June 5, 2012 archive

On This Day In History June 5

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

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June 5 is the 156th day of the year (157th in leap years) in the Gregorian calendar. There are 209 days remaining until the end of the year

1933, the United States went off the gold standard, a monetary system in which currency is backed by gold, when Congress enacted a joint resolution nullifying the right of creditors to demand payment in gold. The United States had been on a gold standard since 1879, except for an embargo on gold exports during World War I, but bank failures during the Great Depression of the 1930s frightened the public into hoarding gold, making the policy untenable.

Soon after taking office in March 1933, Roosevelt declared a nationwide bank moratorium in order to prevent a run on the banks by consumers lacking confidence in the economy. He also forbade banks to pay out gold or to export it. According to Keynesian economic theory, one of the best ways to fight off an economic downturn is to inflate the money supply. And increasing the amount of gold held by the Federal Reserve would in turn increase its power to inflate the money supply. Facing similar pressures, Britain had dropped the gold standard in 1931, and Roosevelt had taken note.

Prolongation of the Great Depression

Some economic historians, such as American professor Barry Eichengreen, blame the gold standard of the 1920s for prolonging the Great Depression. Others including Federal Reserve Chairman Ben Bernanke and Nobel Prize winning economist Milton Friedman lay the blame at the feet of the Federal Reserve. The gold standard limited the flexibility of central banks’ monetary policy by limiting their ability to expand the money supply, and thus their ability to lower interest rates. In the US, the Federal Reserve was required by law to have 40% gold backing of its Federal Reserve demand notes, and thus, could not expand the money supply beyond what was allowed by the gold reserves held in their vaults.

In the early 1930s, the Federal Reserve defended the fixed price of dollars in respect to the gold standard by raising interest rates, trying to increase the demand for dollars. Its commitment and adherence to the gold standard explain why the U.S. did not engage in expansionary monetary policy. To compete in the international economy, the U.S. maintained high interest rates. This helped attract international investors who bought foreign assets with gold. Higher interest rates intensified the deflationary pressure on the dollar and reduced investment in U.S. banks. Commercial banks also converted Federal Reserve Notes to gold in 1931, reducing the Federal Reserve’s gold reserves, and forcing a corresponding reduction in the amount of Federal Reserve Notes in circulation. This speculative attack on the dollar created a panic in the U.S. banking system. Fearing imminent devaluation of the dollar, many foreign and domestic depositors withdrew funds from U.S. banks to convert them into gold or other assets.

The forced contraction of the money supply caused by people removing funds from the banking system during the bank panics resulted in deflation; and even as nominal interest rates dropped, inflation-adjusted real interest rates remained high, rewarding those that held onto money instead of spending it, causing a further slowdown in the economy. Recovery in the United States was slower than in Britain, in part due to Congressional reluctance to abandon the gold standard and float the U.S. currency as Britain had done.

Congress passed the Gold Reserve Act on 30 January 1934; the measure nationalized all gold by ordering the Federal Reserve banks to turn over their supply to the U.S. Treasury. In return the banks received gold certificates to be used as reserves against deposits and Federal Reserve notes. The act also authorized the president to devalue the gold dollar so that it would have no more than 60 percent of its existing weight. Under this authority the president, on 31 January 1934, fixed the value of the gold dollar at 59.06 cents.

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The Beast at Tanagra

Late Night Karaoke

Open Thread: Defying Gravity

What About Syria?

Cross posted fromThe Stars Hollow Gazette

Can the world stop the brutal crackdown in Syria?

Up with Chris Hayes panelists Colonel Jack Jacobs, MSNBC military analyst; Karam Nachar, an activist who has been working with opposition leaders in Syria; Jeremy Scahill of The Nation magazine; and Josh Treviño of the Texas Public Policy Foundation, discuss the international community’s inability to reach a consensus on how to stop President Bashar Al-Assad’s crackdown on protests in Syria.

In the second segment, the panel discusses whether civil war is inevitable in Syria, and whether there’s anything the United States and the world can do to stop it.

Should the US intervene to stop a civil war in Syria?

Syria’s President Bashar Assad, who took over power from is father in 2000, denied that government forces took part in last week’s gruesome Houla massacre and is accusing outsiders for fueling terrorists and extremist in the unrest that started 14 months ago.

In his hourlong address, Mr. Assad offered no specific response to Mr. Annan’s plea for bold steps to end the conflict.

Instead he repeated many of his earlier pledges to maintain a crackdown on opponents he described as terrorists added by interfering foreign governments and he again offered to sit down with opposition figures who have avoided armed conflict or outside backing.  [..]

