Policy Debate: Should the Federal Reserve aim at a zero inflation policy?

Plausible estimates of the benefits of zero inflation are certainly less than the unemployment costs of zero inflation.... A low, steady rate of inflation is a reasonable target for the Fed. We cannot say precisely what low rate of inflation best serves the American people, but we are confident it is not zero.
~ George A. Akerlof, William T. Dickens, and George L. Perry
If the Federal Reserve commits to an explicit plan for achieving price stability, the transition costs would be reduced, and any costs that arise will be outweighed by the benefits. These benefits will be large and permanent, and will far outweigh the costs of getting there.
~ W. Lee Hoskins
Virtually all economists agree that high inflation rates are disruptive. Economies experiencing double-digit inflation rates tend to have lower growth rates than economies experiencing lower rates of inflation. This is due, in large part, to the increased uncertainty about future income and prices that accompanies higher inflation rates. Thus, most economists agree that inflation rates should be relatively low. There is much less consensus about whether an inflation rate of 0% is better or worse than an inflation rate of 3%.

During the 1950s and 1960s, most U.S. economists would have suggested that a positive inflation rate was desirable. This is because this period was characterized by a relatively stable inverse relationship between inflation and unemployment rates. This relationship, known as the "Phillips' curve," suggested that the opportunity cost of less inflation was higher unemployment. In this scenario, policymakers could use monetary and fiscal policy to select whatever combination of inflation and unemployment was perceived as being most desirable.

The economic experience of the 1970s and early 1980s cast serious doubt on this simple Phillips' curve relationship. Supply shocks, induced in large part by the OPEC oil embargoes, resulted in higher unemployment and inflation rates at the same time. The double-digit inflation rates occurring during this period lead to significant changes in the structure of economic relationships. Many labor contracts initiated during this period contained cost-of-living clauses that caused labor costs in the current period to rise at least as rapidly as prices did in the previous period. Inflationary expectations played a major role in the formulation of all types of long-term contracts.

In response to these economic events, economists began to pay substantially more attention to the importance of the role of expectations and the process of expectations formation. The downward sloping Phillips' curve appeared to be, at best, a short-run relationship that existed only when inflationary expectations were held constant. The long-run Phillips curve, it is argued, is vertical at the natural rate of unemployment. Thus, in the long run, monetary policy only affects the inflation rate, but not the level of output.

While many economists believe that a short-run tradeoff exists between unemployment and inflation, new classical economists argue that only unanticipated monetary changes can affect output and employment in the short run. In this case, the Fed can reduce unemployment only if they are able to fool the public by announcing a rate of money growth that is below the actual money growth rate. If the Fed pursues such a policy repeatedly, however, the public would eventually recognize its strategy and the Fed's policy announcements would not be credible.

The debate over the conduct of monetary policy often focuses on two major questions:

Should monetary policy be conducted in a discretionary manner or should it follow a fixed rule?
If an activist monetary policy is used, what should be the monetary target(s)?
As the articles listed below will demonstrate, there is still a substantial amount of disagreement over these issues. A growing number of economists, however, appear to be advocating an inflation rate target.


Primary Resources and Data
Rebecca Hellerstein, "The Impact of Inflation"
http://www.bos.frb.org/economic/nerr/rr1997/winter/hell97_1.htm
In this Boston Fed online article, Rebecca Hellerstein provides a good discussion of the actual and perceived economic costs of inflation. This article summarizes a large volume of relatively technical recent studies in a very easily understood manner. Many of the arguments for and against a zero inflation rate target are summarized in this document.

Alan S. Blinder, "The Strategy of Monetary Policy"
http://minneapolisfed.org/pubs/region/95-09/reg959a.cfm
In this September 1995 article, Alan S. Blinder, the Vice Chairman of the Federal Reserve Board of Governors, discusses practical problems in the conduct of monetary policy. Blinder provides a nice summary of the measurement issues making it difficult to achieve a zero-inflation target and examines the difficulties of conducting monetary policy in an uncertain environment.

Mark Bernkopf's Central Banking Resource Center
http://www.patriot.net/users/bernkopf/
This web site contain links to the websites of virtually all central banks that maintain an internet presence. These web sites often contain information about the conduct of monetary policy in these countries.

New Zealand's Policy Targets Agreement
http://www.rbnz.govt.nz/monpol/pta/index.html
This is the text of the "Policy Targets Agreement" that serves as the basis for New Zealand's 0-3% inflation monetary policy target.

Federal Reserve District Banks
http://www.oswego.edu/~economic/fed.htm
This page contains a list of links to the home pages of Federal Reserve District Bank web sites. These sites contain articles dealing with monetary policy and inflation.

Consumer Price Indexes
http://www.bls.gov/cpi/
This CPI page, provided by the Bureau of Labor Statistics, contains information about the construction of the CPI. Problems in dealing with the service sector and capturing the effects of quality change are discussed at this web site.

Consumer Price Index Conversion Factors
http://www.orst.edu/dept/pol_sci/fac/sahr/sahr.htm
Robert Sahr provides this table of conversion factors that makes it possible to convert past, present, and projected future prices into 2002 dollars. Estimated conversion factors are provided for the years 1665 - 2013.

The Inflation Calculator
http://www.westegg.com/inflation/
This page contains an online calculator that converts prices in any year between 1800 and 2001 into the equivalent price in any of these years.

Different Perspectives in the Debate
Joint Economic Committee, "Establishing Federal Reserve Inflation Goals"
http://www.house.gov/jec/fed/fed/goals.htm
In this April 1997 study, it is argued that a price stability (or zero inflation) target should be introduced. Historical and international evidence in support of such a policy is presented in this document.

Thomas C. Melzer, "To Conclude: Keep Inflation Low and, in Principle, Eliminate It"
http://research.stlouisfed.org/publications/review/97/11/9711tm.pdf
In these November 1997 article, Thomas C. Melzer, past President of the St. Louis Fed, argues that maintaining price stability is an important goal of the Fed. He suggests that there is low inflation will result in a higher rate of economic growth. In this speech, Melzer argues that a credible Fed policy of price stability (or zero inflation) may be achieved at no substantial economic cost and provides large long-run benefits.

