Emirates’ $18 Billion Boeing Order Kicks off Air Show

November 17, 2011 by · Leave a Comment 

By Praveen Menon and Tim Hepher

2011-11-14T075257Z_957579746_GM1E7BE186F01_RTRMADP_3_AIRSHOW-DUBAI

An Emirates Airlines Boeing 777-300 aircraft takes off during the second day of the Dubai Airshow November 14, 2011.

REUTERS/Nikhil Monteiro

DUBAI (Reuters) – Emirates airline placed a blockbuster order for 50 Boeing 777 jetliners at the Dubai Air Show on Sunday, underscoring the confidence brimming among fast-growing Gulf airlines despite growing fears of stalling global growth.

The Dubai government-owned carrier, expanding its role as the world’s largest operator of Boeing’s most profitable plane, said the deal was worth $18 billion, the largest commercial order by value in the U.S. planemaker’s history.

Reuters reported on Friday that Emirates, which has led efforts by Gulf-based carriers to challenge European and Asian carriers by establishing the region as a major East-West hub, would place an order of between 30 and 50 Boeing 777 aircraft.

“This order represents a milestone — it is the single largest dollar value (order) in the Boeing history,” Emirates Chairman Sheikh Ahmed bin Saeed al Maktoum said at a press conference, before signing the deal with Boeing representatives as Dubai’s ruler, Sheikh Mohammed bin Rashid al Maktoum, looked on.

“(The) 777 has served Emirates very well in terms of seat costs … especially when we see the fuel price is quite high.”

Fuel costs took a big toll on the airline’s first half profits, sending them down 76 percent.

Emirates said it had adequate financing in place for 2012, and planned no new bond issue. Sheikh Ahmed said the airline, which launched a heavily oversubscribed $1 billion bond in June, would consider a bond if needed and if the timing was right, adding “we don’t have a push.”

Including options to buy 20 more of the twin-aisle aircraft and other agreements, the total deal is worth $26 billion, Emirates and Boeing said.

The airline planned to eye a mix of funding options for the order, including Islamic finance, he added. Delivery of the aircraft is slated to begin in 2015.

James Albaugh, chief of Boeing’s commercial division, said the order would sustain thousands of U.S. jobs.

Boeing delivered 127 commercial airplanes in the third quarter, including 100 of its best-selling 737 narrowbodies and 21 widebody 777s. The planemaker, which gets paid for its airplanes at delivery, set its commercial airplane delivery guidance for 2011 at about 480, down from previous guidance of 485 to 495.

GULF CARRIERS SPLASH OUT

Gulf airlines and lessors are set to splash out on Airbus and Boeing jets at the November 13-17 air show, underscoring the region’s role as the industry’s chief paymaster amid Europe’s worsening sovereign debt crisis.

Qatar Airways is expected to place a $6.5-billion order for 50 fuel-saving A320neo jets and five A380s from Airbus , and Kuwait lessor Alafco plans to boost a provisional order for 30 Airbus A320neos, industry sources said.

A muted air show two years ago came days before Dubai lurched into its own property and financial crisis in 2009, but the city state has been recovering after a bailout from neighboring Abu Dhabi.
Dubai’s ruler Sheikh Mohammed spent hours at the airshow, looking at commercial and military planes and touring the floor before taking a seat at the Emirates news conference, underscoring the keen interest that the emirate has in the success of its airline and ambitions for Dubai to become a major hub.

Demand for passenger aircraft has been remarkably robust led by rising numbers of middle classes in Asia and the Middle East and a shift of economic power from the West, but some analysts fear a contagion from Europe’s spiraling debt crisis.

“Nothing goes up forever but we really believe the demand for airplanes is driven by world GDP,” Boeing Commercial Airplanes Chief Executive Jim Albaugh said on the eve of the show.

“It goes up by about one and a half times GDP, and while you have spikes .. the long-term direction is pretty positive.”

EUROFIGHTER CHALLENGE

Increasing competition to sell military hardware to Gulf states amid rising tensions over Iran’s nuclear activities also dominated the start of the show.

In a blow to France, an $11 billion contest to sell fighters to the UAE heated up on the eve of the event when the Eurofighter consortium disclosed it had been asked to present its Typhoon warplane to the country’s top military.

A spokesman for the consortium from Britain, Germany, Italy and Spain confirmed a report on the briefing in industry publication Flightglobal.com, but declined further comment.

The briefing by UK officials took place in October in response to a request from the UAE, which has held long-running talks with France over a purchase of up to 60 Dassault-built Rafale fighters.

