a medium of exchange, or as property, possessions or wealth. The former is correct, though very incomplete; at least it touches on the concept of a medium of exchange. The latter is actually wrong; money and wealth are really not the same thing. Here is the most succinct and essential definition you will ever find (or need): “Money is an information system we use to deploy human effort” – Michael Linton, originator of the Local Employment and Trading System. Kenneth Royce (a.k.a. “Boston T. Party”) expands this definition to state “Money is an information system we use to spread out human effort so as to form a wider front.”
A “wider front” against what? Against the formidable destructive forces of Nature – Entropy, decay, etc. Forces that will destroy any civilization.
Look at it this way – one person working alone is not going to be able to achieve much more than a precarious, hand to mouth existence, let alone build a civilization. Only large groups of people working together can do that. And there are only three ways to motivate people to work together: Love, Force, or Trade.
I very much doubt I will get folks to build me a home simply out of kindness (and I am not destitute enough for Habitat for Humanity to come by…). I suppose I could round up people at the muzzle end of my M1 Garand and “convince” them to build my dream home, but I expect the authorities would frown upon this. In any case, even if I were a Soviet Commissar with this sort of power, I doubt I would get a very high quality home out of the bargain, and I would probably need to watch my back.
In either case, Love and Force simply require too much up close and personal attention to be practical – this is in part why the Soviet Union collapsed. Only Trade can work to deploy human effort in any sort of meaningful manner. And Trade requires a functioning, uncorrupted money system in order to work properly.
If you can grasp and internalize the aforementioned definitions of money, you will be able to understand in truth how economics really works. Those who cannot (or will not) will never really understand, no matter how much they may delude themselves to the contrary. Argue all you want, you will be no less wrong then when you started.
Wealth, BTW, is perhaps best described as being the fruits of human labor, whether it is in the form of material goods or information (note that raw materials or land can also be considered wealth). Money, therefore, is used as a device to communicate the relative values of different forms of wealth. This last is my definition, based on my current understanding of economic matters, and I welcome other inputs.
So why does gold make a good form of money? There are a number of reasons, some of them hinted at by Mr. Rawles, but the most important is that it cannot be arbitrarily created out of thin air (i.e. “fiat”). When you have a fiat system, such as the modern “dollar”, you invariably start to introduce distortions in pricing that create a compounding “snowball” effect that will, eventually and inevitably, bring down the entire system.
Remember what I said earlier about money being a communications tool? Consider this: an army in the field relies on communications. If said communications are disrupted, then the lower echelons cannot report the tactical situation up the chain to the generals, who in their turn cannot issue commands to deploy their troops down to said troops. End result: the army is defeated.
Kenneth Royce put it best: “To destroy an army, destroy its communications. To destroy a civilization, destroy its MONEY.”
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Contrary to L.C.’s insane assertion that people needed dollars and not gold (betraying some of his obvious confusion about the concept of money), the ability to grow a money supply is not a good thing, for in the long run (and sometimes even in the short run) it will lead to economic ruin.
“But but but look at all the GROWTH!!!!” …or so I envision L.C. sputtering as he reads the above. And who can blame him? Have we not “grown” a great deal? Are we not much more prosperous then we were, say, 100 years ago? That depends. What L.C. certainly does not grasp, and perhaps most others here do not realize either, is that a significant portion of this perceived prosperity is created by *robbing the future* to pay for fun and games now. How this occurs is artful, to say the least.
One method is simply to incur massive debts that your children and grandchildren are expected to pay off. The U.S. Debt is somewhere in the multi-TRILLION dollar range – which, logically, will mean our descendents shall become, for all intents and purposes, slaves.
But the main method is simply through inflation. By arbitrarily printing more money, or simply injecting credit into the system, you invariably lower the value of dollars. Simple supply and demand folks! All else remaining equal, when something becomes more available, its value dwindles. Did you know that since 1913 (the year the Federal Reserve was formed) the dollar has literally lost 95% (perhaps more, now) of its purchasing power? And that the bulk of that loss started from about 1965-1975 (i.e. the years in which we eliminated silver from our coinage and repudiated the gold standard) onwards? This is NOT, in any way, shape, or form, a coincidence.