The Region, "Fed Presidents Support Zero-Inflation Proposal"
http://minneapolisfed.org/pubs/region/90-02/reg902b.cfm
In this February 1990 article which appeared in The Region (a publication of the Minneapolis Fed), the presidents of the New York, Cleveland, San Francisco, and Richmond Feds provide brief summaries of why they feel that a zero-inflation target is a desirable monetary policy objective.

William Poole, "Is Inflation Too Low?"
http://www.stls.frb.org/news/speeches/1998/10_22_98.html
In these October 22, 1998 remarks, William Poole, the President of the St. Louis Fed, provides a series of economic arguments in favor of a zero inflation rate target.

Interview with W. Lee Hoskins
http://minneapolisfed.org/pubs/region/91-06/int916.cfm
In this June 1991 interview which appeared in The Region (a publication of the Minneapolis Fed), W. Lee Hoskins, the President of the Cleveland Fed, discusses his arguments for a zero inflation target. Hoskins argues that inflation distorts relative prices and results in economic inefficiency.

W. Lee Hoskins, "Defending Zero Inflation: All for Naught"
http://research.mpls.frb.fed.us/research/qr/qr1522.pdf
In this Spring 1991 article (appearing in Federal Reserve Bank of Minneapolis Quarterly Review), W. Lee Hoskins provides a detailed discussion of his arguments for a zero inflation monetary target. He argues that inflation results in:
higher taxes (since not all taxes are indexed),
distortions caused by inflation rate uncertainty, and
higher prices for nonmonetary assets that are used as a hedge against inflation.

S. Rao Aiyagari, "Response to a Defense of Zero Inflation"
http://research.mpls.frb.fed.us/research/qr/qr1523.pdf
In this response to W. Lee Hoskins article (above), S. Rao Aiyagari argues that a zero inflation target is undesirable because:
the Fed's commitment to a zero inflation target is not likely to be credible,
it would reduce the tax on capital income (Aiyagari argues that if this is a goal, it should be implemented through changes in the tax code, not through monetary policy), and
it is argued that there is little evidence suggesting that a zero inflation target will reduce uncertainty about the variability of inflation.

George A. Akerlof, William T. Dickens, and George L. Perry, "Low Inflation or No Inflation: Should the Federal Reserve Pursue Complete Price Stability?"
http://www.brook.edu/comm/policybriefs/pb004/pb4.htm
In this Brookings Institution Policy Brief, Akerlof, Dickens, and Perry argue that there are substantial permanent costs associated with pursuing a zero inflation target. According to their argument, these costs exist as a result of firms' reluctance to reduce nominal wages. The results of a simulation model suggests that reducing the inflation rate below 3% would result in an increase in unemployment that would persist as long as this inflation target is maintained.

George A. Akerlof, William T. Dickens, and George L. Perry, "Options for Stabilization Policy: A New Analysis of Choices Confronting the Fed"
http://www.brook.edu/comm/policybriefs/pb069/pb69.htm
This February 2001 Brookings Institute Policy Brief examines the use of monetary policy targets. Akerlof, Dickens, and Perry suggest that the effect of expected inflation varies with the level of realized inflation. They suggest that the conventional theory of the natural rate of inflation is flawed and attempt to construct a model that they believe more correctly models the process by which expectations are formed. In particular, they suggest that when inflation is low, its effect is either ignored or assigned a low weight by economic decision makers. This provides a range of sustainable unemployment rates. Akerlof, Dickens, and Perry argue that such a model better describes the recent experience of the economy with low rates of both unemployment and inflation. They suggest that there is little or no benefit to a zero-inflation target and substantial costs since this would limit relative price flexibility (since it is argued that prices are somewhat rigid in a downward direction).

Remarks by Vice Chair Alice M. Rivlin at the Annual Meeting of the Eastern Economic Association, Washington, D.C. April 4, 1997
http://www.federalreserve.gov/boarddocs/speeches/19970404.htm
Alice Rivlin, Vice Chair of the Federal Reserve Board of Governors, discusses the objectives of monetary policy in this address. She argues that a zero inflation target is undesirable due to problems in measuring inflation and the possibility that the costs would outweigh the benefits. Rivlin argues that the ultimate goals of monetary policy should be a high (and sustainable) rate of economic growth and a low unemployment rate.

John H. Makin, "What Should Central Banks Do?"
http://www.aei.org/publications/pubID.10819/pub_detail.asp
In this October 1999 Economic Outlook article, John Makin discusses the choices facing monetary policymakers. He argues that central banks were originally formed to maintain stable financial markets and not to fight inflation. In particular, Makin suggests that the Federal Reserve System was created in 1913 in reaction to financial panics, particular the financial panic of 1907. He argues that a low or zero inflation target is just a convenient mechanism for preserving stable financial markets. Makin observes that central banks have demonstrated an ability to rein in inflationary pressures, but expresses concern about how they would deal with a period of deflation. He notes that the Fed is in a difficult position since it needs credibility to maintain stable financial markets. Since the Fed must follow it's announced policy of a low inflation target to maintain this credibility, Makin argues that it is unable to effectively deal with other problems that may occur in financial markets.

Federal Reserve Bank of Minneapolis, "Interview with James Tobin"
http://woodrow.mpls.frb.fed.us/pubs/region/96-12/tobin.cfm
James Tobin was the 1981 recipient of the Nobel Prize in Economics for his work on money demand. In this 1996 interview, Tobin states his views on monetary theory (as well as on other policy issues). He argues that the Fed should consider both unemployment and inflation rate targets in establishing monetary policy. Tobin also argues that there should be more political control over the Fed.

Robert Dutrisac, "Can the Bank of Canada be Reformed?"
http://www.quebecnews.com/en/show_article.asp?lang=AN&no=449&homepage=TRUE
In this March 21, 1998 article, Robert Dutrisac summarizes a critique of the zero inflation target that has been pursued by the Bank of Canada since the 1980s. He suggests that the implementation of this policy resulted in two severe recessions and high levels of unemployment.

