Ruminations - 13oct13 (updated)

George Rebane

NSA strikes deeper into our lives.  The IEEE reported last week that NIST has compromised its random number algorithm to our nation’s electronic spymasters.  Specifically –

The National Institute of Standards and Technology (NIST) has an image problem. Last month, revelations surfaced indicating that the National Security Agency (NSA) may have planted a vulnerability in a widely used NIST-approved encryption algorithm to facilitate its spying activities. And cryptographers are also questioning subtle changes that might weaken a new security algorithm called Secure Hash Algorithm-3, or SHA-3. Encryption experts say NIST’s reputation has been seriously undermined but that the security community would like to continue using it as a standards body if it can show that it has reformed.  (more here)

Given the muffled diktats by secret court orders, there is no credible reform that NIST can profess.  And Forbes reports that the private secure email company LavaBits has also shut down, rather than compromise its customers, subsequent to the FBI demanding that it open ‘back doors’ to allow the bureau to read emails sent through its servers.  (more here)

New Fed chairman nominee Dr Janet Yellen does not perceive America’s systemic unemployment problem.  Economist Yellen made her bones under her mentor, nobel economist James Tobin (of Tobin’s Q Ratio fame), whose Keynesian interpretations of monetary policy held sway in the US through much of the Cold War years.  Yellen believes that the prime function of the Fed is to manage the business cycle by tuning money supply and interest rates so as to minimize unemployment.  (more here)  She gives no hint that she recognizes how accelerating technology has changed the economic landscape for the country’s workforce, and seems to be convinced that continuing to apply the demonstrably failed policies of the 1930s is the way to fix and maintain America’s economy.

As an economic Austrian, I shudder to think about the immediate future years as she inherits the debt, deficits, and debilitating policy of perpetual easing (currently at $85B/month).  That the latter is now an established and freely accessible spigot will give her great comfort as the rest of us worldwide scramble for alternatives to the dollar.

[update]  The problem of evil.  I was perusing the AP news site in bed this morning and came upon a piece reporting that ‘Shutdown Driving Debate Over Role of Government’.  In it this center-left news service describes the purposive atrocities that our federal government has instituted “to make things as difficult as possible” for Americans during this shutdown.  The piece echoes RR’s long-held notions about big government – better late than never.

Today’s news is full of horror stories about the gratuitous and intentional shutdown of services, closing of facilities, and denying access to public venues that have nothing to do with the normal workings of government staff.  In fact, staff has been added where possible, and asked to work extra in order to intimidate and deny Americans what they could still enjoy during the shutdown.  A sinister case in point is TSA now announcing at airports that you may be arrested for making jokes about their security procedures which today includes regular groping of your genitalia.  (more here and here and reaction to shutdowns here)  

A highlight of AP’s light bulb going on is their questioning of what the country would be like if most of those 800,000 federal workers were dismissed (recall my interim plan was to furlough them permanently with full pay).  Many (most?) Americans are beginning to understand that life could be much better without them, and most certainly no worse than it is with them 'doing their jobs'.

These pages record my (and our readers’ wide ranging) thoughts on the more ideal and/or proper role of government.  But here I want to just touch on the notion of evil that invariably is spawned in all organizations (public, private, religious, …) as they grow.  After a certain size the complexity of such institutions gets to be such that the constructive feedback paths are reoriented and replaced by feedbacks that are destructive to the original intent and mission of the institution.  Add to that the inevitable dark side of human nature, and you get the large scale atrocities that decorate ‘modern history’.  And in the small scale you get the unavoidable product of central planners with examples like Obamacare (read Anthony Watts’ recent experience with California’s insurance exchange).

But what is evil?  Dictionary definitions are mostly lame and confusing (example here).  Most definitions make evil out to be a notion that is understood only relative to a belief system that contains certain mores, religious beliefs, ideology, and/or legal code.  But in the real world most of us understand that evil is simply something that increases human suffering in an intended way or through purposeful neglect.  De facto (vs de juris) evil is ecumenical, it exists in and of itself, free of any interpretations from approved belief systems.  According to my lights, all big governments naturally exude evil, as do many small ones and as do other bloated institutions wherein proper feedback and feed forward paths have been corrupted and/or severed.  Evil seems to spontaneously arise through the mixing of power and ignorance in various measures suitable to the occasion.  More to be said about it on a future post.