The move injected unexpected drama into the military side of the Dubai Air Show, which will feature rival flying displays by both jets.

Dassault Aviation Chief Executive Charles Edelstenne shrugged off the assault by the Eurofighter club which France backed away from in the 1980s to concentrate on developing its own independent successor to the Mirage.

“That’s very good, I’m happy,” he told Reuters, walking briskly among displays of military U.S., European and Russian military hardware.

Asked if he was disappointed about the decision to bring in a potential new bidder, he said, “No.”

The UAE has been in talks with France since 2008 but discussions have been subjected to occasional disruption and the UAE has also enquired about the Boeing F/A18 Super Hornet.

President Nicolas Sarkozy has made it a priority to find a foreign buyer for the multi-role Rafale, billed as one of the most effective but also one of the most expensive fighter jets in the world.

Analysts say rising geopolitical tensions surrounding Iran could lead to a spike in defense orders.

(Additional reporting by Sitaraman Shankar and Nadia Saleem; Editing by Amran Abocar and Reed Stevenson)

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Israel Burnishes Missile Shield as Mideast Churns

May 19, 2011 by · Leave a Comment 

By Dan Williams

PALMACHIM AIR BASE, Israel (Reuters) – Israel’s upgraded Arrow air defense system, designed to blow up ballistic missiles in space, could be rushed into deployment before its 2014-15 target date, a senior officer said Thursday.

Partly funded by the United States, Arrow III is envisaged as the future Israeli bulwark against Iran and Syria, with shorter-range interceptors providing protection against rockets favored by neighboring Lebanese and Palestinian guerrillas.

Political turmoil in the Middle East has focused Israel’s crisis planning and a senior military officer, speaking during a rare media tour of Arrow’s command center on a base down the coast from Tel Aviv, predicted a tighter production timeline.

“We’ve already shown how we can get systems out ahead of schedule when there’s a need,” he said, referring to Israel’s Iron Dome interceptor, which shot down several Katyushas fired from Gaza last month during what was billed as an accelerated field trial.

Arrow’s manufacturers had slated the new version for 2014 or 2015. But the officer, who could not be identified under military guidelines, said: “Don’t be surprised if it’s sooner.”
The Arrow command center, dubbed “Defensive Sword,” is one of the few Israeli military units to offer a public glimpse of preparations at a time of often dizzying regional instability.
Watching citizen revolts buffet Arab states, a few of them heretofore friendly, Israelis have preferred to fret quietly on the sidelines rather than risk been perceived as meddling.
But with the future of the stable, decades-old standoff with Syria in doubt, and arch-enemy Iran forging ahead with controversial nuclear and missile projects, Israel’s air defense corps has been promoted as a strategic deterrent.

While its officers insist they can protect the Jewish state alone, the corps has practiced meshing Arrow with mobile U.S. counterparts like the seaborne Aegis ballistic interceptor.

Ensconced amid a pentagon of ochre structures in Palmachim base, protected by bunker-like steel portals and passages, the Arrow command center is staffed around the clock by a dozen officers.

Though the lieutenant-colonel in charge Thursday was careful not to answer questions about current geopolitics, the exercise playing out on his computer screen seemed topical: a Scud missile launch by Syria and its Lebanese Hezbollah allies.

The unit trains regularly, under conditions meant to simulate the stress of a real war. The commander’s F2 button sets off the firing sequence for the Arrow interceptor missiles.

A battery of Arrow II — the system’s current configuration — could shield most of Israel, a major in the unit said. But Israel has deployed several batteries and drilled using them against salvoes involving “dozens” of incoming missiles.

Defense sources report an interception rate of 80 to 90 percent. Back-up Arrow batteries, or lower-altitude interceptors like Patriot and the yet-to-be-deployed David’s Sling, would be expected to take on missiles missed by the first volley.

As with Iron Dome, Arrow has an in-built thrift in its ability to ignore missiles determined to be on a “safe” trajectory away from residential areas.

Could such protection be extended to Palestinian cities in the Israeli-occupied West Bank, should they, along with Jewish settlers nearby, find themselves facing an incoming missile?

“I’m in the business of protecting populaces, whether or not they pay us taxes,” the lieutenant-colonel said.

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Wings Explained

April 1, 2010 by · Leave a Comment 

tufail

A wing is a surface used to produce lift for flight through the air or another gaseous or fluid medium. The cross-sectional shape of a wing is referred to as an airfoil. The word originally referred only to the foremost limbs of birds, but has been extended to include the wings of insects, bats, pterosaurs, and aircraft. The term is also applied to an inverted wing used to generate down-force in auto racing.