Stanley Fischer, "Central Banking: The Challenges Ahead"
http://www.worldbank.org/fandd/english/1296/articles/0101296.htm
In this article, Stanley Fischer, the First Deputy Managing Director of the International Monetary Fund, examines some of the major issues facing central banks. He argues that an inflation target is an appropriate monetary policy objective, but believes that a positive inflation target is preferable to a zero inflation target.

John H. Makin, "How Low Should Inflation Go?"
http://www.aei.org/publications/pubID.6952/pub_detail.asp
In this October 1996 article appearing in Economic Outlook, John H. Makin provides a very nice summary of the problems in establishing an inflation target. One reason for this is the existence of an inflationary bias in the consumer price index. This means that a target of zero actual inflation coincides with a positive measured inflation rate. Makin also provides a concise description of the practical problems facing the Fed in implementing an inflation target.

Alan Greenspan, "Problems of Price Measurement"
http://www.federalreserve.gov/boarddocs/speeches/19980103.htm
In this January 3, 1998 speech delivered at the American Economic Association, Alan Greenspan, the Chairman of the Federal Reserve Board of Governors, presents a detailed discussion of the problems associated with measuring inflation. This article provides a particularly good discussion of the difficulties in measuring price changes in the service sector and for goods that exhibit quality change over time.

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U.S.: 'Humanitarian disaster' in Syria

UNIS, Tunisia, Feb. 24 (UPI) -- U.S. Secretary of State Hillary Clinton, speaking Friday in Tunisia, applauded the selection of Kofi Annan as U.N.-Arab League special envoy for Syria. "We are all here because the Assad regime's escalating violence in Syria is an affront to the international community, a threat to regional security and a grave violation of universal human rights," Clinton said at the international Friends of Syria conference in Tunis. "The Assad regime has ignored every warning, squandered every opportunity and broken every agreement," she said. "Faced with determined protesters demanding their rights and their dignity, the regime is creating an appalling humanitarian disaster." Clinton said the United States strongly supports the Arab League's demand that Syrian forces "immediately halt all attacks against civilians" and called for a "negotiated political solution to the crisis." GALLERY: Protests continue in Syria The Tunis meeting came as the United Nations named top international diplomat Kofi Annan, a former U.N. secretary-general, as an envoy to Syria and targeted top Syrian officials for "gross human-rights violations." Annan -- secretary-general from 1997 to 2006, and a Nobel Peace laureate with the United Nations in 2001 -- was named a special U.N.-Arab League envoy, with a mandate to try to end the bloodshed and arrange a political transition, the world body said. Annan, from the West African country of Ghana, is said to have kept good lines of communications with the Syrian regime, The Wall Street Journal reported. U.S. President Barack Obama, meeting with Danish Prime Minister Helle Thorning-Schmidt in Washington, said: "All of us who have been seeing the terrible pictures coming out of Syria and Homs recently recognize it is absolutely imperative for the international community to rally and send a clear message to President Assad that it is time for a transition. It is time for that regime to move on and it is time to stop the killing of Syrian citizens by their own government. … "It is important that we not be bystanders during these extraordinary events," he said. The Red Cross said Friday it has begun evacuating injured women and children from Homs, Syria, after weeks of shelling by the regime of President Bashar Assad. Homs has been bombarded by government forces for weeks, causing death, destruction and shortages of much-needed food and medicine, even as Assad denies his troops are targeting civilians, CNN reported. Syrian Arab Red Crescent ambulances began removing the sick and injured from the hard-hit suburb of Baba Amr after negotiating with the government, the BBC said. "The ICRC and the Syrian Arab Red Crescent are on the spot in Baba Amr, attempting to evacuate as soon as possible everyone in need of urgent help," International Committee of the Red Cross spokesman Saleh Dabbakeh told the British newspaper The Daily Telegraph in Damascus, adding at least 11 ambulances were active in the operation, which included four Western journalists. The BBC reported the main opposition force in Syria asked the Friends of Syria conference to supply rebel fighters with weapons to use in combat against Syrian forces Officials from the Syrian National Council, the leading opposition group, said other countries should be allowed to supply arms if Assad refuses to give up power. "If the regime fails to accept the terms of the political initiative outlined by the Arab League and end violence against citizens, the Friends of Syria should not constrain individual countries from aiding the Syrian opposition by means of military advisers, training and provision of arms to defend themselves," the Syrian National Council said. White House deputy press secretary Josh Ernest repeated the administration's position that "further militarizing the situation in Syria at this point in time is not a wise course -- that is not the wise policy course to pursue at this point." The United States was working with its partners and other countries in the region "to see if there [are] things that we can do to bring humanitarian relief and aid to those who are affected by the violence, including medical supplies," Ernest said, "to see if there are things that we can do to offer support to the Syrian National Council to speed a democratic transition -- a political solution in Syria -- and to increase the pressure through sanctions on the Assad regime." The deaths of two foreign journalists -- Marie Colvin, a U.S.-born correspondent for The Sunday Times of London, and Remi Ochlik, a French photographer -- have increased international anger at the Assad regime. French President Nicolas Sarkozy described their deaths as "murder" Thursday, The New York Times said. The Syrian government issued a statement saying Colvin, Ochlik and journalists wounded in a rocket attack on a makeshift press center in Homs were in Syria without informing authorities and at their own risk. The United States, Britain, France and Turkey are among the nations joining the first meeting of the Friends of Syria group. Read more: http://www.upi.com/Top_News/World-News/2012/02/24/US-Humanitarian-disaster-in-Syria/UPI-75931330068600/#ixzz1nPSMX9Jw

African-American unemployment at 16 percent

CBS News correspondent Michelle Miller reports that, historically, the unemployment rate for African Americans has always been higher than the national average. However, now it's at Depression-era levels. The most recent figures show African American joblessness at 16.2 percent. For black males, it's at 17.5 percent; And for black teens, it's nearly 41 percent.

