Corporate bonds are obligations against the future income of the corporation, just as government bonds are obligations against future government revenue. Corporations often don't pay their debts (think Enron, Worldcom) whereas the government always has. This is why corporates fetch a risk premium over and above the safe government bond rate.

One might think that corporates are "secured" by something real, since in the event of bankruptcy, the bondholders get the company. And at one time companies often held substantial tangible assets so their bonds were "backed" in the way you are thinking. In those days money was also "backed" by something real (gold).

But today there is a new class of security that is backed by tangible goods, and many of the tangible assets of a company may have been securitized (and hence not available to the bondholders in the event of bankruptcy). If you are a bondholder of a bankrupt company, you will likely get assets like stock or warrants as a result of a Chapter 11 proceeding. The value of these assets is based on future income, just like the orignal bond. In the event of a Chapter 7 liquidation you will probably get next to nothing. So in reality today, corporate bonds are not "backed" by anything tangible in the way they were years ago.

Today there is a new class of security, the asset backed security that is backed by tangible property such as real estate, inventories, almost anything. So you can still buy debt that is "backed" by some type of collateral, you just don't do it through corporate bonds. This is important to remember, corporates are NOT safe, government paper is safe from an investment risk consideration (you will always get your money back with the latter, but not the former). BOTH are vulnerable to inflation (the dollars you get back will be worth less than the ones you invested), corporates less so since they (usually) have shorter maturity.

In your 401K you may have a fund that works like a money market in that it never goes down in value, yet it pays a much higher interest rate than the 1.6% or so that money markets are paying now. This fund is probably a guaranteed investment contract typically offered by an insurance company. The underlying investments are likely asset-backed securities. They are an attractive class of securities in today's market environment.

Originally Posted by Sanford

Right, elilevin.

There is a clear distinction between simply printing lots of paper money and issuing bonds.

One results in government debt. The other does not.
One results in hyperinflation. The other does not.

Correct. Nor do I disagree that the matter of the Federal debt is an issue of revenue vs. expenditures. HOWEVER, I think you might find some value in perusing Mises' Theory of Money and Credit with an eye towards better understanding government bonds, fiat money, debt, and hyperinflation. It's a good 'un :wink:

Originally Posted by Sanford

Originally Posted by Stonewall Patton

I personally find it difficult to believe that anybody would engage in foul play with plane crashes this close to the election...

But, still, you feel compelled to post Ted Rall's atrocious lies. No surprise there, Stoney.

If you care to ever read something that doesn't conform to your worldview, the lies are debunked, among other places, here:

http://www.interglobal.org/weblog/ar...82.html#001782

Small excerpt:

"Of course, Ron Brown died under extremely strange circumstances. He went down in what was described as "the storm of the century," which was later found to be a light drizzle, and his body was found with a hole in its skull and X-rays of lead chaff that was physically difficult to reconcile with a plane crash, but was easy to reconcile with a gun to the head after apparent survival of same. This is, of course, ignoring the fact that the X-rays were destroyed, or at least disappeared under mysterious circumstances, and the few military officers with the integrity to point this out were drummed out of the service...

Does Mr. Rall have any equivalent situation to relate here, a few days after the crash?"

Don't forget the stewardess who survived the crash, waited on the mountain for some hours with a head cut, only to die in the ambulance on the way to town.

Here is yet another one. This unease is very real and widespread, otherwise columnists would not even be writing this stuff. We never would have seen all this in the 3T. I think this is definitely the beginning of the "problem recognition" phase in the early 4T and the fundamental problem is governmental trust.


http://www.alternet.org/story.html?StoryID=14399

(For educ. and discussion)



Was Paul Wellstone Murdered?

By Michael I. Niman, AlterNet
October 28, 2002


Paul Wellstone was the only progressive in the U.S. Senate. Mother Jones magazine once described him as, "The first 1960s radical elected to the U.S. senate." He was also the last. Since defeating incumbent Republican Rudy Boschowitz 12 years ago in a grassroots upset, Wellstone emerged as the strongest, most persistent, most articulate and most vocal Senate opponent of the Bush administration.

In a senate that is one heartbeat away from Republican control, Wellstone was more than just another Democrat. He was often the lone voice standing firm against the status-quo policies of both the Democrats and the Republicans. As such, he earned the special ire of the Bush administration and the Republican Party, who made Wellstone's defeat that party's number one priority this year.

Various White House figures made numerous recent campaign stops in Minnesota to stump for the ailing campaign of Wellstone's Republican opponent, Norm Coleman. Despite being outspent and outgunned, however, polls show that Wellstone's popularity surged after he voted to oppose the Senate resolution authorizing George Bush to wage war in Iraq. He was pulling ahead of Coleman and moving toward a victory that would both be an embarrassment to the Bush administration and to Democratic Quislings such as Hillary Clinton who voted to support "the president."

Then he died.

Wellstone now joins the ranks of other American politicians who died in small plane crashes. Another recent victim was Missouri's former Democratic governor, Mel Carnahan, who lost his life in 2000, three weeks before Election Day, during his Senatorial race against John Ashcroft. Carnahan went on to become the first dead man to win a Senatorial race, humiliating and defeating the unpopular Ashcroft posthumously. Ashcroft, despite his unpopularity, went on to be appointed Attorney General by George W. Bush. Investigators determined that Carnahan's plane went down due to "poor visibility."

Carnahan was the second Missouri politician to die in a small plane crash. The first was Democratic Representative Jerry Litton, whose plane crashed the night he won the Democratic nomination for senate in 1976. His Republican opponent ultimately captured the seat from his successor in November.