A wing’s aerodynamic quality is expressed as a Lift-to-drag ratio. The lift generated by a wing at a given speed and angle of attack can be 1-2 orders of magnitude greater than the drag. This means that a significantly smaller thrust force can be applied to propel the wing through the air in order to obtain a specified lift.

The science of wings is one of the principal applications of the science of aerodynamics. In order for a wing to produce lift it has to be at a positive angle to the airflow. In that case a low pressure region is generated on the upper surface of the wing which draws the air above the wing downwards towards what would otherwise be a void after the wing had passed. On the underside of the wing a high pressure region forms accelerating the air there downwards out of the path of the oncoming wing. The pressure difference between these two regions produces an upwards force on the wing, called lift.

The pressure differences, the acceleration of the air and the lift on the wing are intrinsically one mechanism. It is therefore possible to derive the value of one by calculating another. For example lift can be calculated by reference to the pressure differences or by calculating the energy used to accelerate the air. Both approaches will result in the same answer if done correctly.

A common misconception is that it is the shape of the wing that is essential to generate lift by having a longer path on the top rather than the underside. While wings with this shape are always used in subsonic aircraft and sailing, symmetrically shaped wings can also generate lift by having a positive angle of attack and deflecting air downward. The symmetric approach is less efficient, lacking the lift provided by cambered wings at zero angle of attack.

The common aerofoil shape of wings is due to a large number of factors many of them not at all related to aerodynamic issues, for example wings need strength and thus need to be thick enough to contain structural members. They also need room to contain items such as fuel, control mechanisms and retracted undercarriage. The primary aerodynamic input to the wing’s cross sectional shape is the need to keep the air flowing smoothly over the entire surface for the most efficient operation.

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Pakistan Buys Military Jets

January 21, 2010 by · 2 Comments 

defpro.com

JF-17
The roll-out of Pakistan’s JF 17 Thunder aircraft at the Pakistan Aeronautical Complex, Kamra–manufactured in Pakistan with Chinese cooperation.

Not many modern armed forces unite in their inventory, and particularly among their key assets, technology from two – in political terms – entirely opposite origins. It is more common in the countries of the former Soviet bloc where, since the fall of the iron curtain, Western technology slowly but ever increasingly found its way into countries primarily equipped with Russian weapon systems. In the past two decades the Middle East and southern countries of the Asian continent have become areas in which Western state-of-the- art weapon systems competed next to weapon systems from Russia or other former antagonists to lead these countries’ armed forces into a new age – globalization in the political and industrial defense world.

These countries – not only geographically in between history’s current major players – slowly revolve the old political and economic structures in a natural process and, with their growing political self-confidence, create a new link between the cumbersome super powers which, mostly from behind the scenes, will shape the next decades.

Pakistan is one of these interesting examples, however, with a very unique character. Just as its neighbor and long-lasting political antagonist, India, it develops an increasingly emancipated character in its choice of new weapon systems as well as in its desire to further develop its domestic R&D as well as production capabilities. India currently is in the process of extensive trials for its future fighter aircraft program (MMRCA) in which aircraft from the US compete against European as well as Russian solutions of the latest generations (see http://www.defpro. com/daily/ details/380/). The final choice in this particular race will be a forward-looking one for the face of the Indian Air Force.

On the other side of the Thar Desert, the Pakistani Air Force (PAF) brings together an interesting mix of aircraft from all over the world and, in particular, from the US and China. Due to its historical development, the first aircraft to be used by the Pakistani Air Force were US- and UK-built aircraft. However, in 1965 Pakistan received its first fighter aircraft of Chinese origin: the Shenyang J-6. Since, fighter aircraft of the US as well as from France (the PAF still strongly relies on its French Dassault Mirage IIIs and Mirage Vs) have been operating next to Chinese fighter aircraft. A clear political development can be deduced from the history of fighter aircraft of the PAF: from the post-colonial influences to a regional power at the mercy of the political gravities to a growing national identity and self-determination.