Occupy The Department Of Education

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Apple wins round one of China iPad bout

A Shanghai court has rejected a request by a Chinese technology firm to stop Apple Inc selling its iPad tablet computers in the city, a source said, part of a wider battle for Apple over the trademark in China. The Shanghai Pudong New Area People's Court ruled in Apple's favour after a hearing on Wednesday, the source with direct knowledge of the ruling said, confirming a report by the website of local official newspaper Xinmin Evening News. The Chinese company, Proview Technology (Shenzhen), had said the U.S. tech giant was infringing on a trademark it owns in China. China is important to Apple not only as a consumer market, but also because the country is a major production base for the iPad and other Apple products. The dispute, which dates back to a disagreement over what was covered in a deal for the transfer of the iPad trademark to Apple in 2009, has seen iPads seized by authorities in some Chinese cities, and some retailers in some Chinese cities have stopped selling them under court order. The victory for Apple follows a string of defeats in other Chinese courts, and averted what could have been an embarrassing suspension of iPad sales in Apple's own flagship stores, of which it has three in Shanghai. However, it was still not clear whether a separate effort by Proview to seek compensation in the Shanghai court from Apple for alleged trademark infringement would be successful. Apple disputes Proview's ownership of the trademark, saying it bought the rights to the name in China from Proview in 2009. Apple is also appealing a decision from December by a Shenzhen court, which ruled in Proview's favour. A higher court hearing for the appeal is set for Feb. 29 in China's southern province of Guangdong. Mixed success Following the Shenzhen case, Proview has launched a multi-pronged approach to get Apple's iPads off the shelves in the world's second-biggest economy, with mixed success. Advertise | AdChoices It has petitioned Chinese customs to stop shipments of the iPad in and out of China, although authorities have indicated such a ban would be difficult to impose. Proview has won cases in some smaller cities, forcing some retailers to stop selling iPads. Proview's parent, Hong Kong-listed Proview International Holdings Ltd, was the first Taiwanese technology company to list in Hong Kong and by the end of the 1990s numbered itself among the top five computer monitor makers. In 1999 it partnered with U.S. chip maker National Semiconductor to launch the I-PAD, a stripped-down desktop computer whose main selling points were its Internet connectivity and ease of use. Proview continued to grow, shifting from computer monitors to become the world's third-largest OEM manufacturer of flat panel TVs. But by August 2009, when Apple began trademark talks through a proxy, Proview had been badly hammered by the financial crisis. Trading of its stock was suspended in Hong Kong in August 2010 after creditors in China went to court to recover assets. The company faces delisting in June if it cannot provide the Hong Kong Stock Exchange with a viable rescue plan.

ABC goes inside Apple manufacturer

On Tuesday, ABC News aired an exclusive look inside electronics manufacturer Foxconn Technology Group, a Taiwanese company embroiled in controversy over the low wages and stressful working conditions of its employees. As many as 14 Foxconn employees committed suicide in 2010 by jumping from buildings, and at least four more employees followed suit in 2011. Foxconn, headquartered in Techung, New Taipei, manufactures products for the world’s largest electronics companies, producing household gadgets such as the iPhone, iPad, Kindle, Playstation 2, Wii and Xbox 360. Apple recently hired the Fair Labor Association to audit Foxconn, along with its other suppliers, and asked that the results of the audit be made public. ABC correspondent Bill Weir toured a Foxconn facility in Shenzen, China and interviewed workers and management.Weir’s report included an interview with one employee who saw her first finished iPad when he showed her his own device. Her request to people who use the product was to “please use it with care.” Although the company has stressful working conditions, thousands of people wait outside of the factory in the hopes that they will be hired. Many travel for miles, often leaving their families for weeks at time in order to work at the facility. But conditions inside are so demoralizing for some workers that the company has hung giant nets outside the buildings to solve what it called a “suicide problem” among its employees. Weir’s report also showed that workers were less disgruntled by the working conditions than about their low pay. Foxconn employees work on average 60 hours a week for $2 an hour. A raise for workers at Foxconn took effect on Feb. 1. PC World reported that the workers’ wages will be increased again by as much as 25 percent. Apple Insider reported Wednesday that Foxconn employees alleged the company hid underage workers before the Fair Labor Association inspection.