Comments

[Russ Steele]

NSA’s Own Hardware Backdoors May Still Be a “Problem from Hell:”

Revelations that the NSA has compromised hardware for surveillance highlights the vulnerability of computer systems to such attacks. “In 2011, General Michael Hayden, who had earlier been director of both the National Security Agency and the Central Intelligence Agency, described the idea of computer hardware with hidden “backdoors” planted by an enemy as ‘the problem from hell.’ This month, news reports based on leaked documents said that the NSA itself has used that tactic, working with U.S. companies to insert secret backdoors into chips and other hardware to aid its surveillance efforts. That revelation particularly concerned security experts because Hayden’s assessment is widely held to be true. Compromised hardware is difficult, and often impossible, to detect. Hardware can do things such as access data in ways invisible to the software on a computer, even security software. The possibility that computer hardware in use around the world might be littered with NSA backdoors raises the prospect that other nations’ agencies are doing the same thing, or that groups other than the NSA might find and exploit the NSA’s backdoors.”

Do you have a router build in China at your home or office?

[Account Deleted]

Dr Yellen is the perfect choice as the person who will continue to twirl the money turbine. I think they all know good and well that any country's economy is not a perpetual motion machine that will run on it's own once you 'spin it up' with loads of printed wealth. She is well aware that she needs to say its all about 'jobs', even though it hasn't worked here yet or anywhere else for that matter. It's all about seeing how long we can keep this jury-rigged economy afloat until the next election. QE money goes in 2 directions, but has the same ultimate effect. One stream 'buys' our govt debt, and the other dumps cash into the banks. The folks in the know that are charged with making the hard decisions are painfully aware that a populace that doesn't produce much can't support much, monetarily. Our massive debt is covered with cheap money and the stock market is made to look good as the stock numbers just inflate to chase reality. Money is still being 'made' on paper and the feds (and California) skim a hefty pile off the top in capital gains to make it all look good. The only reason it continues is because of the size of our economy compared to the rest of the world. That is changing. The balloon will deflate or it will pop. Knowing what will happen doesn't do much good if you don't know when. Until then, the money people all just smile, and say soothing things about the economy.
For now, life is good - our beautiful fall weather is here. Enjoy!

[Bill Tozer]

Mr. Obermuller: Excellent analysis. House of cards, smoke and mirrors and all that suff. Great post.

It has always bugged me that the Fed prints money and gives it to us at interest, thus the greenback I have in my back pocket is not worth a dollar. It is worth less than a buck because of the interest we taxpayers are stuck paying. One dollar minus interest. Guess that is why the First Bank of the United States and the 2nd Bank of the United States was shut down. Oh well.

Enjoy the weather indeed. We skip merrily down this path and all seems well. But with Dr. Yellen leading the pack and continuing Uncle Ben's dickless policies all is well can make a sudden unexpected turn. Unexpected to those who purposely choose to remain ignorant for reasons only they know. Will not end well.

http://www.youtube.com/watch?v=014JUEHxtzM

[Bill Tozer]

As far as the NSA is concerned with its backdoor, I feel uneasy just surfing the net.

http://www.youtube.com/watch?v=rOhmYp7bbiI

[George Rebane]

We also note that if printing money actually did help to create jobs, then most Latin American countries, led by Argentina, would be suffering from massive over employment. However, this is not the case with the opposite - national defaults and hyper-inflation - being the result of flooding their economies with fiat money.

[George Rebane]

I draw your kind attention to today's update to this post.

[Account Deleted]

"Add to that the inevitable dark side of human nature,..."
Now you've done it - Another major gore point of the great divide. Lefties mostly like to think we're all basically good, but just temporarily evil caused by evil 'systems' that conservatives set up. There are plenty of holes in that theory, but no matter. They have their narrative and they're sticking to it. And evil continues apace. "If only we had the correct system" - it would banish evil and butterflies would reign. History teaches otherwise, but lately, history doesn't seem to be what it used to be.

[Michael Anderson]

Scott, it seems you are a fire and brimstone guy. As in, humans are inherently evil unless they proscribe certain behaviors (which becomes a very long and impossible to maintain list) into perpetuity.

I was raised Catholic/Mormon/Episcopalian, so I know all about your "evil." What I came to find out was that your fire and brimstone didn't make logical sense, and that the people I was attracted to also were unwilling to dwell in the world of guilt and shame.

I guess you can set up your world view into this completely ridiculous binary dichotomy if you want to, but it has nothing to do with the reality of the 21st century, it is inherently damaging to both educational and economic forward progress in our community, and it has absolutely no legs to stand on.

Scott, you are to the right of your own Pope, who I realize you do not even recognize or admire. Your whole body of religious rhetoric is utter madness. Jim Jones is looking good, compared to what passes for religion on planet earth in the 21st century.