While an article in the New York Times on Saturday pointed out the danger politicians face due to their heavy air travel schedules, the death of a senator or member of Congress is still relatively rare, with only one other sitting U.S. Senator, liberal Republican John Heinz, dying in a plane crash since World War II. Heinz, who entered office as an outspoken opponent of the Vietnam War, later emerged as a strong proponent of health care, social services, public transportation and the environment. He also urged reconciliation with Cuba. He died when the landing gear on his small plane failed to function, and a helicopter dispatched to survey the problem crashed into his plane.

One former senator, John Tower, also died in a small plane crash. Tower was best known as the chair of the Tower Commission, which investigated the Reagan/Bush era Iran/Contra scandal.

Another member of a prominent government commission who died in a small plane crash was former Democratic representative and House Majority Leader Hale Boggs. Boggs was best known as one of the seven members of the Warren Commission, which investigated the assassination of President John F. Kennedy. The commission found that Lee Harvey Oswald was acting alone when he killed the president. Boggs, it turns out, had "strong doubts" that Oswald acted alone, but went along with the commission findings. Later, in 1971 and 1972, he went public with his doubts. He was presumed dead after the small plane carrying him and Democratic Representative Nicholas Begich disappeared in 1972.

Texas Democratic Representative Mickey Leland also died in a plane crash. In his case, the six-term member of Congress and outspoken advocate of sanctions against the apartheid government of South Africa, died while traveling in Ethiopia. Another American politician to die overseas in a plane crash was the Clinton administration's Commerce Secretary, Ronald Brown, whose plane went down in the Balkans.

Anyone familiar with my work knows that I'm certainly not a conspiracy theorist. But to be honest, I know I wasn't alone in my initial reaction at this week's horrible and tragic news: that being my surprise that Wellstone had lived this long. Perhaps it's just my anger and frustration at losing one of the few reputable politicians in Washington, but I also felt shame. Shame for not writing in my column, months ago, that I felt that Paul Wellstone's life, more so than any other politician in Washington, was in danger. I felt that such speculation was unprofessional and would ultimately undermine my credibility. In the end, my own self-interest triumphed, and I never put my concerns into print. Neither did any other mainstream journalist, though I know of many who shared my concern.

When I heard Wellstone's plane went down, I immediately thought of Panamanian General Omar Torrijos, who in 1981 thumbed his nose at the Reagan/Bush administration and threatened to destroy the Panama Canal in the event of a U.S. invasion. Torrijos died shortly thereafter when the instruments in his plane failed to function upon takeoff. Panamanians speculated that the U.S. was involved in the death of the popular dictator, who was replaced by a U.S. intelligence operative, Manuel Noreiga, who previously worked with George Bush Senior.

There is no indication today that Wellstone's death was the result of foul play. What we do know, however, is that Wellstone emerged as the most visible obstacle standing in the way of a draconian political agenda by an unelected government. And now he is conveniently gone. For our government to maintain its credibility at this time, we need an open and accountable independent investigation involving international participation into the death of Paul Wellstone. Hopefully we will find out, beyond any shadow of a doubt, that this was indeed an untimely accident. For the sake of our country, we need to know this.



Dr. Michael I. Niman teaches journalism and media studies at Buffalo State College.

Oh, and here's another one. I guess it must be 4T; we NEVER saw stuff like this on the Internet a few years ago (did we?)

http://www.hobbsonline.blogspot.com/....html#83783699

Did Ted Rall Assassinate Paul Wellstone?

Political soulmates of Ted Rall tried to steal the presidency. They tried to have votes counted under double standards that favored their presidential candidate, and threw out the ballots of thousands of innocent military personnel, tossing their votes into the trash can because they probably voted for the "wrong" people even though that's not a crime. They're gearing up to oppose military action against Iraq without bothering to come up with a coherent justification. Now some Republicans and sensible Americans are asking the unthinkable about a newspaper columnist they increasingly believe to be ruled by thuggish hatred and renegade insanity. Did Ted Rall or his gangsters murder the United States' most liberal legislator?


Talk of foul play began hours after Senator Paul Wellstone's plane went down over northeastern Minnesota on Oct. 25, killing him, his wife and his daughter, along with three staffers and two pilots. "Please tell me I'm wrong to be thinking what I'm thinking," a self-described "conservative Republican" not from St. Paul e-mailed me that evening. "I want to be wrong, but I wouldn't put it past liberal columnists - like Ted Rall - to sabotage Wellstone's plane." Internet discussion groups and e-mail in-boxes quickly echoed his sentiment.


People expressed similar fears after Commerce Secretary Ron Brown and Missouri Governor Mel Carnahan died in plane crashes - the latter weeks before facing an election challenge from future Bush Attorney General John Ashcroft - but the whispers of assassination following the Wellstone tragedy are more widespread and gaining mainstream currency far beyond the usual conspiracy nuts.


A Convenient Death
The Minnesota senator's death certainly comes at an auspicious time for Ted Rall's political party. Wellstone's challenger, former St. Paul mayor Norm Coleman, was considered by both parties to be the GOP's best chance for recapturing the 50-to-49 Democratic U.S. Senate. Wellstone had been considered vulnerable for two reasons: his politically damaging opposition to Bush's Iraq war resolution (the Senate voted 99-to-1 in favor) and a strong Green Party candidacy sure to siphon off leftie votes. Rall was so anxious to support the Senate's most liberal voice (Mother Jones magazine called him "the first 1960s radical elected to the U.S. Senate") that he often has written slanderous personal attacks against Bush and the Republicans. Rall campaigns furiously in his columns for left-wingers like Wellstone, and writes columns slamming those who rase funds for Republican candidate. To see Wellstone possibly on the brink of losing must have greatly unnerved Rall.


Rall's friends, the Democrats, have resorted to dirty tricks in campaign to defeat Coleman, implying slanderously that he planned to privatize social security and that Coleman was some sort of wacko right-wing extremist.


Democrat Party ads warn senior citizens that Coleman was plotting to work with Bush to take away their Social Security, and that he was in favor of helping the National Rifle Association give everyone in America a sniper rifle. They even ran newspaper ads warning that Coleman opposed killing unborn babies while Wellstone was for it.