So what do you think happens to folks who try to save money? Well, if you get 1.5% interest on your savings, but inflation is 2.5% (or more; 6%-7% is a much more plausible figure), then, yes, you end up stealing from them. This is because the creators of this added “money” get to use it at its current “full” value – but those further down the food chain lose buying power because the added liquidity has caused prices of goods and services to rise (and savings just wither away, period). Thus, if you are saving for retirement, you are screwed.
Inflation is, in effect, a stealth tax – and a fairly greedy one at that. But it is the only way for government to grow itself. After all, the level of up front taxation required to support a government as bloated and massive as ours with an honest monetary system (i.e. gold based) would exceed 90% of an individual’s income (not exaggerating here, by the way). Which would, quite naturally, result in an open revolt of the “blood running in the sewers” variety in VERY short order.
Which of course leads to one of the main problems with L.C.’s rose-tinted lens view of the world, namely that much of the “growth” we have witnessed has been in government. Many of the readers here detest government intrusion into their lives, and yet have never once bothered to consider this essential truth: such a level of intrusion would be largely or even wholly IMPOSSIBLE without a fiat money system! Without the ability to inflate, all taxes have to be more or less direct. And as noted earlier the level of taxation in an honest system of money required to support such un-Constitutional abominations such as the IRS, DEA, HUD, ATF, etc. would simply be unsustainable. Only by creating a purely artificial “prosperity” through a policy of inflation can one simultaneously keep such parasitical organizations (would you spend money on ATF “services” if you had a choice in the matter…? Didn’t think so) afloat whilst also keeping the masses content and relatively happy.
As an aside, it should be pointed out that even folks who favor some sort of governmental control might balk at actually paying the costs of such. Continuing with the ATF example, if the gun-grabbers truly had to deal with the direct and indirect costs in an up front and direct manner, it is doubtful there would be any real support for such controls or this agency. It is one thing when the costs are completely hidden, but when, say, 25% of what you make goes to law enforcement, you take a sudden and very deep rooted interest in precisely HOW this money is being spent. Non-effective or even counter-productive use of such money (such as ATF, DEA, etc.) will be immediately highlighted and CUT, without further thought or discussion.
Only dishonest people (i.e. politicians, central bankers, socialists, etc.) want dishonest money.
But there is a far more subtle and sinister side effect that few indeed realize: the artificial prosperity I noted above also causes us to blaze through natural resources at a MUCH higher rate then would ever be possible under an honest monetary system. We are now starting to see resource depletion on a significant scale, from diminishing oil supplies to over fished oceans. We are quite literally stealing the future from our descendents.
What is the root of all evil? Not money, but rather the desire to get something at someone else’s’ expense. In this respect, the so-called “Greatest” Generation and their parents were probably the greediest, as they foisted all of this expense upon us (in fairness, though, they were duped to a significant degree – but they still should have KNOWN better. It is a universal moral law: you can’t get something for nothing!).
Folks, these bills are going to come due at some point! Yeah, maybe YOU don’t have to pay them, but I bet your children and grandchildren won’t adore you. In any case, it is a moral abomination to force others to pay your expenses; it is literally theft, albeit indirect. Perhaps you won’t face the music down here on Earth, but do not think such an evil thing will go unpunished forever. (There is a reason why the Bible considers usury to be wrong…)
There is only one way to, in truth, grow an economy: produce a larger surplus of useful goods and services. There are no true shortcuts to this! Anyone who says otherwise is trying to sell you something.
“Government” produces nothing (save mountains of paperwork, rampant corruption, and injustice), and offers very little of value in terms of services. Certainly the ATF, HUD, DEA et al could be swallowed up by a giant fissure in the earth and the only result would be the betterment of all life on this planet (if not, ultimately, the entire Universe). So what do we even want government for, anyway? Good question… honestly not much.
In reality, virtually all government services (the useful ones, that is) could just as easily be provided through other, more “libertarian” means. But setting that aside what we really want out of government is order, specifically “useful”, as opposed to surplus, order. In other words I want them to keep disaffected malcontents from flying passenger airliners into buildings, keep out “immigrants” whose goal is to subvert and take over our country, rather than become Americans, and prevent fanatic Chinese commies from launching nukes at us. Providing coordination and additional resources for local law enforcement to help track down serial killers, rapists, and other thugs might be nice, too.