Tone down the rhetoric, create a big tent, appeal to Millennials with more than popsicles and flex hours, and you too can have a future existence in the large discussion of great ideas.

Or, just camp out till you become completely irrelevant. Your choice.

[Bill Tozer]

Mr. Anderson. Here are a few examples of EVIL:

1) Shutting down the Amber Alert system to make a point. How many pennies does it take put on an Amber Alert? The system is already in place. Just throw the switch and type in a few details. Your children could face a horrible fate with the system down. Stats show that for the child to be found safe and alive, the first few minutes are the most crucial. This directive came from our current Chief Executive. Shut down the Amber Alert System. Non-essential or evil?

2) Having a Roman Catholic priest face arrest if he gave Mass to our troops. Barring Military Chaplins. from giving services on base and blocked by armed MPs.

3) The Military in general. No matter what/how you feel about the military, chew on this. As per the Commander in Chief, stop all NFL broadcasts to our men and women soldiers overseas. Close down all swimming pools on military bases to hurt the military children and spouses. Close down all PXs so our military and their families have to go off base to buy food at supermarkets for 30% more. BUT, keep the golf course open at Andrews Air Force Base, the favorite golf course of our current Commander in Chief. Considered very essential. Close swimming pools and chapels of worship, but for God's sake, keep the darn golf course open! Maybe not 100%evil, but rather nasty kind of evil.

3) Ban all long charter fishing trips. After all they have to pass through Federal Waters. No fishing.

4) Control every aspect of your life from your utility bill to the fuel you put in your car to whats in your lunch pail. Have the IRS leak sensitive information on citizens and political opponents directly to the White House. 155 times in the past 24 months the head of the IRS went to meet with the Administration. 155 times, and this was before the scandal. Have the NSA spy on every single American and have the IRS join in in the party. Seize all Federal Assets and close down the Statue of Liberty. Block roads that cross federal property. IF this does not smell like East Germany and act like East Germany, then, I suppose I have no idea what evil is.

[Michael Anderson]

Mister Tozer,

One question...were you ever in East Germany before 1992? Just a question.

M.

[Michael Anderson]

So much beauty...
http://www.nytimes.com/2013/10/13/opinion/sunday/douthat-the-kurtz-republicans.html?hp

[Bill Tozer]

No Michael Anderson. I was in the USSR. Moscow. Not East Germany, but West Berlin about that time. Being a tourist and paying the police 3 times for each document in the USSR. They stamped each document 3 times to get more mula. Each stamp was a fee, lol. And no, I did not come back with a Russian Beauty Bride. But a buddy of mine did! Haven't heard from him since.

[fish]

Haven't heard from him since.

Was a body ever discovered....either partner?

[Bill Tozer]

Don't know Mr. Fish. But they say all is fair in Love and War.

Evil, what a concept. My personal view is debt is evil. It enslaves one to the lender and mortgages ones future. Which is why I am very sympathetic to the Tea Party Movement. They don't talk about abortions or Global Warming. They are grounded on fiscal policy and smaller government. Very focused. Diss them all you want, but they are spot on, IMHO.

Debt is evil. This entire shutdown thang is about debt via spending. Just the fact that the Dems (as of last night) are demanding that the whole sequester thing be rolled back is proof that the Sequester was too little and the Dems want to spend like drunken Tozers. The sequester only slowed down the rate of spending (debt), that's about all. Sure, we have revenues coming in daily, but our outgoing dwarfs the incoming. Plus Obama signed the Sequester into law. Law of the land. End it? Pure Evil.

Heard a great analogy. Suppose you had a sewer line break inside your home your home was being flooded with caca-dodo. The stuff starts filling your home building up higher and higher. Now, what would your do? Well, the Senate and Executive Branch's solution is to raise the ceiling! The stuff is now piled high above the windows and they want to raise the ceiling, LOL.

Others such as I want to call some Ready Rooter emergency hot line and get a plumber out here ASAP to fix the broken pipe. Fix the broken pipe. Free us from slavery to debt and addiction to spending like drunken Tozers.

[bill tozer]

Dr. Rebane, its hard to win the debate on such notions as principles and morals when over half the voting block condones the "what can Uncle Sammy do for me" mindset. Yes, them poor and white liberals can never get enough. Ever. Rather chew off their arms than cut 34 cents from the budget. How do you compete with Disneyland Dad? Truly an evil that erodes the character and dignity of the human being.

http://www.foxnews.com/us/2013/10/14/computer-glitches-causes-public-assistance-frenzy/

[George Rebane]

billt 234pm - and that is why I lament that we are already beyond the tipping point.