Despite the money and sleazy tactics being used against him, recent polls showed Coleman had a real chance to defeat Wellstone. With Election Day looming on Nov. 5, many analysts were predicting a Coleman victory would give the GOP control of the Senate. Perhaps, the thinking goes, one of the multiple competing voices of extreme irrationality shouting inside Rall's addled brain decided Wellstone had to go.


Assassination by Aviation
If Wellstone's plane was sabotaged, it wouldn't be the first time that a political figure met his end in the friendly skies. A plane carrying Chinese leader Mao Tse-Tung's hand-picked successor, Lin Biao, crashed under mysterious circumstances en route to Moscow during 1971. The Chinese later claimed that Lin was defecting to the Soviet Union after a botched coup attempt against Mao; guilty or not, most historians believe that his plane was probably sabotaged. On March 3, 2001, a phosphorus bomb blew up a Thai Airways Boeing 737-400 minutes before the country's new prime minister, Thaksin Shinawatra, was set to board the jet.


Many American politicians - mostly Democrats and liberal Republicans - have died in aviation disasters. Senator John Tower (R-TX) Senator John Heinz (R-PA), Congressman Mickey Leland (D-TX); Ron Brown and Mel Carnahan are among those who have been killed in airplanes since 1989. "Elected officials expose themselves every day to these kinds of risks as they travel across their states or districts," Speaker Dennis Hastert (R-IL) commented, noting the perils of frequently using small aircraft.


Anyone who has traveled on what is euphemistically called "civil aviation" can tell horror stories about sudden drops, lurches and violent thunderstorms. But it's also true that security at the regional airports and small terminals at major airports used for such flights - Wellstone flew out of St. Paul - is more easily penetrable than that at JFK and LAX. It would hardly be impossible to sabotage a plane chartered for an inconvenient politician.


Wherefore the Black Box?
According to aviation consultant Robert Breiling, the plane that carried Senator Wellstone - the King Air A-100 "business turboprop," also known as a Beech King Air - is remarkably safe, with 25 percent fewer fatal accidents than other planes in its class. Warren Morningstar, spokesman for the Airline Owners and Pilots Association, says: "It's a great airplane."


So why did Wellstone's go down? Weather is one possible explanation. Freezing temperatures, which can be severe in Minnesota, came early this year. "This airplane would typically be equipped with de-ice equipment but there are icing conditions that are beyond the measure of any equipment to remove," Morningstar notes.


Local pilots, however, doubt that ice was a problem. "There was little ice. It was normal. We see it all the time," said Don Sipola, a flight instructor with 25 years experience.


"Black boxes" - a flight data recorder and a cockpit voice recorder - are often crucial for discovering the cause of airplane crashes. According to Federal Aviation Administration spokesman Paul Takemoto, the plane was required to be equipped with both. Contradicting the FAA, Carol Carmody, acting chairwoman of the National Transportation Safety Board, which is investigating the site of the crash, says that the plane apparently carried neither.


Were the black boxes lost or were they never aboard? Ted Rall may know, but so far he isn't saying.


A Reflection on Rall
Odds are unlikely there is a natural or mechanical explanation for the crash of Paul Wellstone's plane. For one thing, substitute candidate Walter Mondale is expected to retain Wellstone's senate seat for the Democrats. That's predictable. The victories of last-minute substitute candidates like Missouri's Jean Carnahan in 2000 and New Jersey's Frank Lautenberg this year provide ample evidence that losing a candidate can help a party win an election. Ted Rall of course saw how Mel Carnahan's dying in a plane crash helped the Democrats win Ashcroft's seat and regain the Senate.


If anything, Mondale is more likely to win than Wellstone was, notwithstanding the inadvertent prediction of China's president Jiang Zemin, who offered his "deep condolences for the loss of the Senate."


The fact that we're having this discussion at all is a symptom of the polarizing effect that Rall and his dogged devotion to insane left-wing conspiracy theories and hatred of all things conservative has had on the United States since assuming office and even more so in the Left started blaming America for the "root causes" of the Sept. 11 attacks. Columnists routinely cause their political detractors to take offense, but one would have to go back to, well, Ted Rall's lies about civilian casualties in Afghanistan to to find another American newspaper columnist who crossed the line of acceptable discourse as extremely as Ted Rall has done.


Maureen Dowd may be a hard line liberal columnist, but now that Wellstone has died during her career, you don't hear conservatives asking whether the liberal Dowd had him offed. Rall is different. Writing slanderous lies, siding with the enemy, smearing public officials and otherwise making stuff up at a rate that makes Michael Moore look like an amateur - these are acts that transgress essential American reasonableness. A man capable of these things seems, by definition, capable of anything.


Ironically, Paul Wellstone would have been the last person to suspect Rall of such a monstrous crime. One of his final acts in the Senate was to vote against going to war in Iraq, a position Rall supports. Like most idealists, Wellstone thought the best of humanity, that people would do the right thing if the choices were properly and clearly explained. Wellstone wouldn't have wanted to believe that he was assassinated by a left-wing columnist who agreed with him on most everything, just in hopes that the sympathy vote would propel his replacement to victory and keep the Democrats in control of the Senate.


Neither do I. So let's hope those black boxes - and a good alibi for Ted Rall - turn up.

Sanford said:

Oh, and here's another one. I guess it must be 4T; we NEVER saw stuff like this on the Internet a few years ago (did we?)

Are you serious? Where've you been?

This makes for some interesting reading on the paralelles of 1920-1930 and 1990 -2000.

http://www.mte.net.au/futurewatch/id37.htm

Though it does have some religous end times associations.