But the problem is, we get “surplus” order – DEA thugs busting down some 70 year old grandmothers door at 4:00 AM because they were too stupid to get the right address, ATF sturmtruppen burning a bunch of religious dissidents alive in their church (or stomping on helpless kittens and roughing up pregnant women), Education bureau-rats forcing kindergartners to learn about gay lifestyles, EPA slime balls shutting down some small business over a paperwork infraction, BLM agents becoming cattle rustlers, etc. etc., ad nauseam.
This is what L.C.’s blind faith in fiat dollars has really bought for us: a bloated, incompetent, feral, and tyrannical, government. The sort of government that is rapidly starting to make Nazi Germany or Stalinist Russia look like a Libertarian paradise by comparison (don’t believe me? Give it a few years; you’ll see…) Whatever prosperity we have is in spite of, not because of, fiat dollars.
Had that commie moron FDR been impeached and put in prison for merely *suggesting* the confiscation of gold back in the 1930s (let alone his other crimes, creation of the BATF, etc.), the Depression would have been ended much sooner, the growth of the 1950s and later would have been genuine and sustained, government would be much smaller and less intrusive, far fewer resources would have been squandered, and the world, quite simply, would be better off.
Instead, we have skyrocketing inflation, which causes prices to rise, forcing minimum wages to rise, thus creating yet more inflation. This makes a mockery of trying to save for the future, so instead we over-consume resources. And why not? It is not as if there will be a tomorrow worth living in.
Inflation literally destroys money, as it introduces such distortions into the communications between markets and customers that it becomes impossible to “deploy a wider front”. Hence, inflation ultimately destroys civilizations. Just ask the Romans! They can tell you exactly what happens.
“The more things change, the more they remain insane.” – Bill Bonner, The Daily Reckoning, 11/10/05
One of the problems is that, while the Laws of Economics are as ironclad and brutal as the ones that govern physics, the results can be delayed – sometimes for years, decades, or even generations! Picture Wile E. Coyote, chasing poor Roadrunner, and missing his seemingly hapless and going straight-along right off a precipice. He sails on, looking back, plotting how to get himself turned around to catch the Roadrunner, when, suddenly, he realizes he is no longer upon terra firma. Then he looks up, holds up a sign saying “Uh-oh” or something like that, and then plummets downward. That’s about we are at right now. There is no way to run back to the cliff; we are way past that point. Only the Abyss awaits us
The distortions we are seeing now had most of their roots with the creation of the Fed in 1913 – some 92 years ago! Heck, all of those who made these monstrous decisions are long since dead and buried (and, hopefully, roasting in Hell). But their evil legacy lives on.
When you start down the road of fiat inflation and the false prosperity it creates, you bring into being certain unrealistic and false expectations. At the time, Social Security struck people as a good idea (yes, I would argue even without hindsight that it was a remarkably stupid idea, but then I am a good deal smarter than 99.99% of the rest of humanity. And those who actually know me would recoil in horror at such a revelation, given that my IQ is such a low benchmark.) but with the dramatic increase in life expectancy and equally dramatic decrease in fertility rates, to say nothing of the loss of wealth creation ability (i.e. manufacturing, etc.) there is literally NO WAY this can be sustained. It is obvious that it is just economically impossible – the realities WILL catch up at some point. And then there will be HELL to pay.
But the problem is, no one can conceive of a way out. Getting rid of the social welfare system is deemed “too cruel” to the parasites that benefit from it – there would be so much “suffering.” What the well meaning but irretrievably stupid people who espouse this fail to realize is that, by delaying the inevitable you only make things immeasurably worse – ESPECIALLY for those they are claiming to be “helping”.
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In a sane society folks who suggest implementing a fiat currency (or gun control, for that matter) would be laughed out of polite company, and regarded as mental and moral cripples. Such loathsome creatures would be ostracized until they educated themselves as to why it is such a fantastically bad idea, and then formally apologized to all and sundry for their appalling lapse in rudimentary logic and reason. Those holding public office who actively attempted to do such would simply be dragged out of their offices and publicly hanged (after, naturally, a beating remarkable in its savagery and thoroughness), with their bodies left to rot in the open as an object lesson for the next ten generations that some ideas are simply purely evil in and of themselves.
When I become Master of the Dark Side of the Force, there will be some changes in the way things are run… (“Oh Mighty Sith Lord, I have a proposal to print paper mon– ack! Cough! ACK!!! ….. ‘I find your lack of common sense… disturbing….’ *thud*)   – G.F.L.