Failed UN Iran nuclear programs talks fail and spark fear of confrontation

Iran's Supreme Leader Ayatollah Ali Khamenei attends a meeting with Iranian nuclear scientists and managers in Tehran February 22, 2012. Supreme Leader Ayatollah Ali Khamenei said on Wednesday that Iran's nuclear course would not change regardless of international sanctions, assassinations or other pressures (Reuters) - The U.N. nuclear watchdog's latest mission to Iran failed to budge a defiant Tehran over its disputed nuclear program, sending oil prices to a nine-month high over fears of an increasing risk of confrontation with the West. The United States criticized Iran on Wednesday over the collapse of the International Atomic Energy Agency's talks in Tehran, saying it again showed the Islamic Republic's refusal to abide by international obligations over its nuclear program. Expressing defiance, Supreme Leader Ayatollah Ali Khamenei said Iran's nuclear policies would not change despite mounting international pressure against what the West says are Tehran's plans to obtain nuclear bombs. "With God's help, and without paying attention to propaganda, Iran's nuclear course should continue firmly and seriously," he said on state TV. "Pressures, sanctions and assassinations will bear no fruit. No obstacles can stop Iran's nuclear work." A team from the Vienna-based IAEA had hoped to inspect a site at Parchin, southeast of Tehran, where the agency believes there is a facility to test explosives. But the IAEA said Iran "did not grant permission." The failure of the two-day IAEA visit could hamper any resumption of wider nuclear negotiations between Iran and six world powers - the United States, China, Russia, Britain, France and Germany - as the sense grows that Tehran feels it is being backed into a corner. The standoff has rattled oil markets. On Wednesday, London-traded benchmark Brent crude for April delivery rose for a third day - up $1.24 a barrel at $122.90, a nine-month high. U.S. crude futures for April were up 3 cents at $106.28 a barrel. In Washington, White House spokesman Jay Carney said the United States was evaluating Iran's intentions. "This particular action (over the IAEA mission) by Iran suggests that they have not changed their behavior when it comes to abiding by their international obligations," Carney told reporters. Iran rejects accusations that its nuclear program is a covert bid to develop a nuclear weapons capability, saying it is seeking to produce only electricity. As Western sanctions mount, ordinary Iranians are suffering from the effects of soaring prices and a collapsing currency. Several Iranian nuclear scientists have been killed over the past two years in bomb attacks that Tehran has blamed on its arch-adversary Israel. Major oil importer Japan was in final talks with Washington on an agreement for cuts in Iranian crude oil imports that could amount to a higher-than-expected 20 percent or more a year, a newspaper reported on Thursday. China, India and Japan, the top three buyers of Iranian oil, are all planning cuts of at least 10 percent. They buy about 45 percent of Tehran's crude exports. IRAN'S DEFIANT STANCE In response to Western pressure and sanctions, Iran has issued a series of statements asserting its right to self-defense and threatening to block the Strait of Hormuz, a vital oil tanker route. The collapse of the nuclear talks occurred as Iran seems increasingly isolated, with some experts seeing Tehran's defiance in response to sanctions against its oil industry and financial institutions as evidence that it is in no mood to compromise with the West. Parliamentary elections on March 2 are expected to be won by supporters of Khamenei, an implacable enemy of the West. The United States and Israel have not ruled out using force against Iran if they conclude that diplomacy and sanctions will not stop it from developing a nuclear bomb. In Jerusalem, Israel's Foreign Minister Avigdor Lieberman dismissed appeals by world powers to avoid any pre-emptive attacks against Iran's nuclear program. Lieberman said that "with all due respect I have for the United states and Russia, it's none of their business. The security of Israel and its residents, Israel's future, is the responsibility of Israel's government." The failure of the IAEA's mission may increase the chances of a strike by Israel on Iran, some analysts say. But this would be "catastrophic for the region and for the whole system of international relations," Russian Deputy Foreign Minister Gennady Gatilov said. Referring to Iran's role in the failure of the IAEA mission, French Deputy Foreign Ministry spokesman Romain Nadal said: "It is another missed opportunity. This refusal to cooperate adds to the recent statements made by Iranian officials welcoming the progress of their nuclear activities." In the view of some analysts, the Iranians may be trying to keep their opponents guessing as to their capabilities, a diplomatic strategy that has served them well in the past. "But they may be overdoing the smoke and mirrors and as a result leaving themselves more vulnerable," said professor Rosemary Hollis of London's City University. Iranian analyst Mohammad Marandi said providing the West with any more access than necessary to nuclear sites would be a sign of weakness. "Under the current conditions it is not in Iran's interest to cooperate more than is necessary because the West is waging a war against the Iranian nation," he told Reuters. IAEA "DISAPPOINTED" OVER OUTCOME Earlier, Iran's envoy to the IAEA, Ali Asghar Soltanieh, said Tehran expected to hold more talks with the U.N. agency, but IAEA Director General Yukiya Amano's spokeswoman said no further meetings were planned. "During both the first and second round of discussions, the agency team requested access to the military site at Parchin. Iran did not grant permission for this visit to take place," the IAEA said in a statement. "It is disappointing that Iran did not accept our request to visit Parchin. We engaged in a constructive spirit, but no agreement was reached," Amano said. A Western official, who declined to be identified, said: "We think that if Iran has nothing to hide, why do they behave in that way?" Iran's refusal to curb sensitive atomic activities which can have both civilian and military purposes and its record of years of nuclear secrecy have drawn increasingly tough U.N. and separate U.S. and European measures. An IAEA report in November suggested Iran had pursued military nuclear technology. It helped precipitate the latest sanctions by the European Union and United States.

"Two years after Haiti's devastating earthquake, where did the aid money go?"