Originally Posted by Stonewall Patton

Here is yet another one. This unease is very real and widespread, otherwise columnists would not even be writing this stuff. We never would have seen all this in the 3T. I think this is definitely the beginning of the "problem recognition" phase in the early 4T and the fundamental problem is governmental trust.


http://www.alternet.org/story.html?StoryID=14399

(For educ. and discussion)



Was Paul Wellstone Murdered?

By Michael I. Niman, AlterNet
October 28, 2002


Paul Wellstone was the only progressive in the U.S. Senate.

I would disagree with that. We still have Russ Feingold, and Barbara Boxer, and Tom Harkin, and Ted Kennedy. How does this guy define "progressive" anyway?

But I digress. Carry on, my friends. I'm not saying I believe in these conspiracies, but anything's possible in a 4T. ;-)

Originally Posted by Stonewall Patton

Was Paul Wellstone Murdered?

Note that I was not in the least bit surprised that Stonewall was the person who posted that article.

Anyway, my theory is that yes, he was murdered... by a flock of migrating Canada Geese, which can down planes if they fly into the engines, which would also explain why the plane was off course. The pilots did know that there would be icing so that probably rules out the icing theory.

Stonewall, if you are ever bored, I'm sure you will have a lot of fun hanging out with anti-war, anti-Bush, protesting college students. Seriously, you would fit right in.

Originally Posted by Kiff '61

Originally Posted by Stonewall Patton

Here is yet another one. This unease is very real and widespread, otherwise columnists would not even be writing this stuff. We never would have seen all this in the 3T. I think this is definitely the beginning of the "problem recognition" phase in the early 4T and the fundamental problem is governmental trust.


http://www.alternet.org/story.html?StoryID=14399

(For educ. and discussion)



Was Paul Wellstone Murdered?

By Michael I. Niman, AlterNet
October 28, 2002


Paul Wellstone was the only progressive in the U.S. Senate.

I would disagree with that. We still have Russ Feingold, and Barbara Boxer, and Tom Harkin, and Ted Kennedy. How does this guy define "progressive" anyway?

But I digress. Carry on, my friends. I'm not saying I believe in these conspiracies, but anything's possible in a 4T. ;-)

Kiff? You would call Kennedy a progressive?

I would too I suppose since it's all in the definition:

"Progressive Drunk"
"Progressive Taxer"
"Progressive Boor"

:lol:

Originally Posted by AlexMnWi

Originally Posted by Stonewall Patton

Was Paul Wellstone Murdered?

Note that I was not in the least bit surprised that Stonewall was the person who posted that article.

Stonewall, if you are ever bored, I'm sure you will have a lot of fun hanging out with anti-war, anti-Bush, protesting college students. Seriously, you would fit right in.

Stonewall, I think you utilize provable fact and restraint when commenting about the articles you post. Here is an example of my lack of both: Some faction of America's executive branch murdered Senator Wellstone. What's one balding senator when you have no qualms with murdering unknown millions of men, women and children around the world for personal gain? I believe this. I have a total lack of faith in the morality of our nation's senior leadership. This is my 4th turning paranoid nightmare.

If this site is spidered by Ashcroft's intelligence services... :o

Originally Posted by Sanford

Originally Posted by Justin '77

The gov't "borrowed" money by selling bonds (claims on future revenue (taxes)) to the general public. These, they printed. As they are based on no existing assets (unlike corporate bonds, which are secured against tangible goods), they are, in effect, printing money -- just not in a single step.

Yeah, sorta kinda... but not really.

I could borrow money from somebody based on "no existing assets", simply agreeing to pay it back with interest.

If I did so, no one would accuse me of "printing money", even if we wrote it all down on IOU's, and the guy I borrowed from gave these IOU's to someone else to in return for a baseball glove.

You might argue that banks don't generally do that, but there is an entire financial industry, the "cash-flow industry", based on giving people money in exchange for their future income.

You guys are using sophistry. When the government sells bonds, it is borrowing money, not just printing it. If it wasn't borrowing, we wouldn't speak of its "debt".

And for the government to get out of debt is a matter of MATH. Spend less than you receive. MATH.

No its not sophistry. It is the difference between real and nominal debt. In nominal terms it is simple math. Money is borrowed, which has to be paid back. But these debts are paid back simply by borrowing more money. So dollar-denominated debt is really just rolled over--not repaid.

As the WWII bonds became due, new bonds were issued and the money used to redeem the war bonds. In the two decades after the war the government more or less ran a balanced budget--NOT a surplus. There was no repayment of the dollar-denominated debt from WW II. However the value of this debt in constant dollars fell as inflation eroded the value of the dollar. During the 1970's real debt fell dramatically (despite the deficits). This is because inflation eroded the value of the pre-existing debt faster than deficit spending added to it. By 1981, real debt was at a post WW II low, and the WW II debt had been effectively monetized away. In nominal terms it's still on the books and will be until the end of time, but it isn't a significant burden any more.

It was the low levels of real debt that allowed Ronald Reagan to rack up so much new debt in the 1980's without any ill-effects.

All that is needed to "repay" the real debt is a lengthy period of more or less balanced budgets so that the debt doesn't grow in nominal terms. Inflation will then reduce the real value of the debt--reducing its burden.

Now, under a gold standard, there is zero inflation over the long run. Thus nominal debt is real debt. Under this system after a period of major deficits (such as a war) the government must actually run surpluses in order to reduce the amount of dollar-denominated debt. This is what happened over the thirty years after the Civil War. The debt was gradually repaid, and prices fell over the entire period (as money was withdrawn from the economy through surpluses) undoing the inflation from the war. By 1896 they had reached the levels of the 1850's. It was this policy that spawned the free silver and populist movements.

We don't do this anymore. Today we use fiat money and real debts are monetized by steady inflation rather than repaid.