Last month’s massacre in Houla of 108 people, mostly women and children, triggered global outrage and warnings that Syria’s relentless bloodshed – undimmed by Mr. Annan’s April 12 cease-fire deal – could engulf the Middle East.

Western powers have accused Syrian forces and pro-Assad militia of responsibility for the May 25 Houla killing, a charge Damascus has denied.

On Saturday, fighting killed 89 people, including 57 soldiers

The casualties also included 29 civilians and three army defectors killed in various regions of the country in shelling by regime forces or in clashes or gunfire, said the Syrian Observatory for Human Rights.

Asked about the high number of troops killed in recent days, the Observatory’s Rami Abdel-Rahman told AFP: “This relates to the sharp increase in clashes across the country. Troops are vulnerable to heavy losses because they are not trained for street battles and are therefore exposed to attacks.”

France has stated that it will not intervene in military action unless it is sanctioned by the United Nations:

French Defense Minister Jean-Yves Le Drian told an Asian security summit Sunday that the international community should increase sanctions and pressure in an effort to oust Syrian President Bashar Assad. An anti-government uprising has raged for more than a year in Syria.

The conflict is now spreading cross boarder into Lebanon with some heavy fighting in Lebanon:

Bloody clashes between pro- and anti-Syrian regime fighters raged on early Sunday in Tripoli, Lebanon, a day after the deadliest outburst of violence there in recent weeks indicated Syria’s turmoil continues spilling across borders.

Twelve people were killed and about 50 were wounded in fighting on Saturday, the state-run National News Agency reported. [..]

Clashes in both nations pit Sunnis, who make up the majority of the Syrian opposition and population, against Alawites and other Shiites, who are dominant in Syrian President Bashar al-Assad’s government.

There is no easy solution.

Obama: “Take No Prisoners”

Adapted from The Stars Hollow Gazette

Barack Obama’s Righteous Drone Strikes

The government takes out Al Qaeda’s “number two,” and Barack Obama finds an alternative to shutting down Guantanamo Bay.

Obama has carried out more than five times the number of covert drone strikes as George Bush.

So what’s behind Obama’s righteous drone strikes? Could it be he is just gunning for another Novel Peace Prize?

Rather than sending prisoners to GITMO, he is taking the high road by sending them to their maker. As the New York Times, puts it Mr, Obama has avoided the complications of detention by deciding to take no prisoners alive.

It’s brilliant. He doesn’t have to worry about habeas corpus because after a drone strike sometimes you can’t even fond the corpus

That brings us to:

The Word – Two Birds With One Drone

The Obama administration reasons that anyone in a strike zone is likely Al Qaeda, so no one has to feel guilty about civilian casualties.

Wisconsin Recall: Vote Tomorrow

Cross poated from The Stars Hollow Gazette

The vote to recall Wisconsin’s Republican Tea Party Governor Scott Walker is tomorrow. The latest Public Policy Polling results has his challenger Milwaukee Mayor Tom Barrett with a slight lead over Walker:

   PPP’s final poll on the Wisconsin recall finds Scott Walker ahead, but also a race that’s tightening. Walker leads Tom Barrett 50-47. That’s down from 50-45 on a PPP poll conducted three weeks ago and it’s also down from a 52-45 lead that Walker posted in a Marquette Law poll released last week.

   Barrett is actually winning independent voters by a 48-46 margin. The reason he continues to trail overall is that Republicans are more excited about voting in Tuesday’s election than Democrats are. Our projected electorate voted for Barack Obama by only 7 points, even though he took the state by 14 in 2008. If the folks who turn out on Tuesday actually matched the 2008 electorate, Barrett would be ahead of Walker by a 50-49 margin. It’s cliche but this is a race that really is going to completely come down to turnout.

This week’s Up with Chris Hayes devoted its first segments to what is at stake for not only Wisconsin but the rest of the country.

The battle for Wisconsin

Up with Chris Hayes panelists Michael Steele, former chairman of the Republican National Committee; Randi Weingarten, president of the American Federation of Teachers; Michelle Bernard, founder, president and CEO of The Bernard Center for Women, Politics and Public Policy; and Bob Herbert, former New York Times columnist and now a distinguished senior fellow at the progressive think tank Demos, discuss the ferocious recall election in Wisconsin, and its implications for national politics.

John Nichols, Washington correspondent for The Nation, joins thepanel to talk about the tidal wave of dark money flowing in from special interests in the Wisconsin recall election.