PORT-AU-PRINCE, Haiti — In the months following Haiti’s devastating January 2010 earthquake, the United States government spent $140 million on a food program that benefited U.S. farmers but has been blamed for hurting Haitian farmers. The U.S. Agency for International Development (USAID) sent 90,000 metric tons of American crops to Haiti as part of the Food for Progress and its related Food for Peace programs run by USAID and the U.S. Department of Agriculture. That amounted to almost three quarters of the U.S. government aid to Haiti after the earthquake, according to documents obtained through a Freedom of Information Act request by the Haiti Justice Alliance, a Minnesota-based advocacy organization. Critics said that sending American food aid to Haiti undermined thousands of Haitian growers who were already struggling against imports of cheaper rice and corn — staples of the Haitian diet. “If you look at the allocation of food aid after the earthquake, the fact that most of it is (Food for Progress) means that the priority for the U.S. government was exporting food from the U.S.,” said Nathan Yaffe, Board Member of the Haiti Justice Alliance. “The evidence suggests that U.S. foreign aid is structured around our economic needs rather than the humanitarian needs of people we’re supposed to be helping.” Mounting criticism of the perverse consequences of this kind of aid to Haiti has prompted Washington to give more careful consideration to the plan. “It’s not really necessary to send to Haiti a lot of food from the United States.” ~Chavannes Jean-Baptiste, director of Peasant Movement of Papay The U.S. Senate will commence hearings this month to hash out the next U.S. Farm Bill before the 2007 law expires in September and American agriculture policies revert to the 1949 version of the bill. Up for discussion is the controversial Food for Progress Title II food aid program, which has been criticized for undermining local agricultural production in developing nations like Haiti by flooding them with free or cheap U.S. food products. “For those groups that are focused on international issues in the Farm Bill this is really the key issue,” said Karen Hansen-Kuhn, director of international programs for the Institute for Agriculture and Trade Policy. “In a time where budgets are really tight and likely to be facing cuts, there is more pressure to think about for flexible mechanisms like local and regional procurement to food aid.” The 2008 Farm Bill appropriated $2.5 billion to be spent annually on Title II aid programs that send U.S. food products to foreign countries. It also set minimum amounts that must be spent on non-emergency assistance starting at $375 million in 2009 and increasing by $25 million each fiscal year through 2012. Last month, USAID announced it was accepting proposals for an anticipated $140 million in Title II programming in Haiti over the next five years. USAID officials said they had been spending about $35 million a year on food aid to Haiti, but the figure spiked to $140 million in 2010 because “of the hugely increased food needs that occurred directly after the earthquake,” said Adam Reinhart, agricultural and food security adviser at USAID. Officials said the earthquake initially disrupted local markets and supply chains so drastically that importing in-kind food was a helpful early response. “Faced with the task of distributions to approximately three million people, we first were engaged in blanket food distributions. We then adapted and moved to a more targeted assistance,” said Adam Norikane, Food for Peace Officer at USAID. But Chavannes Jean-Baptiste, director of the Haitian farmers collective Peasant Movement of Papay, said the agency should have — could have — bought products from Haitian farmers. “After the earthquake, the country needed food to help the victims in some places. But it’s not really necessary to send to Haiti a lot of food from the United States,” Jean-Baptiste said. “We received too much food, when locally it was possible to find food to buy to help the people.” Buy local A 2009 study by the U.S. Government Accountability Office found it would cost the U.S. approximately the same to buy food for aid in Latin American countries. But the cost of switching to “local and regional procurement” in Haiti was highest of 15 countries studied. USAID officials point out that during the 12 months around the earthquake, the agency’s direct food aid represented only part of total U.S. agricultural and food aid programs to Haiti. In this same period, Haitians received $47 million in vouchers or cash to buy food locally — though many staple foods found in Haitian markets are also imported and are often cheaper than Haitian products. Today aid going to Haiti in the Food for Progress and Food for Peace programs supplements — it doesn’t replace — the diets of particularly vulnerable people such as children and pregnant and lactating women, U.S. officials said. “This is the poorest of poor who are getting this,” Reinhart said. USAID officials also said the amount of food sent to Haiti in this program equals a small fraction of the country’s total food imports. For example, Haiti already imports 26,000 metric tons of rice each month, or 80 percent of the nation’s consumption. Still, the agency acknowledged the danger that such food aid can pose to local agricultural markets. An April 2010 USAID briefing warned that “in the medium and long term, large volumes of food aid would affect production as they would lower prices and thus reduce local production incentives.” Because of a provision that effectively requires approximately two-thirds of Title II food aid to travel on U.S. ships, often the aid doesn’t reach its destination until the most pressing need has already passed. “When food aid arrives at the wrong time, it can undermine local production,” said Hansen-Kuhn. “If you have emergency state declared but then the food aid doesn’t arrive for four to six months because it has to arrive on a U.S. carrier, it can undermine production by local farmers long after the emergency situation is over.” The April USAID briefing concluded the impact of U.S. crops in Haitian markets just after the quake would be temporary. And Food for Progress spending in Haiti has since returned to pre-quake levels. Export or aid? The U.S. government began purchasing American crops to export as food aid with the 1954 Agricultural Trade Development and Assistance Act, which aimed to expand U.S. markets. That act outlined minimum amounts the United States had to spend on the program each year regardless of humanitarian needs in other nations. Haiti Justice Alliance’s Yaffe said he believes this shows the U.S. government’s first priority was to recoup costs of the program, not to help foreigners in need. Experts who study Haitian agriculture say the food aid is just one way U.S. policies have undermined Haitian farmers. In March, at a Foreign Relations Committee hearing, Former President Bill Clinton said it was a mistake to pressure Haiti into reducing tariffs on food imported from the United States, including rice. Clinton is now the U.N. Special Envoy to Haiti and has become a key figure in raising funds for Haiti’s post-earthquake recovery. “Since 1981, the United States has followed a policy, until the last year or so when we started rethinking it, that we rich countries that produce a lot of food should sell it to poor countries and relieve them of the burden of producing their own food, so, thank goodness, they can leap directly into the industrial era,” Clinton said. “It has not worked. It may have been good for some of my farmers in Arkansas, but it has not worked. In 1986, Congress also approved the Bumpers Amendment to the Foreign Assistance Act, which bars the government from helping farmers abroad increase the yields of crops that could compete with staple American exports. Critics like Jean-Baptiste say it’s the reason current USAID programming in Haiti focuses on developing export goods like mangos, cacao and coffee, but largely ignores staples like rice and corn. One important USAID program in Haiti does include some rice and corn growers. The $127 million Watershed Initiative for National Natural Environmental Resources hopes to boost Haitian agriculture through training, better seeds and the use of new fertilizers. USAID claims to have helped 9,700 farmers increase their output since the program began in 2009. Many Haitian farmers rejected the program, however, after they discovered that 475 tons of seeds were hybrids donated by Monsanto, the world’s largest developer of genetically modified seeds. Unlike traditional crops, hybrids do not produce new seeds that can be collected and planted the following growing season, meaning farmers in Haiti would need to begin purchasing the seeds from Monsanto or another company once donations stopped. “In Haiti, people each year conserve their own seeds for the next year. But USAID doesn’t want to promote this kind of agriculture,” Jean-Baptiste said. This reporting was supported by a grant from the Pulitzer Center on Crisis Reporting in cooperation with the International Consortium of Investigative Journalists. An earlier version of the story was published by the Center for Public Integrity at iWatch News.