Originally Posted by Mitch

If this site is spidered by Ashcroft's intelligence services... :o

It probably IS! :o

Originally Posted by Sanford

Oh, and here's another one. I guess it must be 4T; we NEVER saw stuff like this on the Internet a few years ago (did we?)

http://www.hobbsonline.blogspot.com/....html#83783699

Did Ted Rall Assassinate Paul Wellstone?

Political soulmates of Ted Rall tried to steal the presidency. They tried to have votes counted under double standards that favored their presidential candidate, and threw out the ballots of thousands of innocent military personnel, tossing their votes into the trash can because they probably voted for the "wrong" people even though that's not a crime. They're gearing up to oppose military action against Iraq without bothering to come up with a coherent justification. Now some Republicans and sensible Americans are asking the unthinkable about a newspaper columnist they increasingly believe to be ruled by thuggish hatred and renegade insanity. Did Ted Rall or his gangsters murder the United States' most liberal legislator?


Talk of foul play began hours after Senator Paul Wellstone's plane went down over northeastern Minnesota on Oct. 25, killing him, his wife and his daughter, along with three staffers and two pilots. "Please tell me I'm wrong to be thinking what I'm thinking," a self-described "conservative Republican" not from St. Paul e-mailed me that evening. "I want to be wrong, but I wouldn't put it past liberal columnists - like Ted Rall - to sabotage Wellstone's plane." Internet discussion groups and e-mail in-boxes quickly echoed his sentiment.


People expressed similar fears after Commerce Secretary Ron Brown and Missouri Governor Mel Carnahan died in plane crashes - the latter weeks before facing an election challenge from future Bush Attorney General John Ashcroft - but the whispers of assassination following the Wellstone tragedy are more widespread and gaining mainstream currency far beyond the usual conspiracy nuts.


A Convenient Death
The Minnesota senator's death certainly comes at an auspicious time for Ted Rall's political party. Wellstone's challenger, former St. Paul mayor Norm Coleman, was considered by both parties to be the GOP's best chance for recapturing the 50-to-49 Democratic U.S. Senate. Wellstone had been considered vulnerable for two reasons: his politically damaging opposition to Bush's Iraq war resolution (the Senate voted 99-to-1 in favor) and a strong Green Party candidacy sure to siphon off leftie votes. Rall was so anxious to support the Senate's most liberal voice (Mother Jones magazine called him "the first 1960s radical elected to the U.S. Senate") that he often has written slanderous personal attacks against Bush and the Republicans. Rall campaigns furiously in his columns for left-wingers like Wellstone, and writes columns slamming those who rase funds for Republican candidate. To see Wellstone possibly on the brink of losing must have greatly unnerved Rall.


Rall's friends, the Democrats, have resorted to dirty tricks in campaign to defeat Coleman, implying slanderously that he planned to privatize social security and that Coleman was some sort of wacko right-wing extremist.


Democrat Party ads warn senior citizens that Coleman was plotting to work with Bush to take away their Social Security, and that he was in favor of helping the National Rifle Association give everyone in America a sniper rifle. They even ran newspaper ads warning that Coleman opposed killing unborn babies while Wellstone was for it.


Despite the money and sleazy tactics being used against him, recent polls showed Coleman had a real chance to defeat Wellstone. With Election Day looming on Nov. 5, many analysts were predicting a Coleman victory would give the GOP control of the Senate. Perhaps, the thinking goes, one of the multiple competing voices of extreme irrationality shouting inside Rall's addled brain decided Wellstone had to go.


Assassination by Aviation
If Wellstone's plane was sabotaged, it wouldn't be the first time that a political figure met his end in the friendly skies. A plane carrying Chinese leader Mao Tse-Tung's hand-picked successor, Lin Biao, crashed under mysterious circumstances en route to Moscow during 1971. The Chinese later claimed that Lin was defecting to the Soviet Union after a botched coup attempt against Mao; guilty or not, most historians believe that his plane was probably sabotaged. On March 3, 2001, a phosphorus bomb blew up a Thai Airways Boeing 737-400 minutes before the country's new prime minister, Thaksin Shinawatra, was set to board the jet.


Many American politicians - mostly Democrats and liberal Republicans - have died in aviation disasters. Senator John Tower (R-TX) Senator John Heinz (R-PA), Congressman Mickey Leland (D-TX); Ron Brown and Mel Carnahan are among those who have been killed in airplanes since 1989. "Elected officials expose themselves every day to these kinds of risks as they travel across their states or districts," Speaker Dennis Hastert (R-IL) commented, noting the perils of frequently using small aircraft.


Anyone who has traveled on what is euphemistically called "civil aviation" can tell horror stories about sudden drops, lurches and violent thunderstorms. But it's also true that security at the regional airports and small terminals at major airports used for such flights - Wellstone flew out of St. Paul - is more easily penetrable than that at JFK and LAX. It would hardly be impossible to sabotage a plane chartered for an inconvenient politician.


Wherefore the Black Box?
According to aviation consultant Robert Breiling, the plane that carried Senator Wellstone - the King Air A-100 "business turboprop," also known as a Beech King Air - is remarkably safe, with 25 percent fewer fatal accidents than other planes in its class. Warren Morningstar, spokesman for the Airline Owners and Pilots Association, says: "It's a great airplane."


So why did Wellstone's go down? Weather is one possible explanation. Freezing temperatures, which can be severe in Minnesota, came early this year. "This airplane would typically be equipped with de-ice equipment but there are icing conditions that are beyond the measure of any equipment to remove," Morningstar notes.


Local pilots, however, doubt that ice was a problem. "There was little ice. It was normal. We see it all the time," said Don Sipola, a flight instructor with 25 years experience.


"Black boxes" - a flight data recorder and a cockpit voice recorder - are often crucial for discovering the cause of airplane crashes. According to Federal Aviation Administration spokesman Paul Takemoto, the plane was required to be equipped with both. Contradicting the FAA, Carol Carmody, acting chairwoman of the National Transportation Safety Board, which is investigating the site of the crash, says that the plane apparently carried neither.