Today, Pakistan is expecting to take delivery of its first of 18 ordered Lockheed Martin F-16C/D Block 52+ very soon (older versions of the F-16 have already been operating in Pakistan since 1982), bringing the total number of Pakistani F-16s to 54 when the last aircraft will be delivered as scheduled in December 2010. Furthermore, as various press sources have reported mid-November 2009, Pakistan has signed an agreement with China for the procurement of 36 Chengdu FC-20 (J-10 export version) to be delivered by 2015. Finally, Pakistan is also in the process of introducing a growing number of FC-1/JF-17 fighter aircraft, jointly developed by China’s Chengdu and the Pakistan Aeronautical Complex (PAC) Kamra. With the first two small batch production aircraft having been delivered in 2007, Pakistan has since received a good dozen of these aircraft and, as reports Flight International, is expecting to introduce at least 150 domestically produced fighters into service (the number has increased to an estimated 200-250 aircraft).

This development would not only provide Pakistan with a significant number of state-of-the- art air combat assets but also brings together technology from the Far East and the West in an interesting unity. Many eyes of these two political and industrial camps will be glued to the PAF to gather information on this process and the other’s craftsmanship.

F-16 … FC-20 … JF-17

As outlined above the PAF has been combining Western and Chinese aircraft since the 1960s, including bombers and trainer aircraft and is, furthermore, expecting to receive four Chinese Shaanxi Y-8W airborne early warning & control (AEW&C) aircraft equipped with AESA radar by 2011 that will be operating next to Pakistan’s brand-new Saab 2000 Erieye AEW&C aircraft. But let’s take a look at the three state-of-the- art fighter aircraft that will be racing Pakistan’s skies in the near future.

Pakistan’s newest member of the F-16 family, a two seat F-16D Block 52, has been unveiled on October 2009 at Lockheed Martin’s Fort Worth, Texas, facility. The ceremony was attended by the PAF Chief of the Air Staff, Air Chief Marshal Rao Quamar Suleman. The current order, dubbed “Peace Drive I”, is for 12 F-16Cs and six F-16Ds, powered by the Pratt & Whitney F100-PW-229 engine, with an option for another 18 aircraft.

“The Pakistani and U.S. leadership has worked very hard to develop a strategic partnership between the two countries in order to achieve our common strategic interests,” said Rao Qamar. “If this relationship is to succeed, it has to be built on a solid foundation of trust between the two allies. This F-16 is not just an aircraft, but a capability for Pakistan. It is a symbol of trust and the relationship between Pakistan and the U.S.”

As the PAF explains on its homepage, “the PAF had originally planned its force structure to include than a hundred F-16s by the end of the century, but these plans could not be implemented because of the US embargo [of the 1990s due to Pakistan’s testing of a nuclear bomb]. The service is, thus, currently in the process of evaluating other high-tech fighter aircraft for procurement. “

The outcome of this process is quite clear: a stronger co-operation with China which obviously offers Pakistan not only to possibility to acquire new combat aircraft but also of jointly improving its domestic industrial capabilities. The Chengdu FC-20s to enter service in 2015 will replace the aging fleet of combat aircraft such as the Chinese F-7s (a version of the MiG-21 which has been recently upgraded) as well as the extensive fleet of Mirage IIIs and Vs. As the PAF explains, “Chinese systems such as the F-7s provide the staying power to absorb losses and to take punishment in the face of a much bigger adversary. Planned upgrades to equip these less capable fighters with modern radars, better missiles and ECM equipment will help enhance the PAF’s combat capability.”

The FC-20 is not among these less capable fighters. It is the export version, modified to Pakistan’s requirements, of one of China’s most capable multi-role fighter aircraft with a delta-wing and canard design. It was introduced into the People’s Liberation Army Air Force (PLAAF) in 2005 and in April 2006 the Pakistani cabinet approved the procurement of 36 of these aircraft which can be compared to the aircraft generation of the F-16, the Gripen or the Rafale.

Although a greater challenge for the Pakistani Air Force than the mere purchase of new assets, the development and introduction of the JF-17 (Pakistani designation for “Joint Fighter”) has continuously and obviously successfully proceeded. The first aircraft of this type took to the skies in 2003. The first small batch of pre-production aircraft was delivered to Pakistan for operational evaluation purposes in March 2007. The first Pakistani-manufactured JF-17 was rolled out and handed over to the PAF on 23 November 2009. On the occasion of the hand-over ceremony Rao Qamar said that 40 JF-17 would be produced by PAC Kamra within next three years and would be inducted in PAF replacing the existing aircraft. Furthermore, he confirmed that the first JF 17 Squadron would be established shortly. The JF-17 is a lightweight and low-cost multi-role fighter aircraft with a high maneuverability and beyond visual range (BVR) capability. It has advanced aerodynamics configuration and high thrust.