Letter Re: States Plans for Asian Avian Flu

James;
I was looking at the Texas State Department of Health and Human Services home page this morning and saw a link to their state plan for a flu pandemic. I thought our fellow readers might like to take a look. Probably would be a good idea for us all to see what each of our states have in mind for us. Here is the URL: http://www.dshs.state.tx.us/idcu/disease/influenza/pandemic/

Long Life, – “Overhill”





Note from JWR:

Today we feature another entry for the SurvivalBlog non-fiction writing contest. The deadline for entries is November 28th. Get your entry in soon ! The writer of the best article will win a four day course certificate at Front Sight! (An up to $2,000 value.)



Intelligent Consumerism for the New Survivalist by “A. Friend”

Reduce, re-use, and recycle. This article addresses intelligent consumerism for the new survivalist. You’ve heard it many times before: you get what you pay for. As consumers in a global economy we have more choices than ever, but perhaps not as many wise choices. Imported junk fills the shelves of many stores and being a smart consumer is not as easy as knowing a few brand names. Once upon a time you had a general sense of quality by the brand name of a product but the new global economy has made brand names largely irrelevant outside their use as a marketing tool. If you want to be a discriminating consumer in the modern age you need to ask yourself; what is this item worth? Is a knife worth $6.95 because you can always run to the store and by a replacement, or should a knife be worth $75 because you will never need a replacement? The smart consumer will chose the latter. Granted we can’t all afford to buy “the best”, but nearly everyone can afford to be a smart consumer. It is wise to place the proper value on things we need. As survivalists we need to think beyond our next trip to the store or the bargain of the day. We need to think long term and we are all aware that many, many things in our society are built for the short term. From the latest plasma television, to disposable razors, to tennis shoes, these things are not going to be here for long. Many high-tech items are not made to be repaired at all, if something happens and it is out of warranty it must simply be discarded and replaced. A time will come when simple replacement is out of the question – so choose wisely.
I recently decided to see how long a “disposable” razor would last. I shaved with it once a week for six months! It’s nice to know I can get a lot of use out of a disposable item if needed. Yet to too many people it’s a single use “disposable” item. I have broken regular non-disposable razors as well, after hitting them against the side of the sink many, many times, so I know they won’t last all that long either. Short of an actual straight razor, they are all basically “disposable” items. I’m not an earth-hugging-greenie-weenie mind you but I don’t much care for our “disposable society” attitude either. Firstly it is wasteful of money and resources, and secondly it is unwise especially for anyone concerned with their long term survival.
How many things do you throw away every day? How many of those things can be re-used? We can reduce our use of packaging by buying food in bulk quantities. We can reduce our use of natural resources by buying quality first and cost second. We can reuse many items like plastic bread bags and water bottles, and we can recycle almost anything.