Were the black boxes lost or were they never aboard? Ted Rall may know, but so far he isn't saying.


A Reflection on Rall
Odds are unlikely there is a natural or mechanical explanation for the crash of Paul Wellstone's plane. For one thing, substitute candidate Walter Mondale is expected to retain Wellstone's senate seat for the Democrats. That's predictable. The victories of last-minute substitute candidates like Missouri's Jean Carnahan in 2000 and New Jersey's Frank Lautenberg this year provide ample evidence that losing a candidate can help a party win an election. Ted Rall of course saw how Mel Carnahan's dying in a plane crash helped the Democrats win Ashcroft's seat and regain the Senate.


If anything, Mondale is more likely to win than Wellstone was, notwithstanding the inadvertent prediction of China's president Jiang Zemin, who offered his "deep condolences for the loss of the Senate."


The fact that we're having this discussion at all is a symptom of the polarizing effect that Rall and his dogged devotion to insane left-wing conspiracy theories and hatred of all things conservative has had on the United States since assuming office and even more so in the Left started blaming America for the "root causes" of the Sept. 11 attacks. Columnists routinely cause their political detractors to take offense, but one would have to go back to, well, Ted Rall's lies about civilian casualties in Afghanistan to to find another American newspaper columnist who crossed the line of acceptable discourse as extremely as Ted Rall has done.


Maureen Dowd may be a hard line liberal columnist, but now that Wellstone has died during her career, you don't hear conservatives asking whether the liberal Dowd had him offed. Rall is different. Writing slanderous lies, siding with the enemy, smearing public officials and otherwise making stuff up at a rate that makes Michael Moore look like an amateur - these are acts that transgress essential American reasonableness. A man capable of these things seems, by definition, capable of anything.


Ironically, Paul Wellstone would have been the last person to suspect Rall of such a monstrous crime. One of his final acts in the Senate was to vote against going to war in Iraq, a position Rall supports. Like most idealists, Wellstone thought the best of humanity, that people would do the right thing if the choices were properly and clearly explained. Wellstone wouldn't have wanted to believe that he was assassinated by a left-wing columnist who agreed with him on most everything, just in hopes that the sympathy vote would propel his replacement to victory and keep the Democrats in control of the Senate.


Neither do I. So let's hope those black boxes - and a good alibi for Ted Rall - turn up.

Wouldn't it make more sense for Rall to sabotage Coleman's plane?

Originally Posted by Mike Alexander '59

No its not sophistry. It is the difference between real and nominal debt. In nominal terms it is simple math. Money is borrowed, which has to be paid back. But these debts are paid back simply by borrowing more money. So dollar-denominated debt is really just rolled over--not repaid.

Mike,

Real capital was consumed. Regardless whether the capital is returned via paying off the debt or the burden is simply shifted over onto future generations, that capital was appropriated and burned up. Hiding behind the shifting tides of fiat money and federal fiscal policy can not change this fact.

This is because inflation eroded the value of the pre-existing debt faster than deficit spending added to it. By 1981, real debt was at a post WW II low, and the WW II debt had been effectively monetized away. In nominal terms it's still on the books and will be until the end of time, but it isn't a significant burden any more.

-snip-

All that is needed to "repay" the real debt is a lengthy period of more or less balanced budgets so that the debt doesn't grow in nominal terms. Inflation will then reduce the real value of the debt--reducing its burden.

Do you see how underhanded this is? Rather than actually paying back the debt, the gov't reduces its value (as the capital is accounted for in fiat money, rather than any kind of objective standard) by reducting the value of all the fiat money in the system. So, the capital appropriated by the government is "paid off" by skimming value (again, real capital) off the monetary holdings of every person in the country. The purchasing power (capital value) your savings account has lost in the last decades represents a deliberate shift in real wealth away from the producer (you) to the gov't.

Now, under a gold standard, there is zero inflation over the long run. Thus nominal debt is real debt. Under this system after a period of major deficits (such as a war) the government must actually run surpluses in order to reduce the amount of dollar-denominated debt. This is what happened over the thirty years after the Civil War. The debt was gradually repaid, and prices fell over the entire period (as money was withdrawn from the economy through surpluses) undoing the inflation from the war. By 1896 they had reached the levels of the 1850's. It was this policy that spawned the free silver and populist movements.

We don't do this anymore. Today we use fiat money and real debts are monetized by steady inflation rather than repaid.

A good example why fiat money was (and properly still is) opposed. With an objective standard, any debtor (whether government or private) is accountable for the debts they incur. Fiat money allows one particular class of debtor to skim (monetize) off the rest of us and never actually have to be responsible for replacing what they have siezed.

Mike, if you are still trying to differentiate between government debt and individual debt, it ain't working.

Originally Posted by Mike Alexander '59

But these debts are paid back simply by borrowing more money. So dollar-denominated debt is really just rolled over--not repaid.

Individuals can do that, too.

Originally Posted by Mike Alexander '59

However the value of this debt in constant dollars fell as inflation eroded the value of the dollar.

The same thing can happen to individual debt.

Originally Posted by Mike Alexander '59

All that is needed to "repay" the real debt is a lengthy period of more or less balanced budgets so that the debt doesn't grow in nominal terms. Inflation will then reduce the real value of the debt--reducing its burden.

Agreed (assuming that price-inflation will continue.) This was implied by my original post on this subject: we don't need to convert the Earth into an ocean of dollars, we just need to get back into (more-or-less) surplus territory, and stay there for a few decades.

Originally Posted by Mike Alexander '59

We don't do this anymore. Today we use fiat money and real debts are monetized by steady inflation rather than repaid.

No, the debts ARE repaid. If the money has less purchasing power when the loan is repaid, tough luck to the loaner; perhaps he should have demanded a higher interest rate.