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The Next Step: A Stealth Drone

January 4, 2010 by · 2 Comments 

AFP

beastofkandahar2 WASHINGTON (AFP) – The US Air Force on Tuesday confirmed for the first time that it is flying a stealth unmanned aircraft known as the “Beast of Kandahar,” a drone spotted in photos and shrouded in secrecy. The RQ-170 Sentinel is being developed by Lockheed Martin and is designed “to provide reconnaissance and surveillance support to forward deployed combat forces,” the air force said in a brief statement.

The “RQ” prefix for the aircraft indicates an unarmed drone, unlike the “MQ” designation used for Predator and Reaper aircraft equipped with missiles and precision-guided bombs. Aviation experts dubbed the drone the “Beast of Kandahar” after photographs emerged earlier this year showing the mysterious aircraft in southern Afghanistan in 2007.

The image suggested a drone with a radar-evading stealth-like design, resembling a smaller version of a B-2 bomber.

A blog in the French newspaper Liberation published another photo this week, feeding speculation among aviation watchers about the classified drone. The air force said the aircraft came out of Lockheed Martin’s “Skunk Works,” also known as Advanced Development Programs, in California — the home of sophisticated and often secret defense projects including the U-2 spy plane, the F-22 fighter jet and the F-117 Nighthawk.

The photo of the drone in Afghanistan has raised questions about why the United States would be operating a stealth unmanned aircraft in a country where insurgents have no radar systems, prompting speculation Washington was using the drones for possible spying missions in neighboring Iran or Pakistan.

The Sentinel was believed to have a flying wing design with no tail and with sensors built into the top side of each wing, according to published photos.

The RQ-170 is in line with Defense Secretary Robert Gates’ request for more intelligence and surveillance resources and with the Air Force chief of staff’s plans to expand the fleet of unmanned aircraft, the air force said.

The new drone is flown by the 30th Reconnaissance Squadron out of Tonopah Test Range in Nevada, which is under Air Combat Command’s 432nd Wing at Creech Air Base, also in Nevada. The United States has carried out an extensive bombing campaign against Al-Qaeda figures in Pakistan using the Predator and larger Reaper drones.

Robots or “unmanned systems” in the air and on the ground are now deployed by the thousands in Iraq and Afghanistan.

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Israel Lost Ally Turkey

November 1, 2009 by · Leave a Comment 

World Tribune

2009-10-22T080428Z_902822751_GM1E5AM18O201_RTRMADP_3_TURKEY-KAZAKHSTAN TEL AVIV — Turkey was said to have suspended up to $1 billion in proposed Israeli defense projects after canceling a major air exercise with Israel.

A leading Israeli defense analyst said the government of Turkish Prime Minister Recep Erdogan has decided to end defense and military cooperation with Israel. Analyst Ron Ben-Yishai said the Turkish Defense Ministry has shelved a range of proposed Israeli projects.

“New deals worth tens and hundreds of millions of dollars offered by Israel’s defense industries to the Turkish Army, as well as cooperation with Turkish colleagues, are being put on hold or cancelled altogether,” Ben-Yishai said in a report.

The report warned that Israel has lost Turkey as a strategic ally. Ben-Yishai said the government and military were seeking a substitute for Ankara, a task that would prove difficult.

[In Ankara, Turkish industry sources said Ankara has ruled out awarding Israel any major defense contracts. The sources said the Defense Industry Undersecretariat was expected to significantly reduce Israel’s presence after at least one key contract was scheduled to conclude in 2010.]

In many cases, Ben-Yishai said, Turkey has selected inferior and more expensive systems than those offered by Israel. He cited an Italian reconnaissance satellite, which was chosen over an offer of Israel’s Ofeq-class spy satellite.

“Only recently, officials in Ankara preferred to purchase a spy satellite from Italy, even though it is inferior in quality and more expensive than the Israeli product offered to Turkey,” Ben-Yishai said.

“Israel has indeed embarked on a process of seeking substitutes to the strategic advantages offered by the relationship with Turkey,” Ben-Yishai said on Oct. 14. “However, this process is difficult and complex, and it is doubtful whether it will compensate us for the lost ties with Ankara.”

The report said the loss of Turkey as a strategic ally has harmed Israel’s deterrence, particularly toward Iran and Syria. But Ben-Yishai said the Israel Air Force would not be significantly affected by Turkey’s decision to ban the Jewish state from the Anatolian Eagle exercise.