The way that I shop is by first looking at where something is made. As a general rule I don’t support communists so about half of all goods in any given store are off limits because they are made in communist China. I realize that many times I don’t really have a choice and my kids do need shoes so I pretty much have to get shoes made in China for them. For adults we can still find shoes made elsewhere, but I haven’t seen the same options for kids. If I can find what I want and it is not made in a communist country then I can compare quality, features, and value. Too often cost is an overriding factor for many people and I try not to fall into that trap, I prefer to shop for value. To do this I ask: how important is this item to my/our survival? If it is truly a needed item and not simply a luxury I can justify nearly any cost to make sure that I get a quality item that will perform as needed and have a long service life. Luxury items like an auto-drip coffee maker are of far less importance in our household than any survival plans. By being smart consumers and thinking about ways to reduce  / re-use / recycle, we are enforcing good practices that will help ensure our long term survival. Survival for us is not just about being  prepared, but being well prepared, not just about having the stuff, but knowing how to use it, and not just talking about surviving a long term crisis or TEOTWAWKI but by implementing intelligent, purpose driven strategies in our everyday life that make a difference. – “A. Friend”



Clarification on Pre-1965 Silver Coins

There was an interesting thread of conversation over on The FALFiles Forums about the U.S. 90% silver coinage that was minted up to 1964. The thread began:

> Talk about coincidence, I was given two silver quarters im my change from a local McDonalds [the] day
> before yesterday. I knew there was something good in all that change as soon as she dropped
> it into my hand by the distinct difference in sound the old coins made, the cashier never batted an eye.
>I got one 1965 quarter in very good shape and one 1942 quarter that looks as though it went around the world,
>its very worn.

The thread later continued:
>> $1,000 worth of dimes, quaters and half dollars contained 723.4 ounces of

>>silver when minted.
> Because of wear most have less silver now

I replied:
That is correct. Most coin dealers assume that a $1,000 face value bag of circulated pre-1965 coins has just 715 ounces of silver, due to wear. That is assuming typical wear for a bag that is composed of nearly one-half of the coins with a 1964 mint date (the largest–and last–minting year of 90% silver coins), and a mix of earlier dates. A lot of the really early quarters (such as Walking Liberty quarters) in a typical bag are so badly worn that you can hardly read the dates. A bag of those woudl probbaly have less than 700 ounces of silver.

So, assuming 715 ounces of silver at the current spot price of $8.12 per ounce, that makes a $1,000 face value bag worth $5,805, wholesale. (Or just think of it as about 5.8 times face value.)

As for the date confusion: The proper term is “Pre-1965”–coins with a mint date of 1964 or earlier. All of the dimes and quarters minted in and after 1965 show a copper edge–they are a phoney sandwich (“clad”) copper token rather than a proper silver coin. It is no wonder hat they drove the old 90% coins out of circulation so quickly. There was quite a coin shoratge from 1965 ot 1967.

The 1965-to-1970 Kennedy half dollars are not clad coinages. They are a debased 40% silver alloy. BTW, I still occassionally find those circulating (rarely) in rural areas. They mainly get back into circulation via schoolchildren who break into the wrong piggy bank, and don’t know the difference. (Probably the same source as those quarters from McDonald’s.)
I recommend that folks get their “beans, bullets and band-aids” squared way first. Then, you might want to purchase one $1,000 junk silver bag per adult family member, for barter purposes. Above and beyond that, any “investment” silver should probably be in the form of 1,000 ounce Englehard or Johnson-Matthey serialized silver bars. That is the least expensive (lowest premium) way to buy bullion silver that does not require an assay upon resale.

OBTW, if you have the storage space, I strongly recommend silver over gold. I believe that silver is far more likely to double or triple in price than gold. (It isn’t very far from $8 to $16, but psychologically it is a lot farther from $490 to $980!)
I still predict silver at $40+ per ounce by the end of the second term of the Bush administration.