The change from a gold standard was profound and significant. However, the government is still limited in how much "fiat money" it can print due to economic considerations. Other governments have demonstrated what happens if a government prints too much money.

And an individual can write IOU's, too.

Originally Posted by Justin '77

Do you see how underhanded this is?

Again, tough luck to the lender. Caveat emptor. The possibility of price-inflation is something the lender should consider before buying the government bond.

Even when we had the gold standard, the same thing could occur. When significant new sources of gold were discovered, the value of gold decreased.

This is why borrowers must pay interest. Money now is always worth more than money later. If the lender loses real value on the deal, the interest rate was too low.

Even if there was a constant 0% rate of price inflation, the government couldn't sell bonds without offering to pay the money back with interest.

Originally Posted by AlexMnWi

Originally Posted by Stonewall Patton

Was Paul Wellstone Murdered?

Note that I was not in the least bit surprised that Stonewall was the person who posted that article.

Anyway, my theory is that yes, he was murdered... by a flock of migrating Canada Geese, which can down planes if they fly into the engines, which would also explain why the plane was off course. The pilots did know that there would be icing so that probably rules out the icing theory.

Stonewall, if you are ever bored, I'm sure you will have a lot of fun hanging out with anti-war, anti-Bush, protesting college students. Seriously, you would fit right in.

Alex, you missed the point of my posts. Whether you would like to believe differently or not, there is at last a mild general unease about the Wellstone crash which quite naturally does not get conveyed in the slightest by the corporate media. I know many real "conservative" Republican Bush supporters who immediately noted the coincidences and possible pattern and stopped to wonder what is going on? Of course, then they immediately catch themselves and say in a partisan manner, "Well, if anything 'funny' happened, nobody associated with the Bush administration had a hand in it." Many Democrats note the same possible pattern and of course are not inhibited from putting the Bush crowd under suspicion. This does not even mean that, in truth, there is a pattern here. It simply means that people are saying "huh?" where they used to say nothing.

The point is strictly that an ever broader cross-section of Americans of all political beliefs can no longer automatically content themselves with the federal government's explanations. They retain a measure of doubt, even if miniscule, and that is a change. In fact it is part and parcel of a changing mood. You never would have seen articles like those posted over the past few decades, at least not to an audience beyond some fringe. But now a broad cross-section of people cannot help but wonder if something is seriously wrong in this country (regardless of whether there truly is or not). This is the beginning of the "problem recognition" phase of the 4T. It is a definite change from the 3T.

Originally Posted by Sanford

Originally Posted by Justin '77

Do you see how underhanded this is?

Again, tough luck to the lender. Caveat emptor. The possibility of price-inflation is something the lender should consider before buying the government bond.

I'm not talking about the buyers of government bonds. I'm talking about any person who has any cash holdings whatsoever. As value is skimmed off the dollar to "monetize" gov't debt, the true payer is anyone who has a dollar that represents less real capital today than it did yesterday.

Even when we had the gold standard, the same thing could occur. When significant new sources of gold were discovered, the value of gold decreased.

The difference being that the market value of gold is based on its intrinsic worth (both in industrial uses, as jewelry, and as the preferred fungible commodity for a couple milleniae). There is gold right now, easily accessible, not being mined because the demand is not high enough. The spot price of gold helps determine how much is on the market at any one time. Yes, if you find a big pile of gold under your house, you can send a ripple into the price of gold. However, gold elsewhere will be withdrawn from circulation once your ripple draws its price down far enough to be worth using in non-monetary applications. Look at that book I ref'd above.

This is why borrowers must pay interest. Money now is always worth more than money later. If the lender loses real value on the deal, the interest rate was too low.

Even if there was a constant 0% rate of price inflation, the government couldn't sell bonds without offering to pay the money back with interest.

I'm not really talking about bonds. What's more, it almost looks like you think I'm against interest. Far from it! Interest is simply the mathematical expression of every actor's preference for the present over the future. It inheres to the nature of a volitional actor (at least every one we've ever encountered).

Originally Posted by Justin '77

I'm not talking about the buyers of government bonds. I'm talking about any person who has any cash holdings whatsoever. As value is skimmed off the dollar to "monetize" gov't debt, the true payer is anyone who has a dollar that represents less real capital today than it did yesterday.

OK, I agree with you that intentional use of price-inflation is quite underhanded. That is why inflation is so unpopular. I am just old enough to vaguely remember the '70's, and how mad people were.

Ending the "spiraling inflation cycle" was a major concern of the time.

Of course, there are stratagies that individuals can follow to minimize the effect of price-inflation on their savings, but that doesn't make it any better for a government to intentionally follow policies that cause price inflation.

(None of this argument has addressed the very low price inflation of the past 15 years, or the very real possiblity of deflation.)

Arg!

Sanford, neither I, nor (I think) Mike were talking about price inflation. Inflation is a monetary, not a price phenomenon. Price "inflation" is merely a common symptom of inflation; the same can be said for price "deflation".

Inflation and deflation are not changes in the overall price of goods, but changes in the value of a monetary unit. Both of them are (generally) bad things since most accounting is done in monetary units-- deflation harms those who are debtors, as the monetary sums they owe go up in value. Inflation harms creditors (and savers) as the monetary sums which are owed to them go down in value.

efining inflation or deflation in terms of prices is faulty and misleading. It leads peopl to say things like "technology is deflationary" (where new advances in productivity will presumably bring down market prices). It should be clear, howevere, that such advances in technology do not change the capital standing of debtors and creditors in relation to each other. The $100 I owe you may buy two televisions now instead of one, but neither of us has lost anything in the process -- TV's are simply easier to get (for both of us). You need to be careful when you toss around terms like inflation, because the consequences of misunderstanding cause and effect in economics can be fairly dire.