Apple defends its right to use iPad name in China

It's been a big day for Apple in China. The world's most valuable company — and America's hottest brand — defended its right to use the iPad name at the Shanghai Pudong New Area People’s Court. Attorneys for Shenzhen Proview Technology and Apple went head-to-head on Wednesday during a heated hearing in Shanghai over the bitter iPad trademark dispute. The first session was adjourned after four hours, during which Proview denied having sold the right to use the iPad trademark to Apple, while the US tech giant rejected calls for a sales ban on its tablet computers. Lawyers for the plaintiff and defendant were repeatedly admonished by the presiding judge and told to respect court protocol during arguments. No date was set for a verdict or second hearing. At the heart of the dispute is the sale of the trademark by Proview's Taiwan affiliate to an Apple subsidiary in 2009. Xie Xianghui, representing the Shenzhen LCD maker, argued that the transfer was invalid, as it was incomplete. In evidence, Proview presented its IPAD - Internet Personal Access Device - to show it was the first to register the trademark and produce a product. Apple's use of the iPad name has also made it hard for the Chinese company to sell the trademark, such as to Chinese phone makers and PC maker, Xie said, adding that this means Proview may be unable to repay its bank debts. However, Hu Jinnan, Apple's attorney, countered that Proview has not marketed or sold its IPAD for years, thus potentially invalidating its claim to the trademark. The US tech firm also presented copies of e-mails as evidence that Proview was aware of the trademark sale and that the parent company was involved during the process. A sales ban of the iPad in China will affect a large group, including consumers, added Hu. Xie dismissed the argument and added that a block on the use of the trademark was unlikely to hurt Apple's profit margins. Just 50 people were admitted into the gallery to watch the proceedings, which have attracted worldwide attention and thrown a spotlight on trademark disputes in China. Shu Jianxin, an intellectual property attorney in Shanghai who has been following the case closely, said that if Proview is successful, Apple's tablet computers could be pulled from shelves within 48 hours.

Seinfeld Actor Attempts Suicide at Cincinnati-Area Home

An actor who lives in the Tri-State is recovering after a suicide attempt. Daniel Von Bargen called 911 on Monday after shooting himself in the head at his Montgomery home. Von Bargen is best known for playing Mr. Kruger on "Seinfeld." The 61-year-old told the emergency dispatcher he was supposed to go to a hospital later that day to have some toes amputated due to complications of diabetes. The actor admitted feeling depressed. TMZ.com reports he's in critical condition. In addition to "Seinfeld," the actor's credits also include the movies Super Troopers, Silence of the Lambs and 'O Brother Where Art Thou.

Prescription drug, alcohol combo killed Whitney Houston

LOS ANGELES, Feb. 22 (UPI) -- Whitney Houston died of a lethal combination of Valium, Xanax and alcohol, sources close to the Los Angeles investigation told RadarOnline.com. GALLERY: Notable deaths of 2012 "Whitney had taken Valium, Xanax, and alcohol, which led to her death. The coroner is waiting on final toxicology results to determine which one of the three was the major contributing factor of her demise," an insider told the celebrity news Web site. "The coroner will be closely examining Whitney's blood-alcohol content at the time she died as well. The sedatives and alcohol will almost certainly be the cause of death, and not drowning. Her heart stopped beating because her respiratory system was suppressed because of the anti-anxiety meds, and combined with the booze it probably happened very quickly before she was found partially submerged in the bathtub." The Grammy Award-winning recording star, who had long battled addictions to drugs and alcohol, died at age 48 Feb. 11 in her bathtub at the Beverly Hilton hotel in Beverly Hills, Calif. She was buried Saturday in her native New Jersey.

Did money problems prompt shooting spree at Norcross spa?

Police Seek Answers in Deadly Norcross Spa Shooting: MyFoxATLANTA.com

NORCROSS, GA (CBS ATLANTA) - The Georgia Bureau of Investigation is assisting Norcross police in finding a motive for a shooting spree at a health spa late Tuesday that ended with five people – including the shooter – dead. A pastor of the victims told CBS Atlanta News that financial problems were at the center of a dispute among the family who owned the spa. Paul Song Kim, pastor of Fire in the Eye Korean Baptist Church, said the shooter was the brother-in-law of the owner and that the shooting happened during a family meeting over finances. Police, however, have not confirmed that. Norcross police have not confirmed the identities of the victims or the relationships between the shooter and the victims. According to Norcross Police Chief Warren Summers, officers responded to the Buford Highway spa at about 8:40 p.m. They found five people dead. He said the shooting was a murder-suicide, some of which was captured on surveillance footage. "It appears that he walked in, had some conversation with one of the victims and the shooting started," said Summers. "Then he goes off camera at some point, and we don't see exactly what went on there. But then he comes back on camera, and we know it's a murder-suicide." "It's so unexpected and unbelievable," said Jon Lee. He said his friend, the owner of the spa, was killed in the shooting spree. "Just an outstanding gentleman," Lee said of his friend. Return to CBSAtlanta.com for updates on this developing story. Copyright 2012 WGCL-TV (Meredith Corporation). All rights reserved.

Iran: "We will act without waiting for their actions"

A top military official says if Iran perceives an outside threat to its "national interests," it might take preemptive action. BEIRUT, Lebanon — A senior member of the Iranian military warned on Tuesday that Tehran might lash out at perceived threats, according to The New York Times. “If we feel our enemies want to endanger Iran’s national interests... we will act without waiting for their actions,” Mohammed Hejazi said to Fars news agency, according to Reuters. International Atomic Energy Agency officials, who arrived in Tehran Monday for continued nuclear talks, announced that they would not visit Iran’s atomic facilities, despite requesting to do so, The Times reported. More from GlobalPost: IAEA inspectors arrive in Tehran for talks on Iran's nuclear program Iran has come under growing diplomatic and economic pressure from the United States and the European Union as it continues to announce new advances in its nuclear program. Last week, the government announced that it had enriched enough uranium to 20 percent to power a research reactor, inflaming tensions between Iran and Israel, which predicts that Iran is building an atomic weapon that could be used against it. Concerns about Israel's ability to successfully cripple Iran's nuclear enrichment is in doubt, both in Israel and Washington. The Associated Press writes that Israelis are beginning to cast doubt on the government's "saber-rattling." More from GlobalPost: Iran: ‘Rial’ trouble in Tehran The IAEA head, Herman Nackaerts, said before leaving for Tehran that the delegation would like to look at "the possible military dimensions” of Iran's nuclear program, according to the Times.