 

The Army Aviator on HF Radios, Field Telephones, and “Shoutcasting” Parabolic Dish Communications (SAs: Survival Communications, HF, Radio Propagation, Parabolic Dish Voice Communication, Shoutcasting, Field Telephones)

A HF network is a good idea. A local network also has its merits. There are lots of methods and frequencies for local area usage. Some use military surplus equipment, some CBs, some ham, some TA-1 field phones with wire, some use Wireless Fidelity (Wi-Fi) access points (a great idea if you’ve planned ahead for electricity and it actually works.). I know three people in Colorado who use old solid satellite dishes to be able to stand on their hills and talk to each other over several miles using a normal speaking voice. Must be strange facing away from someone several miles away and having a conversation. It works surprisingly well, but I was told that the rare scream of a hawk flying between the dishes can be slightly unnerving. Many people aren’t aware that the Atlanta, Georgia ham community has a city wide internet that’s not part of the [International] Internet. All courtesy of Wi-Fi. Now that’s an interesting concept. Voice, Phone, Data and Video on a parallel internet. Kinda like the Fed, huh?

Lots of ideas and most are good for their particular arena. But here’s the but). But HF can link the continent together so you know what is happening all the way across the continent, even to the other end of the continent. It beats restricting yourself to only knowing what’s going on 20, 40 or 60 miles away.(Not to mention talking worldwide or just listening worldwide, Hmmm?). Check out http://www.matf.org/albums/grc215.htm to acquire an idea of how the government planned to use HF to provide trans and post attack communications among nuclear capable units in the European Theater and then applied the concept for use in CONUS for FEMA.

Excellent idea overall. {For example,] I look forward to seeing where people suggest landing. One suggestion might be similar to the HF Backpack net, all USB. Geared to HF with less than 20 watts and the ability to carry it on your back while talking on the radio. Rough times? Conservative power requirement! Excellent capability. Perhaps someone will show up there and suggest moving to a quieter spot to start a discussion?

OBTW, the web page cited above states the units could regularly communicate over 400 miles. Not quite accurate! From Colorado, I regularly talk to San Francisco, San Diego, Maine, and Georgia [the U.S. state]–all from this little radio which fits in a flight bag. It is 20 watts and has a 10 foot vertical whip antenna powered by a 28 volt, 7 amp battery which I can (and do) recharge with solar cells. And it’s about the same size as the venerable PRC-77! Best Regards, – The Army Aviator





Letter Re: More on Survival Communications and Six Meter Propagation Oddities

Howdy Mr. Rawles!
One frequency [band] that I have had good results from has been 6 meters. This frequency is really unique. It may not be suitable for every situation, however its properties can be of use. It has the ability to become a national frequency when the E layer of the atmosphere is active. I have talked to HAMs from Washington state, to San Francisco, California down through Texas, the Cayman Islands, the Turks and Caicos Islands, Haiti, parts of South America, Vermont and above the Arctic Circle in Canada, [and] among adjacent states. Lets just say I am on the opposite side of the country from Washington State and California. I did these contacts on a wire sloper antenna cut for the mid portion of the 6 meter band. One day I will get my 5-element beam antenna up which should at least triple my [long range propagation] capabilities. Six Meters has the ability to use AM, FM, SSB (upper and lower) and is repeater system capable. I actually talked for thirty minutes to a fellow in Mississippi on the AM side (which I rarely use). I was just goofing around on AM just to see who was transmitting, if anyone, and I heard his CQ. I have collected QSL cards from all the varying points I have made contact. Granted, 6-meters is subject to atmospherics and sun spot cycles, but it does offer a very private local and potential national and international communications capability. I have heard stations from Spain as well as Africa, but I did not have a path back to them. Once I was monitoring 6 meters and heard a conversation from two other HAMs, one located in Texas and another in Cuba! The fellow in Cuba had to have been a higher up in the government as the conversation turned toward atmospheric science. The Cuban mentioned that he was monitoring, yes monitoring, the progression of an E layer cloud that was passing over parts of central Texas. He mentioned that a particular path to South America should open up and the HAM in Texas could make a contact in South America to get a QSL card. It would take the cloud about 20 minutes to move into position. Sure enough about 20 minutes later I started hearing the Texas HAM making CQ calls to a station he could hear in South America. Now the very interesting thing is this. For the Cuban operator, who was doing HAM work while at work, to “see” an E layer cloud over central Texas; he had to be sitting at an over the horizon radar station. Leastwise, this is the only thing I could figure. This means that in all likelihood he was military. So my question has always been, “What else, other than atmospheric research, would Cuba need over the horizon radar for? Makes you go, “Hmmmm.” The six-meter band should be on the list for monitoring of atmospherics at least, and a potential communications band. Other frequencies such as 10 meters are more “stable” in many ways. But what I have noticed is when 6 meters becomes active for distance communication, the other bands ‘open up’ shortly after. If my memory serves me, I think 6 meters can be used for data (NOS or Packet) communications. I don’t have my ARRL Handbook handy to look it up for sure, perhaps someone else knows for sure offhand.