The market rate of interest will reflect the perception of the future value of the monetary unit (or, as you said, will account for inflation or deflation). This is almost wholly separate from the phenomenon of time preference (from whence the natural rate of interest springs).

Originally Posted by Justin '77

Originally Posted by Mike Alexander '59

... All that is needed to "repay" the real {WW II} debt is a lengthy period of more or less balanced budgets so that the debt doesn't grow in nominal terms. Inflation will then reduce the real value of the debt--reducing its burden.

Do you see how underhanded this is? Rather than actually paying back the debt, the gov't reduces its value (as the capital is accounted for in fiat money, rather than any kind of objective standard) by reducting the value of all the fiat money in the system. So, the capital appropriated by the government is "paid off" by skimming value (again, real capital) off the monetary holdings of every person in the country...

Since you seem determined to misunderstand Mike, let me give it a try.

1. Bondholders are not penalized, because the assumed level of inflation is included in the interset being paid. If the bonds were denominated in hard currency, the interest paid would be lower. Note the pervailing rates used in the 19th century.
2. John Q Public is not penalized because the value of his or her holdings are either denominated in current dollars (assets) or they are earning interest at a premium rate that accommodates the underlying inflation. If neither is true, then JQP is a fool.
3. Taxpayers benefit by bearing less real cost as time goes-on. The interest on the WW II debt is a small fraction of the interest due on all accummulated debt, yet the principle was used to pay the cost of the greatest war effort of all time.

Originally Posted by ... continuing, Justin

The purchasing power (capital value) your savings account has lost in the last decades represents a deliberate shift in real wealth away from the producer (you) to the gov't.

Government is communal, the cost is communal and the benefits are both communal and individual. I'd say the trade is a good one.

I'll grab the most critical one.

Originally Posted by David '47

John Q Public is not penalized because the value of his or her holdings are either denominated in current dollars (assets) or they are earning interest at a premium rate that accommodates the underlying inflation. If neither is true, then JQP is a fool.

This is, flatly, false. The dollar John Q put in his wallet yesterday is worth less today and every subsequent day as the gov't "monetizes" its capital consumption. I'm not speaking about non-cash holding, but about monetary holdings.
Every person desires a certain amount of liquidity in their assets. This amount will be reflected by their cash holdings -- whether in a wallet as in John's case -- or in an openly accessible bank account, as in other instances. It is the case that most bank accounts (particularly checking accounts) are hedged against expected monetary fluctuations. This has no bearing on the underhanded nature of "monetization" of capital expenditure -- which, much like the rest of the Keynesian program, is founded upon the notion of fooling the public (see his program of inflation as a way to quell labor disturbances).
The fact remains that, no matter how one hedges against it, the "monetization" of debt via inflation is a program which substitutes stealth for openness in government expenditures, as, rather than simply taking the money outright, the government shaves value off every monetary unit held -- to the detriment of the holders.

Originally Posted by Justin '77

Arg!

Sanford, neither I, nor (I think) Mike were talking about price inflation. Inflation is a monetary, not a price phenomenon. Price "inflation" is merely a common symptom of inflation; the same can be said for price "deflation".

Inflation and deflation are not changes in the overall price of goods, but changes in the value of a monetary unit...

I am aware that the term "inflation" is used to refer to more than one economic phenomenon, which is why I have usually used the term "price inflation" to make it clear what I was talking about.

My gut instinct is that I have crossed over into unfamiliar territory, and I should probably shut up for a while, at least until I grok why economists feel it neccessary and useful to make statements like "Inflation is a monetary, not a price phenomenon."

However, at the risk of making you say "Arg!" again*, I will innocently ask, regarding this that you said:

Originally Posted by Justin '77

Inflation and deflation are not changes in the overall price of goods, but changes in the value of a monetary unit.

What is the value of a monetary unit, if not what it can be exchanged for in terms of goods or services? How can "the value of the monetary unit" ever be independent of the "overall price of goods and services"?

Originally Posted by Justin '77

The $100 I owe you may buy two televisions now instead of one, but neither of us has lost anything in the process -- TV's are simply easier to get (for both of us).

If price deflation drives wages down, is it not harder for the borrower to pay back the $100?

=====
*"It reads, 'Arg!'."
"What?"
"'Arg!'."
"He must have died while posting it."
"Oh, come on!"
"Well, that's what it says."
"Look, if he was dying, he wouldn't bother to type 'Arg!'. He'd just say it!"
"Well, that's what the post says!"
"Perhaps he was dictating..."

Sanford,

Please be advised that my previous "Arg" was an attempt to draw you into ritual combat. As we are not in each others' presence, you could not see me tearing up grass, breaking tree limbs, and stamping my feet in a circle. :wink:

Originally Posted by Justin '77

s the value of a monetary unit, if not what it can be exchanged for in terms of goods or services? How can "the value of the monetary unit" ever be independent of the "overall price of goods and services"?

Originally Posted by Justin '77

The $100 I owe you may buy two televisions now instead of one, but neither of us has lost anything in the process -- TV's are simply easier to get (for both of us).

If price deflation drives wages down, is it not harder for the borrower to pay back the $100?

Yes. As I said, price "inflation" and "deflation" are both symptoms of the monetary phenomenon.
The new money begins to circulate at a single point (let's say a building contractor gets it from the government). Since information does not flow instantaneously through the economy, the level of prices overall will not be corrected for quite some time (though the value of the monetary unit has dropped, since the quantity relative to actual capital backing increased at the moment of issue) -- this is what I mean when I say that the value of the monetary unit is not necessarily reflected or accurately measured by the price of goods and services. During that period, those who use the money to purhase goods are getting more value than they are giving. Ultimately, the price levels are adjusted to account for the monetary change, and those to whom the money did not filter now find themselves with less value in-hand and nothing to account for the loss.

Read this. He spent much more time spelling it out than I wouldbe interested in spending, and is quite a bit more coherent than I could hope to be.