Megaupload founder Kim Dotcom released on bail in New Zealand, not allowed to use the internet

Convicted murderer on hunger strike in California dies

Massacre in South Sudan (GRAPHIC)

A new jobs program for people trapped in unemployment

We've seen some improvement in the job market lately. But there's something stubborn about unemployment. Never in the last 60 years has the length of joblessness been this long. Four million people, a full third of the unemployed, have been out of work more than a year. They've been severed from the workforce. Ben Bernanke, chairman of the Federal Reserve, calls it "a national crisis." To understand what's happening, we went to Stamford, Conn., to see an experiment that might just offer a way back for Americans trapped in unemployment.

Is world's shortest man this 22-inch-tall Nepalese 72-year-old?

Who is the world's shortest man? That all depends on who you ask. According to Guinness World Records, 18-year-old Junrey Balawing of the Philippines is the shortest - standing 23.5 inches tall. But a 72-year-old Nepalese man named Chandra Bahadur Dangi has stepped forward at only 22 inches tall. Now what? Dangi's nephew said his uncle will meet with Guinness officials in Katmandu, Nepal, in the next few days to be officially measured. Until then, take a look through photos of Dangi on his home turf of Reemkholi village in Dang district of Nepal...

U.S. Official Signals Growing Concern Over Anonymous Group's Capabilities

The director of the National Security Agency has warned that the hacking group Anonymous could have the ability within the next year or two to bring about a limited power outage through a cyberattack. Gen. Keith Alexander, the director, provided his assessment in meetings at the White House and in other private sessions, according to people familiar with the gatherings. While he hasn't publicly expressed his concerns about the potential for Anonymous to disrupt power supplies, he has warned publicly about an emerging ability by cyberattackers to disable or even damage computer networks.

NSA's Perfect Citizen Program: What You Need to Know

The Wall Street Journal released a spook from under the sheet this week when it revealed that the super-secret U.S. National Security Agency (NSA) was going to spend $100 million on program called "Perfect Citizen" to monitor and protect key elements of the nation's infrastructure. Here are some things you should know about the program. What is Perfect Citizen? According to the Wall Street Journal, Perfect Citizen will create a system to monitor vital agencies and private utilities against cyberthreats. According to the NSA, the program is purely a vulnerability assessment and capabilities development contract, a research and engineering effort. How will the program work? The Journal reported that the program would install sensors throughout domestic computer networks, including those of private utilities, that would raise alarms during a cyberattack on them. The NSA said the program does not involve the monitoring of communications or the placement of sensors on any utility company systems. The program, it noted, is designed to give the agency a set of technical solutions that help it better understand the threats to networks that affect national security. Is Perfect Citizen a power play by the NSA to intrude into domestic affairs? The Journal reported that Perfect Citizen has caused concern in some government and military circles where it is believed to be a bold attempt by the NSA to carry out massive, automated surveillance of American companies and citizens. The newspaper quoted a memo from the main contractor on the project that said, "Perfect Citizen is Big Brother." The NSA denies that it is embarking on any illegal or invasive domestic activities. It vows that it strictly adheres to both the spirit and the letter of U.S. laws and regulations. Who will be working on the Perfect Citizen contract? The Journal reported that the Raytheon Company, of Waltham, Massachusetts, a prominent defense contractor, would be running the show. Neither the NSA nor Raytheon has confirmed that, and they're not likely to do so in the future because of security restrictions surrounding the project. Should I buy Raytheon stock? Since news of the contract broke, Raytheon shares have gone up about two points. However, news of other contracts for the company have come to light during the same period, so it's doubtful that this particular contract is having much influence on the stock price of the company.

London advertisement targets consumers by gender with facial recognition

As reported by The Independent recently, a two-week trial for gender-specific targeting of advertisements is launching in London’s West End this week. Utilizing facial recognition technology, the interactive advertisement uses a high definition camera to scan pedestrians walking by a specific bus stop on Oxford Street. With a 90 percent accuracy rating, the computer built into the placement analyzes and guesses gender based on specific facial attributes of the jawline, cheekbones, nose and eyes. Based on the current guess of a pedestrian’s gender, the digital placement shows an advertisement targeted at a man or a woman. As this technology continues to be applied to the field of advertising, the computer could also make a judgement about a person’s age, race or body type. The first advertisement in this placement on Oxford Street is being produced by a children’s charity called Plan UK. Linked to an ad campaign that promotes education of girls within impoverished countries, the digital placement will show a 40-second video when a female is scanned by the facial recognition software. If a male pedestrian is scanned by the advert, he will only see a brief message to take a look at the Plan UK site on the Internet for more information. According to Plan UK chief executive Marie Staunton, she stated “We’re not giving men and boys the choice to see the full ad on this occasion – so they get a glimpse of what it’s like to have basic choices taken away.” According to an article in the BBC News, the advertisement cost the organization £30,000, approximately $60,000, but they expect to raise a quarter of a million pounds in the next four months for the “Because I Am a Girl” cause. Clear Channel UK and 3D Exposure are working together to integrate facial recognition technology with advertising and are responsible for ads that are being displayed within this placement. The placement also includes multi-touch technology similar to Apple’s iPad and the facial recognition software shows similarities to Microsoft’s Kinect accessory for the Xbox 360. While the initial trial only includes one placement in London, Clear Channel UK communications manager Guy Melzack stated “We are currently working on a campaign by campaign basis, but if the technology proves to be popular, more screens could be installed,” in an interview with PCMag. While The Open Rights Group called the advertisement “creepy,” this isn’t the first time that facial recognition technology has been used to target consumers. The Venetian resort in Las Vegas uses facial recognition tech to offer suggestions for possible entertainment and restaurant options. A group of bars in Chicago use the technology to analyze age as well the percentage of males and females at the bars. Using a smartphone, a potential customer can check the average age range and breakdown of gender before heading out. In an interview with the L.A. Times during August 2011, Intel director of retail marketing Christopher O’Malley stated “You can put this technology into kiosks, vending machines, digital signs. It’s going to become a much more common thing in the next few years.” This article was originally posted on Digital Trends More from Digital Trends Apple applies for patent concerning face recognition on iOS devices Advertising comes to Facebook’s real-time ticker UK capital to introduce talking trash cans in fight against litter Social media profile pics are a gateway to privacy breaches