Speaking of Packet and NOS, lets not leave these out also. It could be quite useful to connect computers into a ‘chat’ mode or a BBS as the old original text based BBS were in the early days of computer communications when you had to dial directly into a server to post messages, etc. For those old enough to know about Fido[net] and other BBS Programs, these too would offer a point to point BBS provided the grid is not totally down or has been fried by EMP. Check Hamfests for good used equipment as well as eBay. These “fallback” technologies aren’t as pretty and slick as all the bells and whistles of the Internet today, but they do offer a method of communication that does not have a lot of equipment overhead. Granted they are slower than the Internet today, but so long as the word gets through; that accomplishes the mission. A patchwork quilt approach to communications where one area relays information via Packet or NOS to another area so it can forward that information via voice or morse (yes, MORSE CODE) and back to a different Packet station is what we are looking at. Yes I said that bad word Morse code. It is the only method that you can transmit on 1/10th of a watt on a particular frequency and reach around the world. I had a HAM buddy who was my Elmer (volunteer who helps a new person interested in HAM) sit at my kitchen table with a transmitter he built in a sardine can. He used a short wave radio as the receiver. We sat there and with him using Morse code he ‘talked’ [in manual morse code] to a HAM in Siberia. This was long before the fall of the USSR. The Siberian HAM had built the ‘sardine can transmitter’ on the sly from spare parts that he had scrounged. And since it operated on such low wattage and used Morse code, which takes way less power than voice to travel around the world, it was hard for the ‘authorities’ to find him. Hence information from behind the Iron Curtain could get out regardless of the government’s best efforts to prevent it.

[JWR adds: HF transmissions propagate with near vertical incidence skywaves, which are nearly impossible to locate via traditional radio direction finding.  Yes, there is my old favorite, the Track Wolf HF-DF system, but that requires a much longer tale that I’ll reserve for a subsequent blog post. And the full story will have to wait for declassification, probably sometime late in the century.]

Mobility may also be most valuable. Having a HF rig in a mobile platform (car, boat, etc.) makes it difficult to locate. During the invasion into Kuwait by Iraq, a HAM in a van managed to get information out to the rest of the world while constantly moving and keeping messages short. Basically he followed the snipers rule. One shot, then he moves to another location, and takes another shot or transmission in his case. You can get devious about things also. With the data capability why not integrate the use of PGP or other encryption software along with packet, a Network Operating System (NOS), or even over voice. So long as the person you intend to transmit to has the encryption key to decrepit the message. That person passes information along to another node in the net under his or her own unique key. No one could decode it. But you would have to remember about RDF (radio direction finding) if things were real hot. Follow the sniper’s rules.

If you are new to HAM Radio or want to start, then find the ‘old heads’ who have a very broad knowledge of radios. Even tube radio repair will be a useful skill to learn (tube radios aren’t subject to EMP as long as they don’t have any integrated circuits, but they will suck power like there is no tomorrow.) Also check out an ARRL Handbook and look into the Amateur Satellite Radio aspect. The problem is with EMP, but I have no idea how EMP would affect the satellites themselves. But Sats can also be utilized for particular situations. Amateur Television can be utilized to monitor your property or remote areas, but there again EMP is your enemy. And if properly put together they can be run off Solar Panels with battery backups.