“Turkey is not the only region where the IAF can hold drills simulating various combat scenarios — long-range missions, operations in unknown territory, and cooperation with foreign forces,” the report said.

“Nonetheless, the decision to cancel Israel’s participation in NATO’s aerial drill in Turkey must serve as a glowing warning sign in respect to the strategic and economic implications that may follow our growing diplomatic isolation.”

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Dr. Kamran Khan leads team which predicts H1N1 spread

July 13, 2009 by · Leave a Comment 

kamran khan TORONTO, Canada–A system developed by Canadian researchers to rapidly evaluate the world’s air traffic patterns accurately predicted how the H1N1 virus would spread around the world. The team is led by Dr. Kamran Khan.

Infectious disease physicians at Toronto’s St. Michael’s Hospital say that by evaluating air traffic patterns around the world, they were able to predict how the virus would spread globally.

Dr. Kamran Khan and colleagues analyzed flight itineraries of more than 2.3 million passengers who left Mexico on commercial flights in March and April. The team found that countries that received more travellers from Mexico were more likely to import cases of the H1N1 flu virus.

As well, the cities that received the largest number of travellers from Mexico were more likely to have imported H1N1 flu cases. The researchers found that welcoming 1,400 travellers from Mexico put a country at high risk of imported cases of the virus.

Dr. Khan has an MD from University of Toronto and an MPH from Columbia University. His research focuses on global migration and infectious diseases with a particular emphasis on the health of recent immigrant and refugee populations to industrialized nations such as Canada and the United States.

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The Fiat Currency Disease

July 2, 2009 by · 1 Comment 

Courtesy James Turk

Yesterday the Federal Reserve completed the latest meeting of its Federal Open Market Committee.  It re-affirmed its plan to purchase by the end of the year some $1.8 trillion – yes, $1.8 trillion – of US government paper, comprising of agency debt, agency mortgage-backed securities and US Treasuries.  That’s nearly $6,000 for every man, woman and child in the United States.

While $1.8 trillion is a gargantuan amount of money, the actual amount is of secondary importance to the essential, piercing question.  Namely, where is this $1.8 trillion going to come from?

The answer is not pretty.  These dollars will come from the same place that all other dollars are created these days, namely, out of thin air.  Here’s how Mr. Bernanke explained this monetary sleight-of-hand before he was appointed as chairman of the Federal Reserve.  “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Like most central banker statements, this one is based on half-truths. How can there possibly be “essentially no cost” to creating all these dollars?  We=2 0all know that there is no free lunch in the real world, so there must be some significant cost to creating so many dollars, right?

Please read Mr. Bernanke’s statement again. There may be essentially no cost to the US government, but here is what he doesn’t tell you. There is a very real and huge cost to everyone who ends up holding these dollars that were created ‘out of thin air’.  It is the cost of inflation; it is the onerous cost burden arising from the reality that the purchasing power of the dollar is being continuously eroded. And the more dollars that are created beyond the need for dollars in normal commerce, the worst the inflation becomes. The $1.8 trillion the Federal Reserve will soon be creating should cause those remaining deflationists still arguing their point of view to recognize that they are looking down the wrong road.

They argue that deflation is inevitable because credit is contracting.  However, contracting credit is not deflation. Rather, contracting credit causes wealth destruction, but does not necessarily cause deflation in a fiat currency world.

Deflation arises when the quantity of dollars contracts, as it did when credit contracted in the Great Depression.  But the quantity of dollars is not contracting today.  It continues to grow, regardless what measure one uses, M1, M2 or M3 (which John Williams of http://www.shadowstats.com estimates to have grown +7.3% over the past 12 months).

What’s more, the trillions of dollars created out of thin air for various bailout schemes as well as this latest $1.8 trillion planned purchase by the Federal Reserve will make sure that the quantity of dollars continues to grow.  The result will be that the purchasing power of the dollar will continue to be inflated away.

It has become increasingly apparent that the US dollar has caught the fiat currency disease, where too many units of account are created.  This disease is fatal, and hundreds of fiat currencies buried in the fiat currency graveyard throughout history have succumbed to it.

By creating too many units of account out of thin air, the Federal Reserve has sealed the dollar’s inflationary fate.  Own gold and/or silver to protect yourself and your family from this inevitable outcome.

Since 1987 Mr. Turk has written the Freemarket Gold & Money Report, an investment newsletter that publishes twenty issues annually. He is the author of The Illusions of Prosperity (1985), SOCIAL SECURITY Lies, Myths and Reality (1992) and several monographs on money and banking.

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