Explore the totality of HAM, it offers a lot. If you are an ‘old head’ in HAM, become an Elmer. [A mentor to beginners.] If you want to learn more about the capabilities of HAM, check the ARRL website for ARRL clubs listed near you http://www.arrl.org/. Most HAMs are geared toward disaster communications instead of “rachetjawing” all day. When there is a disaster, you will find a HAM trying to get the information out. OBTW, Another interesting technology that was pioneered by HAMs is communication via laser for point to point communications. There was a club out west that was experimenting with utilizing laser communications between two distant mountains or mesas. This area would be ideal for such communications because of the lack of humidity and pollutants in the air. Dust may be a problem but I never heard of any. I don’t remember the name of the club but will try to find out through my HAM buddies. The use of IR laser would make it invisible except for NVGs.

Going on the concept of ‘burst’ communications may provide another mode for communications in some areas. From what my Elmer told me about 20 years ago, they were having some pretty darn good reliability. So with today’s technology it should draw much less power and be viable. Granted, it won’t be for every sector of the country but may become part of the patchwork quilt communications we have to rely on.
73s, – The Rabid One

JWR Replies:  Remember that we are presently on the down slope of the 11 year solar cycle, so don’t depend on reliable 6 meter propagation via the sporadic E-layer skip.



Jim’s Quote of the Day:

"If I can recognize the danger at long range, I’ll deactivate it from a safe distance. The rifle is one of the better long range danger deactivators." – Jim Woods.



Note from JWR:

Pardon me for getting off topic “chasing rabbits”, but I will be posting some more articles and letters on secure communications, encryption, and privacy in next the couple of days. Encryption and cryptanalysis have been interests of mine for many years–even before I was an ASA officer. I hope that you can appreciate the utility of secure communications in retreat planning and in organizing survival teams. If not, well then humor me…



David in Israel on Practical “Pocket” Cryptography

In the absence of computing power if we are reduced to using tiny QRP [low power] transmitters for communication, then there may come a time where some messages require heavy duty encryption. This is the easiest method I know of the Solitaire card deck encryption method. A group could even generate one time pads which would be starting order for a deck and store them in a secure location. See: http://www.schneier.com/solitaire.html Here is a snip from this site:

“In Neal Stephenson’s novel Cryptonomicon, the character Enoch Root describes a cryptosystem code-named “Pontifex” to another character named Randy Waterhouse, and later reveals that the steps of the algorithm are intended to be carried out using a deck of playing cards. These two characters go on to exchange several encrypted messages using this system. The system is called “Solitaire” (in the novel, “Pontifex” is a code name intended to temporarily conceal the fact that it employs a deck of cards) and I designed it to allow field agents to communicate securely without having to rely on electronics or having to carry incriminating tools. An agent might be in a situation where he just does not have access to a computer, or may be prosecuted if he has tools for secret communication. But a deck of cards…what harm is that?”

[See the URL cited above, for the details on this enciphering system]

JWR Replies: Thanks for sending that, David. In the near future I plan to post a brief article about “book codes” –using two identical books as one-time pads. This method is called a Buchspiel (“book game”) by the German spymasters that perfected it.



Letter Re: Amateur Radio in Survival Planning

Jim, I wanted to add that I think it is a great time now to test for Amateur radio license (“Ham” radio.) The entry level test is apparently quite simple and there is no longer any requirement for morse code (although that is a good skill to acquire.) [JWR adds: IIRC, that applies only to “No Code” license classifications, which have band restrictions.] I have been routinely listening to 75 meters at night, here in Coeur d’Alene {Idaho.] I here people as far as San Diego, California. Those broadcasting within 800 miles (Nevada, Oregon and all over the northwest) come in so clear and strong it seems as if they are down the street!) Most of these fellows willing to help out and share their knowledge. This is a lot different from CB radio where there is usually so much vulgarity and bad behavior it makes you want to keep that radio turned off. There are plenty of amateur radio clubs that are willing to help people out (the Spokane area alone has 10 or more clubs). A visit to the American Radio Relay League (ARRL) web site  [www.arrl.org] will provide tons of info. If people are serious about surviving any type of calamity then the ability to communicate is going to be vital. Best Regards,  – Jason  in North Idaho